Exhibit 8(b)
FORUM FUNDS
CUSTODIAN AGREEMENT
AGREEMENT, dated as of December 18, 1995, between FORUM FUNDS (the "Fund"),
a corporation operating as an open-end investment company under the Investment
Company Act of 1940, duly organized and existing under the laws of the State of
Delaware, and The First National Bank of Boston (the "Custodian"), a banking
institution organized under the laws of the United States, provides as follows:
WHEREAS, the Fund desires to appoint the Custodian as custodian of its
securities and cash and the Custodian is willing to act in such capacity upon
the terms and conditions set forth below; and
WHEREAS, the Custodian in its capacity as custodian will also collect and
apply the dividends and interest on securities in the manner and to the extent
set forth below;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. The terms, as defined in this Section, whenever used in this
Agreement or in any amendment or supplement hereto shall have the meanings
specified below, insofar as the context will allow.
(a) The Fund: The term Fund shall mean Forum Funds as defined in the
preamble of this Agreement.
(b) Custodian: The term Custodian shall mean The First National Bank of
Boston, in its capacity as custodian under this Agreement.
(c) Series: The term Series shall mean the Cellular Communications Fund,
or any portfolio that the Fund shall subsequently establish and appoint the
Custodian as custodian thereof and the Custodian shall accept.
(d) Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Fund.
(e) Shares: The term Shares shall mean the issued and outstanding shares
of common stock of a Series of the Fund.
(f) Share Certificates: The term Share Certificates shall mean the stock
certificates for the Shares.
(g) Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the stock registry records of
the Fund.
(h) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good faith
by the Custodian to be a person or persons authorized by a resolution of the
Board of Trustees of the Fund to give Oral Instructions on behalf of the Fund.
Each Oral Instruction shall specify whether it is applicable to the entire Fund
or a specific Series of the Fund.
(i) Written Instructions: The term Written Instruction shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures, or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board of
Trustees of the Fund to give Written Instructions on behalf of the Fund. Each
Written Instruction shall specify whether it is applicable to the Shares of the
Fund or a specific Series of the Fund.
(j) Securities Depository: The term Securities Depository shall mean a
clearing corporation registered under Section 17A of the Securities Exchange Act
of 1934 which maintains a system for the central handling of securities in which
all securities of any particular class or series of any issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the securities.
(k) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the Treasury of the United States of America and Federal
agencies of the United States of America that are maintained in the book-entry
system as provided in Subpart O of Treasury Circular Xx. 000, 00 X.X.X. 000,
Xxxxxxx X of 31 C.F.R. 350 and the book-entry regulations of federal agencies
substantially in the form of Subpart O, or in such successor regulations as may
be adopted from time to time.
(l) Book-Entry Account: The term Book-Entry Account shall mean as account
maintained by a Federal Reserve Bank in accordance with the previously described
Circular and regulations.
(m) Sub-Custodian: The term Sub-Custodian shall mean a Sub-Custodian
approved by the Fund as provided in SECTION 18 of this Agreement.
SECTION 2. The Fund shall, as necessary, file with the Custodian a
certified copy of the operative resolution of the Fund's Board of Trustees
authorizing execution of Written Instructions and the number of signatories
required and setting forth authentic signatures of all
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signatories authorized to sign on behalf of the Fund or any Series thereof.
Such resolution shall constitute conclusive evidence of the authority of all
signatories designated therein to act and shall be considered in full force and
effect, with the Custodian fully protected in acting in reliance thereon, until
the Custodian receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Written Instructions.
The Fund shall, as necessary, file with the Custodian a certified copy of
the operative resolution of the Fund's Board of Trustees authorizing the
transmittal of Oral Instructions and specifying the person or persons authorized
to give Oral Instructions on behalf of the Fund or any Series thereof. This
resolution shall constitute conclusive evidence of the authority of the person
or persons designated therein to act and shall be considered in full force and
effect, with the Custodian fully protected in acting in reliance therein, until
the Custodian actually receives a certified copy of a replacement resolution
adding or deleting a person or persons authorized to give Oral Instructions. If
the officer certifying the resolution is authorized to give Oral Instructions,
the certification shall also be signed by a second officer of the Fund
authorized to give Written Instructions.
SECTION 3. For all purposes under this Agreement, the Custodian is
authorized to act upon receipt of the first of any Written or Oral Instruction
it receives. If the first Instruction is an Oral Instruction, the Fund shall be
responsible for delivering, or having delivered to the Custodian, a confirmatory
Written Instruction; and in cases where the Custodian receives an Instruction,
whether Written or Oral, with respect to a portfolio transaction, the Fund shall
cause the broker or dealer to send a written confirmation of the transaction to
the Custodian. The Custodian shall be entitled to rely on the first Instruction
received and, for any act or omission undertaken in compliance therewith, shall
be free of liability and fully indemnified and held harmless by the Fund. The
sole obligation of the Custodian with respect to any confirmatory Written
Instruction or broker or dealer written confirmation shall be to make reasonable
efforts to detect any discrepancy between the original Instruction and such
confirmation and to report such discrepancy to the Fund. The Fund shall be
responsible, at the Fund's expense, for taking any action, including any
reprocessing, necessary to correct any discrepancy or error, and to the extent
such action requires the Custodian to act, the Fund shall give the Custodian
specific Written Instructions as to the action required.
SECTION 4. The Fund hereby appoints the Custodian as custodian of the
Securities and cash (collectively, "assets") of each Series from time to time on
deposit hereunder. The Securities held by the Custodian, unless payable to
bearer or maintained in a Securities Depository or Book-Entry Account pursuant
to SECTION 5, shall be registered in the name of the Custodian or in the name of
its nominee, or if directed by Written Instructions, in the name of the Fund or
its nominee. Securities, excepting bearer securities, delivered from time to
time to the Custodian in certificated form shall, in all cases, be in due form
for transfer, or registered as above provided. Such Securities and cash of the
Fund shall be and remain the sole property of the Fund and the Custodian shall
have only custody thereof.
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The Custodian shall hold, earmark and physically segregate for the
appropriate Series account of the Fund all non-cash property, including all
Securities that are not maintained pursuant to SECTION 5 in a Securities
Depository or Book-Entry Account.
The Custodian shall open and maintain a separate bank account or accounts
in the name of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Fund. Notwithstanding the foregoing, a separate bank account
may be established by the Fund to be used as a xxxxx cash account in accordance
with Rule 17f-3 of the Investment Company Act of 1940 and the Custodian shall
have no duty or liability with regard to such account.
Upon receipt of Written Instructions, cash held by the Custodian for the
Fund shall be deposited by the Custodian to the Custodian's credit in the
banking department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
SECTION 5. The Fund hereby authorizes the Custodian to deposit assets of
the Fund's Series as follows:
(a) deposit with the Custodian or any other bank licensed and examined by
the United States or any state thereof assets held in the Option Account created
pursuant to SECTION 13(b);
(b) deposit in the Custodian's account(s) with any Securities Depository
all or any part of the Securities as may from time to time be held for the Fund;
and
(c) deposit Book-Entry Securities belonging to the Fund in a Book-Entry
Account maintained for the Custodian by a Federal Reserve Bank.
So long as any deposit referred to in (b) or (c) above is maintained for
the Fund, the Custodian shall
(i) deposit the Securities in an account that includes only assets held
by it for customers;
(ii) send the Fund a confirmation (i.e., an advice of notice of
transaction) of any transfers of the Fund to or from the account;
(iii) with respect to Securities of the Fund transferred to the account,
identify as belonging to the Fund a quantity of securities in a fungible bulk of
securities that are registered in the name of the Custodian or its nominee, or
shown on the Custodian's account on the books of the Securities Depository, the
Book-Entry System, or the Custodian's agent;
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(iv) promptly send to the Fund all reports it receives from the
appropriate Federal Reserve Bank or Securities Depository on its respective
system of internal accounting control; and
(v) send to the Fund such reports of the systems of internal accounting
control of the Custodian and its agents through which such Securities are
deposited as are available and as the Fund may reasonably request from time to
time.
The Fund warrants that its Board of Trustees has approved the arrangement
for the deposit of Securities in a Securities Depository and Book-Entry System.
The Custodian shall not waive any rights it may have against a Securities
Depository or Federal Reserve Bank. The Fund may elect to be subrogated to the
rights of the Custodian against the Securities Depository or Federal Reserve
Bank or any other person with respect to any claim that the Custodian may have
as a consequence of any loss or damage suffered by the Fund as a result of the
Custodian's use of a Securities Depository or Book Entry Account if and to the
extent that the Fund has not been made whole for any such loss or damage.
SECTION 6. The Fund will initially transfer and deposit or cause to be
transferred and deposited with the Custodian all of the Securities and cash
owned by each Series of the Fund at the time this Agreement becomes effective.
Such transfer and deposit shall be evidenced by appropriate schedules duly
executed by the Fund. The Fund will deposit with the Custodian additional
Securities of the Fund and dividends or interest collected on such Securities as
the same are acquired from time to time.
The Fund will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
Shares sold, whether representing initial issue or any other securities and
(iii) cash as may be acquired.
SECTION 7. The Custodian is hereby authorized and directed to disburse
cash from time to time as follows:
(a) for the purchase of Securities by the Fund, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in SECTION 4, or notification by a Securities Depository
or a Federal Reserve Bank that the Securities have been credited to the
Custodian's account with the Securities Depository or Federal Reserve Bank;
(b) for transferring funds, including xxxx-to-the-market payments, as
directed by the Fund in connection with a repurchase agreement covering
Securities that have been received by the Custodian as provided in subsection
(a) above, upon receipt by the Custodian of Written or
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Oral Instructions specifying the Securities, the purchase price and the party to
whom the purchase price is to be paid;
(c) to advance or pay out accrued interest on bonds purchased, cash
dividends on stocks sold and similar items. In the event that any Securities
are registered in the name of the Fund or its nominee, the Fund will endorse, or
cause to be endorsed, to the Custodian dividend and interest checks, or will
issue appropriate orders to the issuers of the Securities to pay dividends and
interest to the Custodian;
(d) for transferring funds as directed by the Fund to its redemption paying
agent;
(e) for exercising warrants and rights received upon the Securities, upon
timely receipt of Written or Oral Instructions authorizing the exercise of such
warrants and rights and stating the consideration to be paid;
(f) for repaying, in whole or in part, any loan of the Fund, upon receipt
of Written or Oral Instructions directing payment;
(g) for transferring funds to any Sub-Custodian, upon receipt of Written or
Oral Instructions and upon agreement by the Custodian; and
(h) to disburse money to or upon the order of the Fund, as it may from time
to time direct for the following purposes;
(i) to pay proper compensation and expenses of the Custodian;
(ii) to transfer funds to the Fund's dividends disbursing agent;
(iii) to pay, or provide the Fund with money to pay, taxes, upon receipt of
appropriate Written or Oral Instructions;
(iv) to transfer funds to a separate checking account maintained by the
Fund pursuant to Section 17f of the Investment Company Act of 1940, as amended
from time to time; and
(v) to pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services. Before making any such payment or disbursement, however, the
Custodian shall receive, and may conclusively rely upon, Written or Oral
Instructions requesting such payment or disbursement and stating that it is for
one or more or the purposes enumerated above. Notwithstanding the foregoing,
the Custodian may disburse cash for other corporate purposes; provided, however,
that such disbursement may be made only upon receipt of Written or Oral
Instructions stating that such disbursement was authorized by resolution of the
Board of Trustees of the Fund as a proper corporate purpose.
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The determination of the Board of Trustees of the Fund as to what shall
constitute income derived from the Securities, as distinguished from principal
or capital, shall be final and conclusive upon the Fund, the Custodian and the
Shareholders.
SECTION 8. The Custodian is hereby authorized and directed to deliver
Securities of the Fund from time to time as follows:
(a) for completing sales of Securities sold by the Fund, upon receipt of
(i) Written or Oral Instructions specifying the Securities sold, the amount to
be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in SECTION 5(b) or (c) above; and provided further, that the Custodian
may advance the proceeds of sale to the Fund pending the completion of the sale
or the return to the Fund of the Securities in the event the sale fails to be
completed. Any such advance shall be at the Custodian's risk and the Custodian
shall be subrogated to the Fund's rights against any other person in the event
the sale is not completed and the Fund's Securities are not returned;
(b) for exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions;
(c) for exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, readjustment or otherwise, upon timely receipt of (i) Written or
Oral Instructions authorizing such exchange or conversion and stating the manner
in which such exchange or conversion is to be made and (ii) the Securities,
certificates of deposit, interim receipts, and/or cash to be received as
specified in the Written or Oral Instructions;
(d) for presenting for payment Securities that have matured or have been
called for redemption;
(e) for depositing with the lender Securities to be held as collateral for
a loan to the Fund, upon receipt of Written or Oral Instructions directing
delivery to the lender;
(f) in connection with a repurchase agreement, upon receipt of Written or
Oral Instructions stating (i) the Securities to be delivered and the payment to
be received and (ii) payment;
(g) for depositing with a depository agent in connection with a tender or
other similar offer to purchase portfolio Securities of the Fund, upon receipt
of Written or Oral Instructions;
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(h) for depositing Securities with the issuer thereof, or its agents, for
the purpose of transferring such Securities into the name of the Fund, the
Custodian or any nominee of either in accordance with SECTION 4; and
(i) for other proper corporate purposes; provided, that the Custodian shall
receive Written or Oral Instructions requesting such delivery.
SECTION 9. The Fund will cause any bank (including the Custodian) from
which it borrows money using Securities as collateral to deliver to the
Custodian a notice of undertaking in the form then currently employed by the
lender setting forth the amount that the lender will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian Written or Oral Instructions for each loan, stating (i) the name
of the lender and the amount of loan; and (ii) the name of the issuer, the title
and the number of shares or principal amount of the Securities to be delivered
as collateral. The Custodian shall deliver as directed by the Fund such
specified collateral, if any, and receive from the lender the total amount of
the loan proceeds; provided, however, that no delivery of Securities shall occur
if the amount of loan proceeds does not conform to the amount set forth in the
Written or Oral Instructions, or if such Instructions do not contain the
requirements of (ii) above.
The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Fund shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 10. If, in its sole discretion, the Custodian advances funds to
the Fund to pay for the purchase of Securities, to cover an overdraft of the
Fund's account with the Custodian, or to pay any other indebtedness to the
Custodian, the Fund's indebtedness shall be deemed to be a loan by the Custodian
to the Fund, payable on demand and bearing interest at the rate then charged by
the Custodian for such loans; provided, however, that the Custodian shall obtain
the Fund's prior approval for any advance of funds other than for the purpose of
settling a Securities trade. The Fund hereby agrees that the Custodian shall
have a continuing lien and security interest, to the extent of any such
overdraft or indebtedness, and to the extent required by Regulation U of the
Board of Governors of the Federal Reserve System in the event any security
interest is taken in "margin stock" as therein defined, in any property then
held by the Custodian or its agents for the benefit of the Fund, or in which the
Fund may have an interest. The Fund authorizes the Custodian, in its sole
discretion at any time, to charge any such overdraft or indebtedness, together
with interest due thereon, against any balance then credited to the Fund on the
Custodian's books.
SECTION 11. The Custodian's responsibilities regarding put and call option
contracts will be governed by the following subsections:
(a) With respect to puts and calls traded on securities exchanges:
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(1) The Custodian shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Fund regarding escrow
or other arrangements (i) in accordance with the provisions of any agreement
between the Custodian, any broker-dealer registered under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and a member of the National
Association of Securities Dealers, Inc. and, if necessary, the Fund relating to
compliance with the rules of the Options Clearing Corporation ("OCC") and of any
registered national securities exchange, or of any similar organization or
organizations, or (ii) alternatively, in accordance with subsection (d) as to
covered call options written by the Fund.
(2) The Custodian shall be under no duty or obligation to see that
the Fund has deposited or is maintaining adequate margin, if required, with any
broker in connection with any option, nor shall the Custodian be under any duty
or obligation to present such option to the broker for exercise unless it
receives proper Instructions from the Fund. The Custodian shall have no
responsibility for the legality of any put or call purchased or sold on behalf
of the Fund, the propriety of any such purchase or sale, or the adequacy of any
collateral delivered to a broker in connection with an option or deposited to or
withdrawn from a Segregated Account as described in subsection (c) of this
SECTION 11. The Custodian specifically, but not by way of limitation, shall not
be under any duty or obligation to: (i) periodically check or notify the Fund
that the amount of collateral held by a broker or held in a Segregated Account
as described in subsection (c) of this SECTION 11 is sufficient to protect the
broker against any loss; (ii) effect the return of any collateral delivered to a
broker; or (iii) advise the Fund that any option it holds has or is about to
expire. Such duties or obligations shall be the sole responsibility of the
Fund.
(b) With respect to puts, calls and futures traded on commodities
exchanges:
(1) The Custodian shall take action as to puts, calls and futures
contracts ("futures") purchased or sold by the Fund in accordance with the
provisions of any agreement among the Fund, the Custodian and a futures
commission merchant registered under the Commodity Exchange Act, as amended,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar organization or
organizations, regarding account deposits in connection with transactions by the
Fund.
(2) The responsibilities and liabilities of the Custodian as to
futures, puts and calls traded on commodities exchanges, any futures commission
merchant account and the Segregated Account shall be limited as set forth in
subsection (a) (2) of this SECTION 11 as if such subsection referred to futures
commission merchants rather than brokers, and futures and puts and calls thereon
instead of options.
(c) The Custodian shall upon receipt of Oral or Written Instructions
establish and maintain a Segregated Account or Accounts for and on behalf of the
Fund, into which Account or Accounts may be transferred cash and Securities (i)
in accordance with the provisions of any agreement among the Fund, the Custodian
and a broker-dealer registered under the Exchange Act and a member of the
National Association of Securities Dealers, Inc. or any futures commission
merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of
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OCC and 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 by the Fund, and (ii) for the purpose of
segregating cash or Securities in connection with options written by the Fund,
and (iii) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of Segregated Accounts by registered investment companies and (iv)
for other proper corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Written or Oral Instructions, a certified copy of a
resolution of the Board of Trustees of the Fund signed by an officer of the Fund
and certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such Segregated Account and declaring such purposes to be
proper corporate purposes.
(d) Upon receipt of Written or Oral Instructions, the Custodian will
execute, or cause a Sub-Custodian or depository to execute, an escrow receipt
relating to a call option written by the Fund and will deliver such escrow
receipt against receipt of payment of the premium therefor or, in the case of
call option contracts issued by OCC, an escrow deposit form of OCC pursuant to
the Escrow Deposit Agreement in effect from time to time between the Custodian
and OCC. The Instruction shall contain all information necessary for the
issuance of such receipt or deposit form and will authorize the deposit of the
securities specified therein into an escrow account which will be held by the
Custodian or a depository subject to the terms of such escrow receipt or deposit
form. However, the Custodian agrees that it will not deliver or cause a
depository to deliver any securities deposited in an escrow account pursuant to
an exercise notice unless the Custodian has received Oral or Written Instruction
to do so or (i) the Custodian has duly requested the issuance of such
Instruction; (ii) at least two business days have elapsed since the receipt of
such request to the Fund; and (iii) the Fund has not advised the Custodian that
it has purchased Securities that are to be delivered pursuant to the exercise
notice. The Fund shall be subrogated to the rights of the Custodian against any
party for any claim the Custodian may have as a result of the Custodian's
delivery or directing delivery of Securities deposited in an escrow account
other than pursuant to an Instruction by the Fund. The Fund agrees that it will
not issue an Instruction which shall conflict with the terms of any escrow
receipt executed by the Custodian or any depository in relation to the Fund
which is then in effect. The Custodian need not maintain any written evidence
of any call written by the Fund as part of its duties under this Agreement. The
Fund may write calls on securities ("underlying securities") which are not owned
by the Fund and may issue an Instruction to the Custodian to execute, or cause a
depository to execute, an escrow receipt or deposit form on securities
("convertible securities") which are, or are to be, owned by the Fund and are
convertible into the underlying securities. In such event, any Instruction as
to the execution of the escrow receipt or deposit form will relate only to such
convertible securities but any instruction as to the delivery of such securities
may direct the Custodian to convert the same.
SECTION 12. The Custodian assumes no duty, obligation or responsibility
whatsoever to exercise any voting or consent powers with respect to the
Securities held by it from time to time hereunder. The Fund or such person or
persons as it may designate shall have the right to
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vote, consent or otherwise act with respect to such Securities. The Custodian
will exercise its best efforts (as defined in SECTION 14) to furnish to the Fund
in a timely manner all proxies or other appropriate authorizations with respect
to Securities registered in the name of the Custodian or its nominee, so that
the Fund or its designee may vote, consent or otherwise act.
SECTION 13. The Fund agrees to pay to the Custodian compensation for its
services as set forth in Schedule A hereto attached, or as shall be set forth in
written amendments to such Schedule approved by the Fund and the Custodian from
time to time.
SECTION 14. The Custodian will exercise its best efforts to forward to the
Fund in a timely manner all notices of stockholder meetings, proxy statements,
annual reports, conversion notices, call notices, or other notices or written
materials of any kind (excluding stock certificates and dividend and interest
payments) received by the Custodian as registered owner of Securities ("notices
and materials"). The Fund and its investment adviser have primary
responsibility for taking action on such notices and materials. Best efforts as
used in this Agreement shall mean the efforts reasonably believed in good faith
by the Custodian to be adequate in the circumstances.
Upon receipt of warrants or rights issued in connection with the assets of
the Fund, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Fund of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
SECTION 15. The Custodian assumes no duty, obligation or responsibility
whatsoever with respect to Securities not deposited with the Custodian.
SECTION 16. The Custodian acknowledges and agrees that all books and
records maintained for the Fund in any capacity under this Agreement are the
property of the Fund and may be inspected by the Fund or any authorized
regulatory agency at any reasonable time. Upon request all such books and
records will be surrendered promptly to the Fund. The Custodian agrees to make
available upon request and to preserve for the periods prescribed in Rule 31a-2
of the Investment Company Act of 1940 any records related to services provided
under this Agreement and required to be maintained by Rule 31a-1 of such Act.
SECTION 17. The Custodian assumes only the duties and obligations
specifically set forth herein, and duties incidental thereto normally performed
by custodians of mutual funds. It specifically assumes no responsibility for
the management, investment or reinvestment of the Securities from time to time
owned by the Fund, whether or not on deposit hereunder. The responsibility for
the proper and timely management, investment and reinvestment of such Securities
shall be that of the Fund and its investment advisor.
The Custodian shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed upon the Securities held by
it hereunder, or upon the income
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therefrom. Upon Written or Oral Instructions, the Custodian may pay any such
tax, assessment or charge and reimburse itself out of the monies of the Fund or
the Securities held hereunder.
The Custodian may rely upon the advice of counsel, who may be counsel for
the Fund or for the Custodian, and upon statements of accountants, brokers or
other persons believed by it in good faith to be expert in the matters upon
which they are consulted. The Custodian shall not be liable for any action
taken in good faith reliance upon such advice or statements. The Custodian
shall not be liable for action taken in good faith in accordance with any
Written or Oral Instructions, request or advice of the Fund or its officers, or
information furnished by the Fund or its officers. The Custodian shall not be
liable for any non-negligent action taken in good faith and reasonably believed
by it to be within the powers conferred upon it by this Agreement.
No liability of any kind, other than to the Fund, shall attach to the
Custodian by reason of its custody of the Securities and cash of the Fund under
this Agreement or otherwise as a result of its custodianship. In the event that
any claim shall be made against the Custodian, it shall have the right to pay
the claim and reimburse itself from the assets of the Fund in its hands;
provided, however, that no such reimbursement shall occur unless the Fund is
notified of the claim and is afforded an opportunity to defend the claim, if it
so elects. Except as otherwise provided herein, the Fund shall further agree to
indemnify and hold the Custodian harmless for any loss, claim, damage, expense
or liability arising out of the custodian relationship under this Agreement;
provided such loss, claim, damage, expense or liability is not the direct result
of the Custodian's negligence or willful misconduct.
SECTION 18. Upon receipt of Written or Oral Instructions to appoint a Sub-
Custodian, which shall be deemed a Fund approval of the appointment, the
Custodian shall appoint one or more banking institutions licensed and examined
by the United States or any state thereof as Sub-Custodian of Securities and
cash of the Fund from time to time; provided, however, that the Custodian shall
have requested appointment of a Sub-Custodian.
The Custodian shall have no liability to the Fund or any other person by
reason of any act or omission of any Sub-Custodian, and the Fund shall indemnify
the Custodian and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising directly of indirectly out of or in connection with the
performance of any Sub-Custodian; provided, however, that the Custodian shall,
and hereby does, assign to the Fund any and all claims for any losses, costs,
expenses, or damages that may be incurred by the Fund by reason of the
negligence, gross negligence or misconduct of any Sub-Custodian, or by reason of
the failure of a Sub-Custodian to perform in accordance with any applicable
agreement, including instructions of the Custodian of the Fund. The Custodian
shall be under no obligation to prosecute or to defend any action, suit or claim
arising out of, or in connection with, the performance of any Sub-Custodian, if,
in the opinion of the Custodian's counsel, such action will involve the
Custodian in expense or liability. The Fund shall, upon request, furnish the
Custodian with satisfactory indemnity against such expense or liability, and
upon request of the
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Custodian, the Fund shall assume the entire defense of any action, suit, or
claim subject to the foregoing indemnity.
The Fund shall pay all fees and expenses of any Sub-Custodian.
SECTION 19. This Agreement may be amended from time to time without notice
to or approval of the Shareholders by a written supplemental agreement executed
by the Fund and the Custodian.
SECTION 20. This Agreement may be terminated by either party upon notice
to the other. The termination shall become effective at the time specified in
the notice but no earlier than sixty (60) days after the date of the notice.
Upon notice of termination, the Fund shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within sixty
(60) days after the date of the notice of termination, the Board of Trustees
of the Fund shall, by resolution, designate the Fund as its own custodian.
Each successor custodian shall be a person qualified to serve under the
Investment Company Act of 1940, as amended from time to time. Promptly
following receipt of written notice from the Fund of the appointment of a
successor custodian and receipt of Written or Oral Instructions, the Custodian
shall deliver upon payment of the Custodian's reasonable charges and
disbursements and any other amounts due all Securities and cash it then holds
directly to the successor custodian and shall, upon request of the Fund and the
successor custodian, execute and deliver to the successor custodian an
instrument approved by its counsel transferring to the successor custodian all
the rights, duties and obligations of the Custodian, transfer to the successor
custodian the originals or copies of all books and records maintained by the
Custodian hereunder and cooperate with, and provide reasonable assistance to,
the successor custodian in the establishment of the books and records necessary
to carry out its responsibilities hereunder. If the Fund's Board of Trustees
fails to designate a successor custodian or to designate the Fund as its own
custodian within sixty (60) days after the date of the notice of termination,
the Custodian may, at the expense of the Fund, apply to the Federal District
Court for the Commonwealth of Massachusetts for further direction as to the
disposition of the Fund's assets. Notwithstanding the termination of this
Agreement, the Custodian shall be obligated to safeguard the assets of the Fund
and may change reasonable and customary fees for doing so pending receipt by the
court or the Fund of instructions for delivery of all securities and cash held,
but the Custodian shall have no obligation to process any other transactions or
perform any other custodial functions following termination of this Agreement.
Upon delivery of the Securities and other assets of the Fund and compliance with
the other requirements of this SECTION 20, the Custodian shall have no further
duty or liability hereunder. Every successor custodian appointed hereunder
shall execute and deliver an appropriate written acceptance of its appointment
and shall thereupon become vested with the rights, powers, obligations and
custody of the predecessor custodian.
SECTION 21. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday, weekend or weekday on which the Custodian or the New York
Stock Exchange is closed or permitted by law to be closed. Functions or duties
normally scheduled to be performed on such days shall be
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performed on, and as of, the next business day on which both the New York Stock
Exchange and the Custodian are open, unless otherwise required by law.
SECTION 22. Unless otherwise agreed upon by the parties, this Agreement
shall become effective as of the date set forth on the first page hereof.
SECTION 23. This Agreement may be executed in more than one counterpart,
each of which shall be deemed to be an original, and all of which together shall
constitute one and the same instrument.
SECTION 24. This Agreement shall extend to and bind the parties hereto and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of the Fund's Board of Trustees.
Notwithstanding the foregoing, either party may assign this Agreement without
the consent of the other party so long as the assignee is an affiliate, parent
or subsidiary of the assigning party and the assignee of the Custodian is
qualified to serve as custodian under the Investment Company Act of 1940, as
amended from time to time.
SECTION 25. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
WITNESS the following signatures:
FORUM FUNDS
BY: /s/ Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
TITLE: President
-----------------------
FIRST NATIONAL BANK OF BOSTON
BY: /s/ Xxxxxx Xxxxxxxxxxx
--------------------------
Xxxxxx Xxxxxxxxxxx
TITLE:
-----------------------
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SCHEDULE A
BASE FEE $2,000 per annum for each investment adviser to the Fund.
$ 300 per annum for each additional Series after the first Series.
ADMINISTRATIVE FEE - An annual rate of .02% of the average daily value of the
assets of each Series.
TRANSACTION FEES - $15.00 per asset transaction for any asset investment such as
a purchase, sale or corporate action activity.
MINIMUM FEE - $4,000 per annum against the overall custodial relationship.
