CUSTODIAN AGREEMENT
Exhibit
g
THIS
AGREEMENT,
dated as of March 5, 2007, among
AMERISTOCK ETF TRUST,
a Delaware statutory trust duly registered with the U.S. Securities and Exchange
Commission under the 1940 Act (the Trust)
on
behalf of a number of separate investment portfolios listed on Schedule A hereto
(each a Fund
and collectively, the Funds),
AMERISTOCK
CORPORATION,
a California corporation duly registered with the Securities and Exchange
Commission under the Investment Advisers Act of 1940 (the Adviser),
and XXXXX
BROTHERS XXXXXXXX & CO.,
a limited partnership formed under the laws of the State of New York
(BBH&Co.
or the Custodian),
WHEREAS,
under an Investment Advisory Agreement between the Trust and Adviser, the
Adviser serves as the investment adviser of each Fund, and has agreed to pay
most operating expenses of the Funds, including custodial expenses;
and
WHEREAS,
the Trust and Adviser wish to employ BBH&Co. to act as custodian for the
Funds’ Investments and to provide related services, all as provided herein, and
BBH&Co. is willing to accept such employment, subject to the terms and
conditions herein set forth;
NOW,
THEREFORE,
in consideration of the mutual covenants and agreements herein contained, Trust
on behalf of each Fund, the Adviser and BBH&Co. hereby agree, as
follows:
1. Appointment
of Custodian.
The Trust and Adviser hereby appoint BBH&Co. as the Funds’ custodian for
their Investments, and BBH&Co. hereby accepts such appointment. All
Investments of a Fund delivered to the Custodian or its agents or Subcustodians
shall be dealt with as provided in this Agreement. The duties of the Custodian
with respect to a Fund's Investments shall be only as set forth expressly in
this Agreement, which duties are generally comprised of safekeeping and various
administrative duties that will be performed in accordance with Instructions
and
as reasonably required to effect Instructions.
2. Representations,
Warranties and Covenants of the Trust and Adviser.
The Trust and Adviser hereby represent, warrant and covenant each of the
following:
2.1 This
Agreement has been, and at the time of delivery of each Instruction such
Instruction will have been, duly authorized, executed and delivered by the
Trust
and/or Adviser, or the duly appointed agent of either. This Agreement does
not
violate any Applicable Law applicable to the Trust of Adviser or conflict with
or constitute a default under the Trust’s Agreement and Declaration of Trust,
any Fund’s prospectus or other organic document, agreement, judgment, order or
decree to which the Trust or a Fund is a party or by which it or their
Investments are bound.
2.2 By
providing an Instruction with respect to the first acquisition of an Investment
in a jurisdiction other than the United States of America, the Trust shall
be
deemed to have confirmed to the Custodian that it has (a) made all
determinations required to be made under Applicable Law, and (b) appropriately
and adequately disclosed to shareholders in the Funds and all persons who have
rights in or to such Investments, all material investment risks, including
those
relating to the custody and settlement infrastructure or the servicing of
securities in such jurisdiction.
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2.3 The
Trust shall safeguard and shall solely be responsible for the safekeeping of
any
testkeys, identification codes, passwords, other security devices or statements
of account with which the Custodian provides it. In furtherance and not
limitation of the foregoing, in the event the Trust or the Adviser utilizes
any
on-line service offered by the Custodian, the Trust, the Adviser and the
Custodian shall be fully responsible for the security of each party’s respective
connecting terminal, access thereto and the proper and authorized use thereof
and the initiation and application of continuing effective safeguards in respect
thereof. Additionally, if the Trust uses any on-line or similar communications
service made available by the Custodian, the Trust shall be solely responsible
for ensuring the security of its access to the service and for the use of the
service, and shall only attempt to access the service and the Custodian’s
computer systems as directed by the Custodian. If the Custodian provides any
computer software to the Trust relating to the services described in this
Agreement, the Trust and the Adviser will only use the software for the purposes
for which the Custodian provided the software to the Trust and will abide by
the
license agreement accompanying the software and any other security policies
which the Custodian provides to the Trust.
3. Representation
and Warranty of BBH&Co.
BBH&Co. hereby represents and warrants that this Agreement has been duly
authorized, executed and delivered by BBH&Co. and does not and will not
violate any Applicable Law applicable to BBH&Co. or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party
or by which it is bound.
4. Instructions.
Unless otherwise explicitly indicated herein, the Custodian shall perform its
duties pursuant to Instructions. As used herein, the term Instruction
shall mean a directive initiated by the Board of Trustees, acting directly
or
through or other Authorized Persons, which directive shall conform to the
requirements of this Section 4.
4.1 Authorized
Persons.
For purposes hereof, an Authorized
Person
shall be a person or entity authorized to give Instructions for or on behalf
of
the Trust or a Fund by written notices to the Custodian or otherwise in
accordance with procedures delivered to and acknowledged by the Custodian.
The
Custodian may treat any Authorized Person as having full authority of the Trust
to issue Instructions hereunder unless the notice of authorization contains
explicit limitations as to said authority. The Custodian shall be entitled
to
rely upon the authority of Authorized Persons until it receives appropriate
written notice from the Trust to the contrary.
The
Trust hereby designates the Distributor (as such term is defined under an
Authorized Purchaser Agreement entered into by the Trust on behalf of the Funds,
as approved by the Custodian (the Authorized
Purchaser Agreement))
as an Authorized Person from whom the Custodian is hereby authorized to receive
Instructions to accept deposits of cash and securities in connection with the
purchase of shares of the Funds and the distribution of cash and securities
in
connection with the redemption of shares of the Funds. The specific securities
to be received in connection with a purchase of shares or to be distributed
in
connection with a redemption of shares shall be the securities specified by
the
Trust or Adviser in the applicable day’s list of deposit securities or list of
redemption securities, as the case may be, unless specific Instructions to
the
contrary are given to the Custodian.
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4.2 Form
of Instruction.
Each Instruction shall be transmitted by such secured or authenticated
electro-mechanical means as the Custodian shall make available to the Trust
or
Authorized Persons from time to time unless the Trust shall elect to transmit
such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of this
Section.
4.2.1
Board
of Trustees Designated Secured-Transmission Method. Instructions
may be transmitted through a secured or tested electro-mechanical means
identified by the Trust or by an Authorized Person entitled to give Instruction
and acknowledged and accepted by the Custodian; it being understood that such
acknowledgment shall authorize the Custodian to receive and process such means
of delivery but shall not represent a judgment by the Custodian as to the
reasonableness or security of the method determined by the Authorized
Person.
4.2.2
Written
Instructions.
Instructions may be transmitted in a writing that bears the manual signature
of
Authorized Persons.
4.2.3
Other
Forms of Instruction.
Instructions may also be transmitted by another means determined by the Trust
or
Authorized Persons and acknowledged and accepted by the Custodian (subject
to
the same limits as to acknowledgements as is contained in Subsection 4.2.1,
above) including Instructions given orally or by SWIFT, telex or telefax
(whether tested or untested).
When
an Instruction is given by means established under Subsections 4.2.1 through
4.2.3, it shall be the responsibility of the Custodian to use reasonable care
to
adhere to any security or other procedures established in writing between the
Custodian and the Authorized Person with respect to such means of Instruction,
but such Authorized Person shall be solely responsible for determining that
the
particular means chosen is reasonable under the circumstances. Oral Instructions
shall be binding upon the Custodian only if and when the Custodian takes action
with respect thereto. With respect to telefax instructions, the parties agree
and acknowledge that receipt of legible instructions cannot be assured, that
the
Custodian cannot verify that authorized signatures on telefax instructions
are
original or properly affixed, and that the Custodian shall not be liable for
losses or expenses incurred through actions taken in reliance on inaccurately
stated, illegible or unauthorized telefax instructions. The provisions of
Section 4A of the Uniform Commercial Code as
currently in effect in the State of New York
shall apply to the funds transfers performed in accordance with Instructions.
The Funds Transfer Services Schedule and the Electronic and Online Services
Schedule to this Agreement shall each comprise a designation of form of a means
of delivering Instructions for purposes of this Section 4.2.
4.3 Completeness
and Contents of Instructions.
The Authorized Person shall be responsible for assuring the adequacy and
accuracy of Instructions. Particularly, upon any acquisition or disposition
or
other dealing in a Fund's Investments and upon any delivery and transfer of
any
Investment or moneys, the person initiating such Instruction shall give the
Custodian an Instruction with appropriate detail, including, without
limitation:
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4.3.1
The transaction date and the date and location of settlement;
4.3.2
The specification of the type of transaction;
4.3.3
A description of the Investments or moneys in question, including, as
appropriate, quantity, price per unit, amount of money to be received or
delivered and currency information. Where an Instruction is communicated by
electronic means, or otherwise where an Instruction contains an identifying
number such as a CUSIP, SEDOL or ISIN number, the Custodian shall be entitled
to
rely on such number as controlling notwithstanding any inconsistency contained
in such Instruction, particularly with respect to Investment description;
and
4.3.4
The name of the broker or similar entity concerned with execution of the
transaction.
If
the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian shall give prompt notice of such determination to
the
Authorized Person and the Authorized Person shall thereupon amend or otherwise
reform such Instruction. In such event, the Custodian shall have no obligation
to take any action in response to the Instruction initially delivered until
the
redelivery of an amended or reformed Instruction.
4.4 Timeliness
of Instructions.
In giving an Instruction, the Trust shall take into consideration delays which
may occur due to the involvement of a Subcustodian or agent, differences in
time
zones, and other factors particular to a given market, exchange or issuer.
When
the Custodian has established specific timing requirements or deadlines with
respect to particular classes of Instruction, or when an Instruction is received
by the Custodian at such a time that it could not reasonably be expected to
have
acted on such instruction due to time zone differences or other factors beyond
its reasonable control, the execution of any Instruction received by the
Custodian after such deadline or at such time (including any modification or
revocation of a previous Instruction) shall be at the risk of the
Trust.
5. Safekeeping
of Fund Assets. The
Custodian shall hold Investments delivered to it or Subcustodians for a Fund
in
accordance with the provisions of this Section. The Custodian shall not be
responsible for (a) the safekeeping of Investments not delivered or that are
not
caused to be issued to it or its Subcustodians; or (b) pre-existing faults
or
defects in Investments that are delivered to the Custodian, or its
Subcustodians. The Custodian is hereby authorized to hold with itself or a
Subcustodian, and to record in one or more accounts, all Investments delivered
to and accepted by the Custodian, any Subcustodian or their respective agents
pursuant to an Instruction or in consequence of any corporate action. The
Custodian shall hold Investments for the account of each Fund and shall
segregate Investments from assets belonging to the Custodian and shall cause
its
Subcustodians to segregate Investments from assets belonging to the Subcustodian
in an account held for that Fund or in an account maintained by the Subcustodian
generally for non-proprietary assets of the Custodian.
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5.1 Use
of Securities Depositories. The
Custodian may deposit and maintain Investments in any Securities Depository,
either directly or through one or more Subcustodians appointed by the Custodian.
Investments held in a Securities Depository shall be held (a) subject to the
agreement, rules, statement of terms and conditions or other document or
conditions effective between the Securities Depository and the Custodian or
the
Subcustodian, as the case may be, and (b) in an account for a Fund or in bulk
segregation in an account maintained for the non-proprietary assets of the
entity holding such Investments in the Depository. If market practice or the
rules and regulations of the Securities Depository prevent the Custodian, the
Subcustodian (or any agent of either) from holding its client assets in such
a
separate account, the Custodian, the Subcustodian or other agent shall as
appropriate segregate such Investments for benefit of the appropriate Fund
or
for the benefit of clients of the Custodian generally on its own
books.
5.2 Certificated
Assets.
Investments which are certificated may be held in registered or bearer form:
(a)
in the Custodian's vault; (b) in the vault of a Subcustodian or agent of the
Custodian or a Subcustodian; or (c) in an account maintained by the Custodian,
Subcustodian or agent at a Securities Depository; all in accordance with
customary market practice in the jurisdiction in which any Investments are
held.
5.3 Registered
Assets.
Investments
which are registered may be registered in the name of the Custodian, a
Subcustodian, or in the name of a Fund or a nominee for any of the foregoing,
and may be held in any manner set forth in paragraph 5.2 above with or without
any identification of fiduciary capacity in such registration.
5.4 Book
Entry Assets.
Investments which are represented by book-entry may be so held in an account
maintained by the Book-entry Agent on behalf of the Custodian, a Subcustodian
or
another agent of the Custodian, or a Securities Depository.
5.5 Replacement
of Lost Investments.
In the event of a loss of Investments for which the Custodian is responsible
under the terms of this Agreement, the Custodian shall replace such Investment,
or in the event that such replacement cannot be effected, the Custodian shall
pay to the Fund the fair market value of such Investment based on the last
available price as of the close of business in the relevant market on the date
that a claim was first made to the Custodian with respect to such loss, or,
if
less, such other amount as shall be agreed by the parties as the date for
settlement.
6. Administrative
Duties of the Custodian. The
Custodian shall perform the following administrative duties with respect to
Investments of each Fund.
6.1 Purchase
of Investments. Pursuant
to Instruction, Investments purchased for the account of any Fund shall be
paid
for (a) against delivery thereof to the Custodian or a Subcustodian, as the
case
may be, either directly or through a Clearing Corporation or a Securities
Depository (in accordance with the rules of such Securities Depository or such
Clearing Corporation), or (b) otherwise in accordance with an Instruction,
Applicable Law, generally accepted trade practices, or the terms of the
instrument representing such Investment.
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6.2 Sale
of Investments.
Pursuant to Instruction, Investments sold for the account of any Fund shall
be
delivered (a) against payment therefor in cash or by bank wire transfer, (b)
by
credit to the account of the Custodian or the applicable Subcustodian, as the
case may be, with a Clearing Corporation or a Securities Depository (in
accordance with the rules of such Securities Depository or such Clearing
Corporation), or (c) otherwise in accordance with an Instruction, Applicable
Law, generally accepted trade practices, or the terms of the instrument
representing such Investment.
6.3 Delivery
and Receipt in Connection with Borrowings of the Fund or other Collateral and
Margin Requirements.
Pursuant to Instruction, the Custodian may deliver or receive Investments or
cash of a Fund in connection with borrowings or loans by the Fund and other
collateral and margin requirements.
6.4 Futures
and Over-the-Counter (OTC) Contracts.
If,
pursuant to an Instruction, the Custodian shall become a party to an agreement
with the Trust on behalf of a Fund or any Fund and a futures commission merchant
regarding margin or a counterparty to an OTC contract (Tri-Party
Agreement),
the
Custodian shall (a) receive and retain, to the extent the same is provided
to
the Custodian, confirmations or other documents evidencing the purchase or
sale
by the Fund of exchange-traded futures contracts or the entering into of an
option, forward or other derivatives transaction by the Fund, (b) when required
by such Tri-Party Agreement, deposit and maintain in an account opened pursuant
to such Agreement (Margin
Account)
segregated either physically or by book-entry in a Securities Depository for
the
benefit of any futures commission merchant, such Investments as the Fund shall
have designated as initial, maintenance or variation "margin" deposits or other
collateral intended to secure the Fund's performance of its obligations under
the terms of any exchange-traded futures contracts and commodity options; and
(c) thereafter pay, release or transfer Investments into or out of the Margin
Account in accordance with the provisions of such Agreement. Alternatively,
the
Custodian may deliver Investments, in accordance with an Instruction, to a
futures commission merchant for margin purposes or to the counterparty or its
custodian. The Custodian shall in no event be responsible for the acts and
omissions of any futures commission merchant or the counterparty or its
custodian, to whom Investments are delivered pursuant to this Section; for
the
sufficiency of Investments held in any Margin Account; for funding margin
deposits or otherwise providing Advances for the purpose of margin or other
collateral in any Margin Account; or for the performance of any terms of any
exchange-traded futures contracts, commodity options, forward contracts and
other derivative transactions.
6.5 Contractual
Obligations and Similar Investments.
From time to time, a Fund's Investments may include Investments that are not
ownership interests as may be represented by certificate (whether registered
or
bearer), by entry in a Securities Depository or by book entry agent, registrar
or similar agent for recording ownership interests in the relevant Investment.
If a Fund shall at any time acquire such Investments, including without
limitation deposit obligations, loan participations, repurchase agreements
and
derivative arrangements, the Custodian shall (a) receive and retain, to the
extent the same are provided to the Custodian, confirmations or other documents
evidencing the arrangement; and (b) perform on the Fund's account in accordance
with the terms of the applicable arrangement, but only to the extent directed
to
do so by Instruction. The Custodian shall have no responsibility for agreements
running to the Fund as to which it is not a party other than to retain, to
the
extent the same are provided to the Custodian, documents or copies of documents
evidencing the arrangement and, in accordance with Instruction, to include
such
arrangements in reports made to the Fund.
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6.6 Exchange
of Securities.
Unless otherwise directed by Instruction, the Custodian shall: (a) exchange
securities held for the account of a Fund for other securities in connection
with any reorganization, recapitalization, conversion, split-up, change of
par
value of shares or similar event, and (b) deposit any such securities in
accordance with the terms of any reorganization or protective plan.
6.7 Surrender
of Securities.
Unless otherwise directed by Instruction, the Custodian may surrender
securities: (a) in temporary form for definitive securities; (b) for transfer
into the name of an entity allowable under Section 5.3; and (c) for a different
number of certificates or instruments representing the same number of shares
or
the same principal amount of indebtedness.
6.8 Rights,
Warrants, Etc.
Pursuant to Instruction, the Custodian shall (a) deliver warrants, puts, calls,
rights or similar securities to the issuer or trustee thereof, or to any agent
of such issuer or trustee, for purposes of exercising such rights or selling
such securities, and (b) deposit securities in response to any invitation for
the tender thereof.
6.9 Mandatory
Corporate Actions.
Unless otherwise directed by Instruction, the Custodian shall: (a) comply with
the terms of all mandatory or compulsory exchanges, calls, tenders, redemptions
or similar rights of securities ownership affecting securities held on a Fund’s
account and promptly notify the Trust of such action, and (b) collect all stock
dividends, rights and other items of like nature with respect to such
securities.
6.10 Income
Collection.
Unless otherwise directed by Instruction, the Custodian shall collect any amount
due and payable to the Fund with respect to Investments and promptly credit
the
amount collected to a Principal or Agency Account; provided, however, that
the
Custodian shall not be responsible for taking legal action to collect amounts
due and payable with respect to Investments that are in default. The Custodian
is hereby authorized to endorse and deliver any instrument required to be so
endorsed and delivered to effect collection of any amount due and payable to
the
Fund with respect to Investments.
6.11 Ownership
Certificates and Disclosure of the Fund's Interest.
The
Custodian is hereby authorized to execute on behalf of each Fund ownership
certificates, affidavits or other disclosure required under Applicable Law
or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
With
respect to securities issued in the United States of America, the Custodian
[ X
] may [ ] may not release the identity of a Fund to an issuer
which requests such information pursuant to the Shareholder Communications
Act
of 1985 for the specific purpose of direct communications between such issuer
and the Fund. IF NO BOX IS CHECKED, THE CUSTODIAN SHALL
RELEASE
SUCH
INFORMATION UNTIL IT RECEIVES CONTRARY INSTRUCTIONS FROM THE FUND. A Fund may
by
Instruction change any election made under this paragraph. With respect to
securities issued outside of the United States of America, information shall
be
released in accordance with law or custom of the particular country in which
such security is located.
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6.12 Proxy
Materials. The
Custodian shall promptly deliver, or cause to be delivered, to the Trustees
proxy forms, notices of meeting, and any other notices or announcements
materially affecting or relating to Investments received by the Custodian or
any
nominee.
6.13 Taxes.
The
Custodian shall, where applicable, assist the Trust in the reclamation of taxes
withheld on dividends and interest payments received by a Fund. In the
performance of its duties with respect to tax withholding and reclamation,
the
Custodian shall be entitled to rely on the advice of counsel and upon
information and advice regarding a Fund’s tax status that is received from or on
behalf of the Fund without duty of separate inquiry.
6.14 Other
Dealings.
The Custodian shall otherwise act as directed by Instruction, including without
limitation effecting the free payments of moneys or the free delivery of
securities, provided that such Instruction shall indicate the purpose of such
payment or delivery and that the Custodian shall record the party to whom such
payment or delivery is made.
The
Custodian shall attend to all nondiscretionary details in connection with the
sale or purchase or other administration of Investments, except as otherwise
directed by an Instruction, and may make payments to itself or others for minor
expenses of administering Investments under this Agreement; provided that the
Trust shall have the right to request an accounting with respect to such
expenses.
In
fulfilling the duties set forth in Sections 6.6 through 6.10 above, the
Custodian shall promptly provide to the Trust all material information
pertaining to a corporate action which the Custodian actually receives; provided
that the Custodian shall not be responsible for the completeness or accuracy
of
such information. Information relative to any pending corporate action made
available to the Trust or Authorized Person via any of the services described
in
the Electronic and Online Services Schedule shall constitute the delivery of
such information by the Custodian hereunder. Any advance credit of cash or
shares expected to be received as a result of any corporate action shall be
subject to actual collection and may, when the Custodian deems collection
unlikely, be reversed by the Custodian.
The
Custodian may at any time or times in its discretion appoint (and may at any
time remove) agents (other than Subcustodians) to carry out some or all of
the
administrative provisions of this Agreement (Agents),
provided, however, that the appointment of such agent shall not relieve the
Custodian of its administrative obligations under this Agreement.
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7. Cash
Accounts, Deposits and Money Movements. Subject
to the terms and conditions set forth in this Section 7, the Trust hereby
authorizes the Custodian to open and maintain, with itself or with
Subcustodians, cash accounts in United States Dollars.
7.1 Types
of Cash Accounts.
Cash accounts opened on the books of the Custodian (Principal
Accounts)
shall be opened in the name of each Fund. Such accounts collectively shall
be a
deposit obligation of the Custodian and shall be subject to the terms of this
Section 7 and the general liability provisions contained in Section 9. Cash
accounts opened on the books of a Subcustodian may be opened in the name of
a
Fund or the Custodian or in the name of the Custodian for its customers
generally (Agency
Accounts).
Such deposits shall be obligations of the Subcustodian and shall be treated
as
an Investment of the Fund. Accordingly, the Custodian shall be responsible
for
exercising reasonable care in the administration of such accounts but shall
not
be liable for their repayment in the event such Subcustodian, by reason of
its
bankruptcy, insolvency or otherwise, fails to make repayment.
7.1.1 Administrative
Accounts. In
connection with the services provided hereunder, the Custodian is hereby
directed to open cash accounts on
its books and records from time to time for the purposes of receiving
subscriptions and/or processing redemptions on behalf of the Funds, and/or
for
the purposes of aggregating, netting and/or clearing transactions (including,
without limitation repurchase agreements, capital stock activity, expense
payment) or other administrative purposes (each an "Account"). Each such Account
shall be subject to the terms and conditions of this Agreement and each Fund
shall be liable for the satisfaction of its own obligations in connection with
each Account.
7.2 Payments
and Credits with Respect to the Cash Accounts.
The Custodian shall make payments from or deposits to any of said accounts
in
the course of carrying out its administrative duties, including but not limited
to income collection with respect to the Fund's Investments, and otherwise
in
accordance with Instructions. The Custodian and its Subcustodians shall be
required to credit amounts to the cash accounts only when moneys are actually
received in cleared funds in accordance with banking practice in the country
and
currency of deposit. Any credit made to any Principal or Agency Account before
actual receipt of cleared funds shall be provisional and may be reversed by
the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
7.3 Delays.
If no event of Force Majeure shall have occurred and be continuing and in the
event that a delay shall have been caused by the negligence or willful
misconduct of the Custodian in carrying out an Instruction to credit or transfer
cash, the Custodian shall be liable to each Fund: (a) with respect to Principal
Accounts, for interest to be calculated at the rate customarily paid on such
deposit and currency by the Custodian on overnight deposits at the time the
delay occurs for the period from the day when the transfer should have been
effected until the day it is in fact effected; and, (b) with respect to Agency
Accounts, for interest to be calculated at the rate customarily paid on such
deposit and currency by the Subcustodian on overnight deposits at the time
the
delay occurs for the period from the day when the transfer should have been
effected until the day it is in fact effected. The Custodian shall not be liable
for delays in carrying out such Instructions to transfer cash which are not
due
to the Custodian's own negligence or willful misconduct.
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7.4 Advances.
If, for any reason in connection with this Agreement the Custodian or any
Subcustodian makes an Advance to facilitate settlement or otherwise for the
benefit of a Fund (whether or not any Principal or Agency Account shall be
overdrawn either during, or at the end of, any Business Day (defined as any
day
other than a day on which the American Stock Exchange, the New York Stock
Exchange or the U.S. Government securities markets are closed for regular
trading)), the Trust hereby does:
7.4.1
acknowledge that the Fund shall have no right, title or interest in or to any
Investments purchased with such Advance or proceeds of such Investments, and
that any credit to an account of Fund shall be provisional, until: (a) the
debit
of the Principal or Agency Account by Custodian for an amount equal to Advance
Costs; and/or (b) if such debit produces an overdraft in such account,
reimbursement to the Custodian or Subcustodian for the amount of such
overdraft;
7.4.2
acknowledge that the Custodian has an automatically perfected statutory security
interest in Investments purchased with any such Advance pursuant to
Section 9-206 of the Uniform Commercial Code as in effect in the State of
New York from time to time;
7.4.3
in
addition, in order to secure the obligations of the Fund to pay or perform
any
and all obligations of the Fund pursuant to this Agreement, including without
limitation to repay any Advance made pursuant to this Agreement, grant to the
Custodian a security interest in all Investments and proceeds thereof (as
defined in the Uniform Commercial Code as currently in effect in the State
of
New York); and agree to take, and agree that the Custodian may take, in respect
of the security interest referenced above, any further actions that the
Custodian may reasonably require.
7.5 Custodian’s
Rights Neither
the Custodian nor any Subcustodian shall be obligated to make any Advance or
to
allow an Advance to occur to a Fund, and in the event that the Custodian or
any
Subcustodian does make or allow an Advance, any such Advance and any transaction
giving rise to such Advance shall be for the account and risk of the Fund and
shall not be deemed to be a transaction undertaken by the Custodian for its
own
account and risk. If such Advance shall have been made or allowed by a
Subcustodian or any other person, the Custodian may assign all or part of its
security interest referenced above and any other rights granted to the Custodian
hereunder to such Subcustodian or other person. If the Fund shall fail to repay
the Advance Costs when due, the Custodian or its assignee, as the case may
be,
shall be entitled to a portion of the available cash balance in any Agency
or
Principal Account equal to such Advance Costs, and the Trust authorizes the
Custodian, on behalf of the Fund, to pay an amount equal to such Advance Costs
irrevocably to such Subcustodian or other person, and to dispose of any property
in such Account to the extent necessary to make such payment. Any Investments
and funds credited to accounts subject to this Agreement created pursuant hereto
shall be treated as financial assets credited to securities accounts under
Articles 8 and 9 of the Uniform Commercial Code as in effect in the State of
New
York from time to time. Accordingly, the Custodian and any Subcustodian shall
have the rights and benefits of a secured creditor that is a securities
intermediary under such Articles 8 and 9.
10
7.6 Integrated
Account.
For purposes hereof, deposits maintained in all Principal Accounts shall
collectively constitute a single and indivisible current account with respect
to
a Fund's obligations to the Custodian or its assignee, and balances in the
Principal Accounts shall be available for satisfaction of the Fund's obligations
under this Section 7. The Custodian shall further have a right of offset against
the balances in any Agency Account for a Fund maintained hereunder to the extent
that the aggregate of all Principal Accounts for that Fund is
overdrawn.
8. Subcustodians
and Securities Depositories.
Subject to the provisions hereinafter set forth in this Section 8 and, with
respect to securities depositories, set forth in Section 5.1, the Trust each
hereby authorizes the Custodian to utilize Securities Depositories to act on
behalf of any Fund and to appoint from time to time and to utilize
Subcustodians. With respect to securities and funds held by a Subcustodian,
either directly or indirectly (including by a Securities Depository or Clearing
Corporation), notwithstanding any provisions of this Agreement to the contrary,
payment for securities purchased and delivery of securities sold may be made
prior to receipt of securities or payment, respectively, and securities or
payment may be received in a form, in accordance with (a) governmental
regulations, (b) rules of Securities Depositories and clearing agencies, (c)
generally accepted trade practice in the applicable local market, (d) the terms
and characteristics of the particular Investment, or (e) the terms of
Instructions.
8.1 Domestic
Subcustodians and Securities Depositories.
The Custodian may deposit and/or maintain, either directly or through one or
more agents appointed by the Custodian, Investments of the Fund in any
Securities Depository in the United States of America, including The Depository
Trust Company, provided such Depository meets applicable requirements of the
Federal Reserve Bank or of the Securities and Exchange Commission. The Custodian
may, at any time and from time to time, appoint any bank meeting the
requirements of a custodian and the rules and regulations thereunder, to act
on
behalf of the Fund as a Subcustodian for purposes of holding Investments of
the
Fund in the United States. Pursuant to Rule 17f-4 under the 1940 Act, the
Custodian shall require each Subcustodian at a minimum to exercise reasonable
care in accordance with reasonable commercial standards in discharging its
duties as a Subcustodian.
8.2 Responsibility
for Subcustodians.
The
Custodian shall be liable to each Fund for any loss or damage to the Fund caused
by or resulting from the acts or omissions of any domestic Subcustodian to
the
extent that such acts or omissions would be deemed to be negligence, gross
negligence or willful misconduct in accordance with the terms of the relevant
subcustodian agreement under the laws, circumstances and practices prevailing
in
the place where the act or omission occurred.
9. Responsibility
of the Custodian.
In performing its duties and obligations hereunder, the Custodian shall use
reasonable care under the facts and circumstances prevailing in the market
where
performance is effected. Subject to the specific provisions of this Section,
the
Custodian shall be liable for any direct damage incurred by a Fund in
consequence of the Custodian's negligence, bad faith or willful misconduct.
In
no event shall the Custodian be liable hereunder for any special, indirect,
punitive or consequential damages arising out of, pursuant to or in connection
with this Agreement even if the Custodian has been advised of the possibility
of
such damages. It is agreed that the Custodian shall have no duty to assess
the
risks inherent in the Fund's Investments or to provide investment advice with
respect to such Investments and that the Fund as principal shall bear any risks
attendant to particular Investments such as failure of counterparty or issuer.
11
9.1 Limitations
of Performance.
The Custodian shall not be responsible under this Agreement for any failure
to
perform its duties, and shall not be liable hereunder for any loss or damage
in
association with such failure to perform, for or in consequence of the following
causes:
9.1.1
Force
Majeure. Force
Majeure
shall mean any circumstance or event which is beyond the reasonable control
of
the Custodian, a Subcustodian or any agent of the Custodian or a Subcustodian
and which adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody Agreement
or by any other agent of the Custodian or the Subcustodian, including any event
caused by, arising out of or involving (a) an act of God, (b) accident, fire,
water damage or explosion, (c) any computer, system or other equipment failure
or malfunction caused by any computer virus or the malfunction or failure of
any
communications medium, (d) any interruption of the power supply or other utility
service, (e) any strike or other work stoppage, whether partial or total, (f)
any delay or disruption resulting from or reflecting the occurrence of any
Sovereign Risk, (g) any disruption of, or suspension of trading in, the
securities, commodities or foreign exchange markets, whether or not resulting
from or reflecting the occurrence of any Sovereign Risk, (h) any encumbrance
on
the transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not resulting
from
or reflecting the occurrence of any Sovereign Risk, or (i) any other cause
similarly beyond the reasonable control of the Custodian.
9.1.2
Sovereign
Risk. Sovereign
Risk
shall mean, in respect of any jurisdiction, including the United States of
America, where Investments are acquired or held hereunder or under a Subcustody
Agreement, (a) any act of war, terrorism, riot, insurrection or civil commotion,
(b) the imposition of any investment, repatriation or exchange control
restrictions by any Governmental Authority, (c) the confiscation, expropriation
or nationalization of any Investments by any Governmental Authority, whether
de
facto or de jure, (d) any devaluation or revaluation of the currency, (e) the
imposition of taxes, levies or other charges affecting Investments, (f) any
change in the Applicable Law, or (g) any other economic or political risk
incurred or experienced.
12
9.2 Limitations
on Liability.
The Custodian shall not be liable for any loss, claim, damage or other liability
arising from the following causes:
9.2.1
Failure
of Third Parties.
The failure of the following third parties: (a) any futures commission
merchant(s); (b) any issuer of Investments or book-entry or other agent of
and
issuer; (c) any counterparty with respect to any Investment, including any
issuer of exchange-traded or other futures, option, derivative or commodities
contract; (d) failure of the Adviser or other agent of the Fund; or (e) failure
of other third parties similarly beyond the control or choice of the Custodian.
9.2.2
Information Sources.
The Custodian may rely upon information received from issuers of Investments
or
agents of such issuers, information received from Subcustodians and from other
commercially reasonable sources such as commercial data bases and the like,
but
shall not be responsible for specific inaccuracies in such information, provided
that the Custodian has relied upon such information in good faith and has no
reason to believe that any such information is inaccurate, or for the failure
of
any commercially reasonable information provider.
9.2.3 Reliance
on Instruction.
Action by the Custodian or the Subcustodian in accordance with an Instruction,
even when such action conflicts with, or is contrary to any provision of, the
Declaration of Trust, prospectus, Applicable Law, or actions by the trustees
or
shareholders of the Trust.
9.2.4
Restricted Securities.
The limitations inherent in the rights, transferability or similar investment
characteristics of a given Investment of a Fund.
10. Indemnification.
10.1 The
Trust and Adviser hereby indemnify the Custodian and each Subcustodian, and
their respective agents, nominees and the partners, employees, officers and
directors, and agrees to hold each of them harmless from and against all claims
and liabilities, including counsel fees and taxes, reasonably incurred or
assessed against any of them in connection with the performance of this
Agreement and any Instruction, provided that such person is not subject to
liability under any provision of this Agreement, including Section 9, or is
required to indemnify a Fund or the Adviser under Section 10.2 of this
Agreement.
10.2 The
Custodian hereby indemnifies each Fund and the Adviser, and their respective
agents, nominees and the partners, employees, officers and directors, and agrees
to hold each of them harmless from and against all claims and liabilities,
including counsel fees and taxes, reasonably incurred or assessed against any
of
them as a direct result of the Custodian’s negligence, willful misconduct or bad
faith in its performance of this Agreement and any Instruction.
13
11. Reports
and Records.
The Custodian shall:
11.1 create
and maintain records relating to the performance of its obligations under this
Agreement;
11.2 make
available to the Trust, its auditors, agents and employees, upon reasonable
request and during normal business hours of the Custodian, all records
maintained by the Custodian pursuant to Section 11.1 above, subject, however,
to
all reasonable security requirements of the Custodian then applicable to the
records of its custody customers generally;
11.3 make
available to the Trust all Electronic Reports; it being understood that the
Custodian shall not be liable hereunder for the inaccuracy or incompleteness
thereof or for errors in any information included therein;
11.4 pursuant
to Rule 17f-4 under the 1940 Act, provide to the Trust, promptly upon the
Trust’s request, such reports as are available concerning the internal
accounting controls and financial strength of the Custodian.
The
Trust shall examine all records, howsoever produced or transmitted, promptly
upon receipt thereof and notify the Custodian promptly of any discrepancy or
error therein. Unless the Trust delivers written notice of any such discrepancy
or error within a reasonable time after its receipt thereof, such records shall
be deemed to be true and accurate. It is understood that the Custodian now
obtains and will in the future obtain information on the value of assets from
outside sources which may be utilized in certain reports made available to
the
Trust. The Custodian deems such sources to be reliable but it is acknowledged
and agreed that the Custodian does not verify nor represent nor warrant as
to
the accuracy or completeness of such information and accordingly shall be
without liability in selecting and using such sources and furnishing such
information.
12. Miscellaneous.
12.1 Proxies,
etc.
The Trust or an Authorized Person will promptly execute and deliver, upon
request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
12.2 Entire
Agreement.
This Agreement (including any schedules and exhibits attached hereto and
thereto) contains all of the agreements among the parties hereto and thereto
with respect to the transactions contemplated hereby and thereby and supersedes
all prior agreements or understandings, whether written or oral, among the
parties with respect thereto.
12.3 Amendment
and Modification.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by all parties hereto.
14
12.4 Successors
and Assigns; Assignment.
All the terms and provisions of this Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. This Agreement shall not be assigned by any party without the prior
written consent of the other parties and any assignment without such consent
shall be null and void.
12.5 Waiver
of Compliance.
Except as otherwise provided in this Agreement, any failure of any of the
parties to comply with any obligation, covenant, agreement or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but any such waiver, or
the
failure to insist upon strict compliance with any obligation, covenant,
agreement or condition herein, shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure or breach.
12.6 Severability.
The parties hereto desire that the provisions of this Agreement be enforced
to
the fullest extent permissible under the Law and public policies applied in
each
jurisdiction in which enforcement is sought. Accordingly, in the event that
any
provision of this Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited
or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
12.7 Notices.
All notices, waivers, or other communications pursuant to this Agreement shall
be in writing and shall be deemed to be sufficient if delivered personally,
by
facsimile (and, if sent by facsimile, followed by delivery by
nationally-recognized express courier), sent by nationally-recognized express
courier or mailed by registered or certified mail (return receipt requested),
postage prepaid, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(1) |
if
to the Trust or Adviser
|
0000
Xxxxxx Xxx Xxxxxxx
Xxxxx
000
Xxxxxxx,
Xxxxxxxxxx 00000
Attn: Xxxxxxxx
X. Xxxxxx, President
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
(2) |
if
to the Custodian, to:
|
Xxxxx
Brothers Xxxxxxxx & Co.
00
Xxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attn:
Manager, Securities Department
Telephone: (000)
000-0000
Facsimile:
(000)
000-0000,
or
such other address as the Trust or the Custodian may have designated in writing
to the other.
15
All
such notices and other communications shall be deemed to have been delivered
and
received (i) in the case of personal delivery or delivery by a
nationally-recognized express courier, on the date of such delivery if delivered
during business hours on a Business Day or, if not delivered during business
hours on a Business Day, the first Business Day thereafter, and (ii) in the
case
of mailing or delivery by facsimile, upon receipt by the intended
party.
12.8.1 All
questions concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance with
the
domestic laws of the State of New York, without giving effect to any choice
or
conflict of law provision or rule (whether in the State of New York or any
other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of New York. In furtherance of the foregoing, the internal
law of the State of New York will control the interpretation and construction
of
this Agreement, even if under such jurisdiction's choice of law or conflict
of
law analysis, the substantive law of some other jurisdiction would ordinarily
or
necessarily apply.
12.8.2 Each
party irrevocably consents and agrees, for the benefit of the other parties,
that any legal action, suit or proceeding against it with respect to its
obligations, liabilities or any other matter arising out of or in connection
with this Agreement or any related agreement may be brought in the courts of
the
State of New York and hereby irrevocably consents and submits to the
non-exclusive jurisdiction of each such court in personam, generally and
unconditionally with respect to any action, suit or proceeding for itself and
in
respect of its properties, assets and revenues. Each party irrevocably waives
any immunity to jurisdiction to which it may otherwise be entitled or become
entitled (including sovereign immunity, immunity to pre-judgment attachment
and
execution) in any legal suit, action or proceeding against it arising out of
or
based on this Agreement or any related agreement or the transactions
contemplated hereby or thereby which is instituted in any court of the State
of
New York.
The
provisions of this Section 12.8 shall survive any termination of this Agreement,
in whole or in part.
12.9 No
Partnership.
The Custodian acts as an independent contractor with respect to the services
provided under this Agreement. The terms and conditions of this Agreement do
not
create a partnership relationship between the Custodian and the Trust or any
Fund or between the Custodian and the Adviser. The Trust and Adviser acknowledge
that the Custodian may enter into similar agreements with others without the
consent of the Trust or Adviser.
12.10 Interpretation.
The article and section headings contained in this Agreement are solely for
the
purpose of reference, are not part of the agreement of the parties and shall
not
in any way affect the meaning or interpretation of this Agreement.
16
12.11 No
Strict Construction.
The language used in this Agreement will be deemed to be the language chosen
by
the parties to express their mutual intent, and no rule of strict construction
will be applied against any party.
12.12 Counterparts;
Facsimile Signatures.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument. Facsimile counterpart signatures to this Agreement shall be
acceptable and binding.
12.13 Other
Usages.
The following usages shall apply in interpreting this Agreement: (i) references
to a governmental or quasi-governmental agency, authority or instrumentality
shall also refer to a regulatory body that succeeds to the functions of such
agency, authority or instrumentality; and (ii) “including” means “including, but
not limited to.”
12.14 Confidentiality.
The parties hereto agree that each shall treat confidentially the terms and
conditions of this Agreement. The Custodian agrees that it shall treat
confidentially all information provided to it by the Trust or Adviser regarding
the Trust’s or Adviser’s business or operations, and the Trust and Adviser agree
that they shall treat confidentially all information provided to them by the
Custodian regarding the Custodian’s business or operations. All confidential
information provided by a party hereto shall be used by the anparty hereto
solely for the purpose of rendering or obtaining services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not apply to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required to be disclosed by
or to
any bank examiner of the Custodian or any Subcustodian, any Regulatory
Authority, any auditor of the parties hereto, or by judicial or administrative
process or otherwise by Applicable Law.
12.15 Counsel.
In fulfilling its duties hereunder, the Custodian shall be entitled to receive
and act upon the advice of (i) counsel regularly retained by the Custodian
in
respect of such matters, (ii) counsel for the Trust or a Fund or (iii) such
counsel as the Trust and the Custodian may agree upon, with respect to all
matters. The Custodian shall not be considered to have engaged in any misconduct
or to have acted negligently when soliciting and following such
advice.
12.16 Conflict.
Nothing contained in this Agreement shall prevent the Custodian and its
associates from, to the extent not prohibited by Applicable Law, (i) dealing
as
a principal or an intermediary in the sale, purchase or loan of a Fund’s
Investments to, or from the Custodian or its associates; (ii) acting as a
custodian, a subcustodian, a trustee, an agent, securities dealer, an investment
manager or in any other capacity for any other client; or (iii) buying, holding,
lending, and dealing in any way in any assets for the benefit of its own
account, for the account of any other client, or for the account of a Fund.
12.17 Privacy.
In the course of carrying out its obligations under this Agreement, each party
shall maintain physical, procedural and/or electronic safeguards reasonably
designed to protect information regarding each Fund and its investors that
such
party has obtained or to which such party has gained access.
17
13. Definitions.
The following defined terms will have the respective meanings set forth
below.
13.1 Advance(s)
shall mean any extension of credit by or through the Custodian or by or through
any Subcustodian, or paid to third parties for account of a Fund or in discharge
of any expense, tax or other item payable by a Fund.
13.2 Advance
Costs shall
mean any Advance, interest on the Advance and any related expenses, including
without limitation any xxxx to market loss of the Custodian or Subcustodian
on
any Investment to which Section 7.4.1 applies.
13.3 Agency
Account(s)
shall mean any deposit account opened on the books of a Subcustodian or other
banking institution in accordance with Section 7.1.
13.4 Agent(s)
shall have the meaning set forth in the last sentence of Section 6.
13.5 Applicable
Law
shall mean with respect to each jurisdiction, all (a) laws, statutes, treaties,
regulations, guidelines (or their equivalents); (b) orders, interpretations,
licenses and permits; and (c) judgments, decrees, injunctions, writs, orders
and
similar actions by a court of competent jurisdiction; compliance with which
is
required or customarily observed in such jurisdiction.
13.6 Authorized
Person(s)
shall mean any person or entity authorized to give Instructions on behalf of
a
Fund in accordance with Section 4.1.
13.7 Book-entry
Agent
shall mean an entity acting as agent for the issuer of Investments for purposes
of recording ownership or similar entitlement to Investments, including without
limitation a transfer agent or registrar.
13.8 Clearing
Corporation
shall mean any entity or system established for purposes of providing securities
settlement and movement and associated functions for a given
market.
13.9 Electronic
and Online Services Schedule
shall mean any separate agreement entered into between the Custodian and the
Trust or its authorized representative with respect to certain matters
concerning certain electronic and online services as described therein and
as
may be made available from time to time by the Custodian to the Trust or an
Authorized Person.
13.10 Electronic
Reports
shall
mean any reports prepared by the Custodian and remitted to the Trust or its
authorized representative via the internet or electronic mail.
13.11 Funds
Transfer Services Schedule
shall mean any separate agreement entered into among the Custodian, the Board
of
Trustees or an Authorized Person with respect to certain matters concerning
the
processing of payment orders from Principal Accounts of a Fund.
18
13.12 Instruction(s)
shall have the meaning assigned in Section 4.
13.13 Investment(s)
shall mean any investment asset of a Fund, including without limitation:
securities, bonds, notes, and debentures as well as receivables, derivatives,
contractual rights or entitlements and other intangible assets.
13.14 Margin
Account shall
have the meaning set forth in Section 6.4 hereof.
13.15 Principal
Account(s)
shall mean deposit accounts of a Fund carried on the books of BBH&Co. as
principal in accordance with Section 7.
13.16 Safekeeping
Account shall
mean an account established on the books of the Custodian or any Subcustodian
for purposes of segregating the interests of a Fund (or clients of the Custodian
or Subcustodian) from the assets of the Custodian or any
Subcustodian.
13.17 Securities
Depository
shall mean a central or book entry system or agency established under Applicable
Law for purposes of recording the ownership and/or entitlement to investment
securities for a given market.
13.18 Subcustodian(s)
shall mean each bank appointed by the Custodian pursuant to Section 8 hereof,
but shall not include Securities Depositories.
13.19 Tri-Party
Agreement
shall have the meaning set forth in Section 6.4 hereof.
13.20 1940
Act
shall mean the Investment Company Act of 1940.
14. Compensation.
The Adviser agrees to pay to the Custodian (a) a fee in an amount set forth
in
the fee letter between the Adviser and the Custodian in effect on the date
hereof or as amended from time to time, and (b) all reasonable out-of-pocket
expenses incurred by the Custodian, including the fees and expenses of all
Subcustodians, and payable from time to time. Amounts payable by the Adviser
under and pursuant to this Section 14 shall be payable by wire transfer to
the
Custodian at BBH&Co. in New York, New York.
15. Termination.
This Agreement may be terminated by either party in accordance with the
provisions of this Section. The provisions of this Agreement and any other
rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this
Agreement.
15.1 Term,
Notice and Effect.
This Agreement shall have an initial term of two (2) years from the date hereof.
Thereafter, this Agreement shall automatically renew for successive one (1)
year
periods unless any party terminates this Agreement by written notice effective
no sooner than seventy-five (75) days following the date that notice to such
effect shall be delivered to the other parties at the addresses set forth in
Section 12.5 hereof. Notwithstanding the foregoing provisions, the Trust or
the
Adviser (together, the “Fund Parties”) or the Custodian may terminate this
Agreement at any time (a) for cause, which is a material breach of the Agreement
not cured within 60 days, in which case termination shall be effective upon
receipt of written notice by the breaching party, (b) upon thirty (30) days
written notice by the Custodian to the Fund Parties in the event that a Fund
Party is adjudged bankrupt or insolvent, or there shall be commenced against
such Fund Party a case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, or (c) upon thirty (30) days written
notice by a Fund Party to the Custodian in the event that the Custodian adjudged
bankrupt or insolvent, or there shall be commenced against the Custodian a
case
under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect.
19
15.2 Successor
Custodian.
In the event of the appointment of a successor custodian, it is agreed that
the
Investments of a Fund held by the Custodian or any Subcustodian shall be
delivered to the successor custodian in accordance with reasonable Instructions.
The Custodian agrees to cooperate with the Trust in the execution of documents
and performance of other actions necessary or desirable in order to facilitate
the succession of the new custodian. If no successor custodian shall be
appointed, the Custodian shall in like manner transfer the Fund's Investments
in
accordance with Instructions.
15.3 Delayed
Succession.
If no Instruction has been given as of the effective date of termination,
Custodian may at any time on or after such termination date and upon ten (10)
consecutive calendar days written notice to the Trust either (a) deliver the
Investments of a Fund held hereunder to the Trust at the address designated
for
receipt of notices hereunder; or (b) deliver any investments held hereunder
to a
bank or trust company having a capitalization of $50,000,000 equivalent and
operating under the Applicable law of the jurisdiction where such Investments
are located, such delivery to be at the risk of the Fund. In the event that
Investments or moneys of a Fund remain in the custody of the Custodian or its
Subcustodians after the date of termination owing to the failure of the Trust
to
issue Instructions with respect to their disposition or owing to the fact that
such disposition could not be accomplished in accordance with such Instructions
despite diligent efforts of the Custodian, the Custodian shall be entitled
to
compensation for its services with respect to such Investments and moneys during
such period as the Custodian or its Subcustodians retain possession of such
items and the provisions of this Agreement shall remain in full force and effect
until disposition in accordance with this Section is accomplished.
16. Compliance
Policies and Procedures. To
assist
the Trust in complying with Rule 38a-1 of the 1940 Act, BBH&Co. represents
that it has adopted written policies and procedures reasonably designed to
prevent violation of the federal securities laws in fulfilling its obligations
under the Agreement and that it has in place a compliance program to monitor
its
compliance with those policies and procedures. BBH&Co
will upon request provide the Trust with information about its compliance
program as mutually agreed.
20
The
undersigned acknowledges that (I/we) have received a copy of this
document.
XXXXX
BROTHERS XXXXXXXX & CO.
By:
__________________________________
Name:
Title:
Date:
By:
________________________________
Name:
Title:
Date:
AMERISTOCK
CORPORATION
By:__________________________________
Name:
Title:
Date:
21
FUNDS
TRANSFER SERVICES SCHEDULE TO CUSTODIAN AGREEMENT
1. Execution
of Payment Orders.
Xxxxx
Brothers Xxxxxxxx & Co. (the Custodian) is hereby instructed by Ameristock
ETF Trust (the “Trust”), on behalf of its separate investment portfolios
(“Funds”) to execute each payment order, whether denominated in United States
dollars or other applicable currencies, received by the Custodian in a Fund’s
name as sender and authorized and confirmed by an Authorized Person as defined
in a Custodian Agreement dated as of March 5, 2007 by and among the Custodian,
the Trust, and Ameristock Corporation, as amended or restated from time to
time
thereafter (the Agreement), provided that the Fund has sufficient available
funds on deposit in a Principal Account as defined in the Agreement and provided
that the order (i) is received by the Custodian in the manner specified in
this
Funds Transfer Services Schedule or any amendment hereafter; (ii) complies
with
any written instructions and restrictions of the Trust as set forth in this
Funds Transfer Services Schedule or any amendment hereafter; (iii) is authorized
by the Trust or is verified by the Custodian in compliance with a security
procedure set forth in Paragraph 2 below for verifying the authenticity of
a
funds transfer communication sent to the Custodian in the name of a Fund or
for
the detection of errors set forth in any such communication; and (iv) contains
sufficient data to enable the Custodian to process such transfer.
2. Security
Procedure.
Board
of Trustees hereby elects to use the procedure selected below as its security
procedure (the Security Procedure). The Security Procedure will be used by
the
Custodian to verify the authenticity of a payment order or a communication
amending or canceling a payment order. The Custodian will act on instructions
received provided the instruction is authenticated by the Security Procedure.
The Trust agrees and acknowledges in connection with (i) the size, type and
frequency of payment orders normally issued or expected to be issued by the
Trust to the Custodian, (ii) all of the security procedures offered to the
Trust
by the Custodian, and (iii) the usual security procedures used by customers
and
receiving banks similarly situated, that authentication through the Security
Procedure shall be deemed commercially reasonable for the authentication of
all
payment orders submitted to the Custodian. The Trust hereby elects (please
choose one)
the
following Security Procedure as described below:
[X] |
BIDS
and BIDS Worldview Payment Products.
BIDS and BIDS Worldview Payment Products, are on-line payment order
authorization facilities with built-in authentication procedures.
The
Custodian and the Trust shall each be responsible for maintaining
the
confidentiality of passwords or other codes to be used by them in
connection with BIDS. The Custodian will act on instructions received
through BIDS without duty of further confirmation unless the Trust
notifies the Custodian that its password is not secure.
|
[ ] |
SWIFT.
The Custodian and the Trust shall comply with SWIFT’s authentication
procedures. The Custodian will act on instructions received via SWIFT
provided the instruction is authenticated by the SWIFT system.
|
[ ] |
Tested
Telex.
The Custodian will accept payment orders sent by tested telex,
provided
the test key matches the algorithmic key the Custodian and the
Trust have
agreed to use.
|
22
[ ] |
Computer
Transmission.
The Custodian is able to accept transmissions sent from the Trust
or
Authorized Persons computer facilities to the Custodian’s computer
facilities provided such transmissions are encrypted and digitally
certified or are otherwise authenticated in a reasonable manner
based on
available technology. Such procedures shall be established in an
operating
protocol among the Custodian and the
Trust.
|
[ ] |
Telefax
Instructions.
A
payment order transmitted to the Custodian by telefax transmission
shall
transmitted by the Trust or Authorized Person to a telephone number
specified from time to time by the Custodian for such purposes.
If it
detects no discrepancies, the Custodian will then
either:
|
1. |
If
the telefax requests a repetitive payment order, the Custodian may
call
the Trust or Authorized Person at its last known telephone number,
request
to speak to an Authorized Person, and confirm the authorization and
details of the payment order (a Callback);
or
|
2. |
If
the telefax requests a non-repetitive order, the Custodian will
perform a
Callback.
|
All
faxes
must be accompanied by a fax cover sheet which indicates the sender’s name, Fund
name, telephone number, fax number, number of pages, and number of transactions
or instructions attached.
[ ] |
Telephonic.
A
telephonic payment order shall be called into the Custodian at
the
telephone number designated from time to time by the Custodian
for that
purpose. The caller shall identify herself/himself as an Authorized
Person. The Custodian shall obtain the payment order data from
the caller.
The Custodian shall then:
|
1. |
If
a telephonic repetitive payment order, the Custodian may perform
a
Callback; or
|
2. |
If
a telephonic non-repetitive payment order, the Custodian
will perform a
Callback.
|
In
the
event the Trust chooses a procedure which is not a Security Procedure as
described above, the Trust agrees to be bound by any payment order (whether
or
not authorized) issued in its name and accepted by the Custodian in compliance
with the procedure selected by the Trust.
3. Rejection
of Payment Orders.
The
Custodian shall give the Trust timely notice of the Custodian’s rejection of a
payment order. Such notice may be given in writing or orally by telephone,
each
of which is hereby deemed commercially reasonable. In the event the Custodian
fails to execute a properly executable payment order and fails to give the
Trust
notice of the Custodian’s non-execution, the Custodian shall be liable only for
each Fund’s actual damages and only to the extent that such damages are
recoverable under UCC 4A (as defined in Paragraph 7 below). Notwithstanding
anything in this Funds Transfer Services Schedule and the Agreement to the
contrary, the Custodian shall in no event be liable for any consequential or
special damages under this Funds Transfer Services Schedule, whether or not
such
damages relate to services covered by UCC 4A, even if the Custodian has been
advised of the possibility of such damages. Whenever compensation in the form
of
interest is payable by the Custodian to a Fund pursuant to this Funds Transfer
Services Schedule, such compensation will be payable in accordance with UCC
4A.
23
4. Cancellation
of Payment Orders.
The
Trust or Authorized Person may cancel a payment order but the Custodian shall
have no liability for the Custodian’s failure to act on a cancellation
instruction unless the Custodian has received such cancellation instruction
at a
time and in a manner affording the Custodian reasonable opportunity to act
prior
to the Custodian’s execution of the order. Any cancellation shall be sent and
confirmed in the manner set forth in Paragraph 2 above.
5. Responsibility
for the Detection of Errors and Unauthorized Payment Orders.
Except
as may be provided, the Custodian is not responsible for detecting any Trust
error contained in any payment order sent by the Trust or an Authorized Person
to the Custodian. In the event that the Trust’s or Authorized Person’s payment
order to the Custodian either (i) identifies the beneficiary by both a name
and
an identifying or bank account number and the name and number identify different
persons or entities, or (ii) identifies any bank by both a name and an
identifying number and the number identifies a person or entity different from
the bank identified by name, the Custodian shall seek further Instructions
from
the Trust when and if it becomes aware or has reason to know of the discrepancy.
If the Custodian is not aware and does not have reason to know of the
discrepancy or does not receive further Instructions within a reasonable time
after they are sought, execution of the payment order, payment to the
beneficiary, cancellation of the payment order or actions taken by any bank
in
respect of such payment order may be made solely on the basis of the number.
The
Custodian shall not be liable for interest on the amount of any payment order
that was not authorized or was erroneously executed unless the Trust so notifies
the Custodian within thirty (30) Business Days following the Trust’s receipt of
notice that such payment order had been processed. If a payment order in the
name of a Fund and accepted by the Custodian was not authorized by the Trust
or
Authorized Person, the liability of the parties will be governed by the
applicable provisions of UCC 4A.
6. Laws
and Regulations.
The
rights and obligations of the Custodian and the Trust with respect to any
payment order executed pursuant to this Funds Transfer Services Schedule will
be
governed by any applicable laws, regulations, circulars and funds transfer
system rules, the laws and regulations of the United States of America and
of
other relevant countries including exchange control regulations and limitations
on dealings or other sanctions, and including without limitation those sanctions
imposed under the law of the United States of America by the Office of Foreign
Assets Control. Any taxes, fines, costs, charges or fees imposed by relevant
authorities on such transactions shall be for the account of the appropriate
Fund.
7. Miscellaneous.
All
accounts opened by the Trust or its authorized agents at the Custodian
subsequent to the date hereof shall be governed by this Funds Transfer Schedule.
All terms used in this Funds Transfer Services Schedule shall have the meaning
set forth in Article 4A of the Uniform Commercial Code as currently in effect
in
the State of New York (UCC 4A) unless otherwise set forth herein. The terms
and
conditions of this Funds Transfer Services Schedule are in addition to, and
do
not modify or otherwise affect, the terms and conditions of the Agreement and
any other agreement or arrangement between the parties hereto.
24
8. Indemnification.
The
Custodian does not recommend the sending of instructions by telefax or
telephonic means as provided in Paragraph 2. BY
ELECTING TO SEND INSTRUCTIONS BY TELEFAX OR TELEPHONIC MEANS, THE BOARD OF
TRUSTEES AGREE TO INDEMNIFY THE CUSTODIAN AND ITS PARTNERS, OFFICERS AND
EMPLOYEES FOR LOSSES THEREFROM.
_____________________________________________
OPTIONAL:
The
Custodian will perform a Callback if instructions are sent by telefax or
telephonic means as provided in Paragraph 2. THE
BOARD OF TRUSTEES MAY, AT ITS OWN RISK AND BY HEREBY AGREEING TO INDEMNIFY
THE
CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR ALL LOSSES
THEREFROM,
ELECT TO
WAIVE A CALLBACK BY THE CUSTODIAN BY INITIALING HERE:____
_____________________________________________
The
undersigned acknowledges that (I/we) have received a copy of this
document.
Accepted
and agreed:
XXXXX
BROTHERS XXXXXXXX & CO.
By:
__________________________________
Name:
Title:
Date:
By:
________________________________
Name:
Title:
Date:
25
ELECTRONIC
AND ON-LINE SERVICES SCHEDULE
This
Electronic and On-Line Services Schedule (this Schedule)
to a
Custodian Agreement dated as of March 5, 2007 (as amended from time to time
hereafter, the Agreement)
by and
among Xxxxx Brothers Xxxxxxxx & Co. (we,
us our),
Ameristock ETF Trust (you,
your),
and
Ameristock Corporation provides general provisions governing your use of and
access to the Services (as hereinafter defined) provided to you by us via the
Internet (at xxx.xxxxx.xxx
or
such other URL as we may instruct you to use to access our
products)
and via
a direct dial-up connection between your computer and our computers, as of
March
5, 2007 (the Effective
Date). Use
of
the Services constitutes acceptance of the terms and conditions of this
Schedule, any Appendices hereto, the Terms and Conditions posted on our web
site, and any terms and conditions specifically governing a particular Service
or our other products, which may be set forth in the Agreement or in a separate
related agreement (collectively, the Related
Agreements).
You
will
be granted access to our suite of online products, which may include, but shall
not be limited to the following services via the Internet or dial-up connection
(each separate service is a Service;
collectively referred to as the Services):
1.1.
|
BIDS®
and BIDS WorldView, a system for effectuating securities and fund
trade
instruction and execution, processing and handling instructions,
and for
the input and retrieval of other information;
|
1.2.
|
F/X
WorldView, a system for executing foreign exchange
trades;
|
1.3.
|
Fund
WorldView, a system for receiving fund and prospectus
information;
|
1.4.
|
BBHCOnnect,
a system for placing securities trade instructions and following
the
status and detail of trades;
|
1.5.
|
ActionViewSM,
a
system for receiving certain corporate action information;
|
1.6.
|
Risk
View, an interactive portfolio risk analysis tool; and
|
1.7.
|
Such
other services as we shall from time to time
offer.
|
2.1.
|
A
digital certificate and/or an encryption key may be required to access
certain Services. You may apply for a digital certificate and/or
an
encryption key by following the procedures set forth at xxxx://xxx.xxx.xxx/xxxxx/. You
also will need an identification code (ID)
and password(s) (Password)
to access the Services.
|
2.2.
|
You
agree to safeguard your digital certificate and/or encryption key,
ID, and
Password and not to give or make available, intentionally or otherwise,
your digital certificate, ID, and/or Password to any unauthorized
person.
You must immediately notify us in writing if you believe that your
digital
certificate and/or encryption key, Password, or ID has been compromised
or
if you suspect unauthorized access to your account by means of the
Services or otherwise, or when a person to whom a digital certificate
and/or an encryption key, Password, or ID has been assigned leaves
or is
no longer permitted to access the Services.
|
2.3.
|
We
will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your
failure
(be it intentional, unintentional, or negligent) to maintain the
confidentiality of your ID and/or Password and/or the security of
your
digital certificate and/or encryption key.
|
26
3.1.
|
Proper
instructions under this Schedule shall be provided as designated
in the
Related Agreements (Instructions).
|
3.2.
|
The
following additional provisions apply to Instructions provided via
the
Services:
|
a.
|
Instructions
sent by electronic mail will not be accepted or acted
upon.
|
b.
|
You
authorize us to act upon Instructions received through the Services
utilizing your digital certificate, ID, and/or Password as though
they
were duly authorized written instructions, without any duty of
verification or inquiry on our part, and agree to hold us harmless
for any
losses you experience as a result.
|
c.
|
From
time to time, the temporary unavailability of third party
telecommunications or computer systems required by the Services may
result
in a delay in processing Instructions. In such an event, we shall
not be
liable to you or any third party for any liabilities, losses, claims,
costs, damages, penalties, fines, obligations, or expenses of any
kind
(including without limitation, reasonable attorneys', accountants',
consultants', or experts' fees and disbursements) that you experience
due
to such a delay.
|
We
may
make periodic statements, disclosures, notices, and other documents available
to
you electronically, and, subject to any delivery and receipt verification
procedures required by law, you agree to receive such documents electronically
and to check the statements for accuracy. If you believe any such statement
contains incorrect information, you must follow the procedures set forth in
the
Related Agreement(s).
You
understand and agree that we will not be responsible to you for the introduction
by you, your employees, agents, or representatives into the Services, whether
intentional or unintentional, of (i) any virus or other code, program, or
sub-program that damages or interferes with the operation of the computer system
containing the code, program or sub-program, or halts, disables, or interferes
with the operation of the Services themselves; or (ii) any device, method,
or
token whose knowing or intended purpose is to permit any person to circumvent
the normal security of the Services or the system containing the software code
for the Services (Malicious
Code),
provided in any case that we have taken commercially reasonable actions and
precautions to protect the Services form the introduction of, and to minimize
the damage caused by, the Malicious Code. You agree to take all necessary
actions and precautions to prevent the introduction and proliferation of any
Malicious Code into those systems that interact with the Services.
For
avoidance of doubt, you hereby agree that the provisions in the Related
Agreement(s) related to your indemnification of us and any limitations on our
liability and responsibilities to you shall be applicable to this Agreement,
and
are hereby expressly incorporated herein. You agree that the Services are
comprised of telecommunications and computer systems, and that it is possible
that Instructions, information, transactions, or account reports might be added
to, changed, or omitted by electronic or programming malfunction, unauthorized
access, or other failure of the systems which comprise the Services, despite
the
security features that have been designed into the Services. You agree that
we
will not be liable for any action taken or not taken in complying with the
terms
of this Schedule, except for our willful misconduct or negligence. The
provisions of this paragraph shall survive the termination of this Schedule
and
the Related Agreements.
27
7.
|
You
may
be charged for services hereunder as set forth in a fee schedule from time
to
time agreed by us.
8.1.
|
This
Schedule is effective as of the date you sign it or first use the
Services, whichever is first, and continues in effect until such
time as
either you or we terminate the Schedule in accordance with this Section
8
and/or until your off-line use of the Services is
terminated.
|
8.2.
|
We
may terminate your access to the Services at any time, for any reason,
with thirty (30) Business Days prior notice; provided that we may
terminate your access to the Services with no prior notice (i) if
your
account with us is closed, (ii) if you fail to comply with any of
the
terms of this Agreement, (iii) if we believe that your continued
access to
the Services poses a security risk, or (iv) if we believe that you
are
violating or have violated applicable laws, and we will not be liable
for
any loss you may experience as a result of such termination. You
may
terminate your access to the Services at any time by giving us thirty
(30)
Business Days notice. Upon termination, we will cancel all your Passwords
and IDs and any in-process or pending Instructions will be carried
out or
cancelled, at our sole discretion.
|
9.1.
|
Notices.
All notices, requests, and demands (other than routine operational
communications, such as Instructions) shall be in such form and effect
as
provided in the Related Agreement(s).
|
9.2.
|
Inconsistent
Provisions.
Each Service may be governed by separate terms and conditions in
addition
to this Schedule and the Related Agreement(s). Except where specifically
provided to the contrary in this Schedule, in the event that such
separate
terms and conditions conflict with this Schedule and the Related
Agreement(s), the provisions of this Schedule shall prevail to the
extent
this Schedule applies to the transaction in
question.
|
9.3.
|
Binding
Effect; Assignment; Severability.
This Schedule shall be binding on you, your employees, officers and
agents. We may assign or delegate our rights and duties under this
Schedule at any time without notice to you. Your rights under this
Schedule may not be assigned without our prior written consent. In
the
event that any provision of this Schedule conflicts with the law
under
which this Schedule is to be construed or if any such provision is
held
invalid or unenforceable by a court with jurisdiction over you and
us,
such provision shall be deemed to be restated to effectuate as nearly
as
possible the purposes of the Schedule in accordance with applicable
law.
The remaining provisions of this Schedule and the application of
the
challenged provision to persons or circumstances other than those
as to
which it is invalid or unenforceable shall not be affected thereby,
and
each such provision shall be valid and enforceable to the full extent
permitted by law.
|
28
9.4.
|
Choice
of Law; Jury Trial.
This Schedule shall be governed by and construed, and the legal relations
between the parties shall be determined, in accordance with the laws
of
the State of New York, without giving effect to the principles of
conflicts of laws. Each party agrees to waive its right to trial
by jury
in any action or proceeding based upon or related to this Agreement.
The
parties agree that all actions and proceedings based upon or relating
to
this Schedule may
be brought in the courts of the State of New York and hereby irrevocably
consents and submits to the non-exclusive jurisdiction of each such
court
in personam.
|
9.5.
|
Confidentiality.
The
parties hereto agree that each shall treat confidentially the terms
and
conditions of this Agreement and all information provided by each
party to
the other regarding its business and operations. All confidential
information provided by a party hereto shall be used by any other
party
hereto solely for the purpose of rendering or obtaining services
pursuant
to this Agreement and, except as may be required in carrying out
this
Agreement, shall not be disclosed to any third party without the
prior
consent of such providing party. The foregoing shall not be applicable
to
any information that is publicly available when provided or thereafter
becomes publicly available other than through a breach of this Agreement,
or that is required to be disclosed by or to any bank examiner of
the
Custodian or any Subcustodian, any Regulatory Authority, any auditor
of
the parties hereto, or by judicial or administrative process or otherwise
by Applicable Law.
|
29
The
undersigned acknowledges that (I/we) have received a copy of this
document.
XXXXX
BROTHERS XXXXXXXX & CO.
By:
__________________________________
Name:
Title:
Date:
By:
________________________________
Name:
Title:
Date:
30