Exhibit 99.j
EXCHANGE TRADED FUND CUSTODY AGREEMENT
THIS AGREEMENT is made this ____ day of ________, 1999 by and between XXX
TRUST PREFERRED FUND I, a Delaware business trust (the "Fund"), and THE TRUST
COMPANY OF STERNE, AGEE & XXXXX, INC., an Alabama state chartered trust company
("The Trust Company").
W I T N E S S E T H
WHEREAS, the Fund is registered as a closed-end, non-diversified,
management investment company under the Investment Company Act of 1940, as
amended ("xxx 0000 Xxx"); and
WHEREAS, the Fund desires to retain The Trust Company to serve as the
Fund's custodian and The Trust Company is willing to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints The Trust Company to act as
custodian of its portfolio securities, cash and other property on the terms set
forth in this Agreement. The Trust Company accepts such appointment and agrees
to furnish the services herein set forth in return for the compensation as
provided in Section 23 of this Agreement.
2. Delivery of Documents. The Fund has furnished The Trust Company with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the
appointment of The Trust Company as Custodian of the portfolio securities, cash
and other property of the Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and containing the
signatures of the Fund's officers and/or the persons authorized to sign Proper
Instructions, as hereinafter defined, on behalf of the Fund;
(c) The Fund's Declaration of Trust and all amendments thereto (such
Declaration of Trust as currently in effect and as it shall from time to time be
amended, are herein called the "Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
currently in effect and as they shall from time to time be amended, are herein
called the "By-Laws"),
(e) Resolutions of the Fund's Board of Trustees appointing the investment
manager of the Fund and resolutions of the Fund's Board of Trustees and the
Fund's Shareholders, if
applicable, approving the proposed Investment Management Agreement between the
Fund and the advisor (the "Management Agreement");
(f) The Management Agreement
(g) The Fund's Notification of Registration filed pursuant to Section 8(a)
of the 1940 Act, as filed with the SEC; and
(h) The Fund's Registration Statement on Form N-2 under the 1940 Act and
the Securities Act of 1933, as amended ("xxx 0000 Xxx"), as filed with the SEC;
and
(i) The Fund's most recent prospectus and statement of additional
information including all amendments and supplements thereto (the "Prospectus").
Upon request the Fund will furnish The Trust Company with copies of all
amendments of or supplements to the foregoing, if any. The Fund will also
furnish The Trust Company upon request with a copy of the opinion of counsel for
the Fund with respect to the validity of the Shares and the status of such
Shares under the 1933 Act filed with the SEC, and any other applicable federal
law or regulation.
3. Definitions. As used in this Agreement, the following terms shall have the
following definitions:
(a) "Authorized Person" means the Fund's President, Treasurer and any
other person, whether or not any such person is an officer or employee of the
Fund, duly authorized by the Board of Trustees of the Fund to give Proper
Instructions on behalf of the Fund as set forth in resolutions of the Fund's
Board of Trustees.
(b) "Book-Entry System" means a book-entry system authorized by the U.S.
Department of Treasury, its successor or successors and its nominee or nominees.
(c) "Proper Instructions" means a writing signed or initialed by two or
more persons as the Board of Trustees shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered Proper
Instructions if The Trust Company reasonably believes them to have been given by
a person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Trustees of the Fund accompanied by a detailed
description of procedures approved by the Board of Trustees, Proper Instructions
may include communications effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees and The Trust Company are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
For purposes of this Section,
Proper Instructions shall include instructions received by The Trust Company
pursuant to any three-party agreement which requires a segregated asset account
in accordance with Section 9.
(d) "Property" means:
(i) any and all securities and other property of the Fund which the
Fund may from time to time deposit, or cause to be deposited, with The Trust
Company or which The Trust Company may from time to time hold for the Fund;
(ii) all income in respect of any such securities or other property;
(iii) all proceeds of the sales of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the Fund, which
are received by The Trust Company from time to time from or on behalf of the
Fund.
(e) "Securities Depository" shall mean The Depository Trust Company, a
clearing agency registered with the SEC or its successor or successors and its
nominee or nominees; and shall also mean any other registered clearing agency,
its successor or successors specifically identified in a certified copy of a
resolution of the Fund's Board of Trustees approving deposits by The Trust
Company therein.
4. Delivery and Registration of the Property. The Fund will deliver or cause
to be delivered to The Trust Company all securities and all monies owned by it,
including payments of interest, principal and capital distributions and cash
received for the issuance of its Shares, at any time during the period of this
Agreement, except for securities and monies to be delivered to any subcustodian
appointed pursuant to Section 7 hereof. The Trust Company will not be
responsible for such securities and such monies until actually received by it.
All securities delivered to The Trust Company or to any such subcustodian (other
than in bearer form) shall be registered in the name of the Fund or in the name
of a nominee of the Fund or in the name of The Trust Company or any nominee of
The Trust Company (with or without indication of fiduciary status) or in the
name of any subcustodian or any nominee of such subcustodian appointed pursuant
to Paragraph 7 hereof or shall be properly endorsed and in form for transfer
satisfactory to The Trust Company.
5. Voting Rights. With respect to all securities, however registered, it is
understood that the voting and other rights and powers shall be exercised by the
Fund. The Trust Company's only duty shall be to mail for delivery on the next
business day to the Fund any documents received, including proxy statements and
offering circulars, with any proxies for securities registered in a nominee name
executed by such nominee. Where any securities have fixed expiration dates, the
Fund understands that in order for The Trust Company to act, The Trust Company
must receive the Fund's instructions at its offices in Birmingham, addressed as
The Trust Company may from time to time request, by no later than noon
(Birmingham time) at least one business day prior to the last scheduled date to
act with respect thereto (or such earlier date or time as The Trust Company may
reasonably notify the Fund). Absent The Trust Company's timely receipt of such
instructions, such instruments will expire without liability to The Trust
Company.
6. Receipt and Disbursement of Money.
(a) The Trust Company shall open and maintain a custody account for the
Fund, subject only to draft or order by The Trust Company acting pursuant to the
terms of this Agreement, and shall hold in such account, subject to the
provisions hereof, all cash received by it from or for the Fund other than cash
maintained by the Fund in a bank account established and used in accordance with
Rules 17f-2 and 17f-3 under the 1940 Act. Funds held by The Trust Company for
the Fund may be deposited by it to its credit at The Trust Company in the
Banking Department of The Trust Company or in such other banks or trust
companies as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act, and that each such bank or trust company shall be
approved by vote of a majority of the Board of Trustees of the Fund. Such funds
shall be deposited by The Trust Company in its capacity as Custodian and shall
be withdrawable by The Trust Company only in that capacity.
(b) Upon receipt of Proper Instructions (which may be continuing
instructions as deemed appropriate by the parties) The Trust Company shall make
payments of cash to, or for the account of, the Fund from such cash only (i) for
the purchase of securities for the Fund as provided in Section 13 hereof; (ii)
in the case of a purchase of securities effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section 8
hereof; (iii) for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund; (iv) for the payment of dividends or other
distributions on shares declared pursuant to the governing documents of the
Fund, or for the payment of interest, taxes, administration, distribution or
management fees or expenses which are to be borne by the Fund under the terms of
this Agreement, any Management Agreement, or any administration agreement; (v)
for payments in connection with the conversion, exchange or surrender of
securities owned or subscribed to by the Fund and held by or to be delivered to
The Trust Company; (vi) to a subcustodian pursuant to Section 7 hereof; (vii)
for such common expenses incurred by the Fund in the ordinary course of its
business, including but not limited to printing and mailing expenses, legal
fees, accountants fees, exchange fees; or (viii) for any other proper purpose,
but only upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board of Trustees signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the person or persons
to whom such payment is to be made.
(c) The Trust Company is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as Custodian
for the Fund.
6A. Advances by Custodian. The Custodian may from time to time agree to
advance cash to the Fund, without interest, for the Fund's proper corporate
purposes. If the Custodian advances cash for any purpose, the Fund shall and
hereby does grant to the Custodian a security interest in Fund securities equal
in value to the amount of the cash advance but in no event shall the value
of securities in which a security interest has been granted exceed 20% of the
value of the Fund's total assets at the time of the pledge; should the Fund fail
to repay the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to reasonably dispose of any securities in which it has a
security interest to the extent necessary to obtain reimbursement.
7. Receipt and Delivery of Securities.
(a) Except as provided by Section 8 hereof, The Trust Company shall hold
and physically segregate all securities and noncash Property received by it for
the Fund. All such securities and non-cash Property are to be held or disposed
of by The Trust Company for the Fund pursuant to the terms of this Agreement. In
the absence of Proper Instructions accompanied by a certified resolution
authorizing the specific transaction by the Fund's Board, The Trust Company
shall have no power or authority to withdraw, deliver, assign, hypothecate,
pledge or otherwise dispose of any such securities and investments, except in
accordance with the express terms provided for in this Agreement. In no case may
any director, officer, employee or agent of the Fund withdraw any securities.
(b) Promptly after the close of business on each day that a transfer to or
from the account of the Fund occurs, The Trust Company shall furnish the Fund
with confirmations and a summary of all transfers to or from the account of the
Fund during said day. Where securities are transferred to the account of the
Fund established at a Securities Depository or Book Entry System pursuant to
Section 8 hereof, The Trust Company shall also by book-entry or otherwise
identify as belonging to such Fund the quantity of securities in a fungible bulk
of securities registered in the name of The Trust Company (or its nominee) or
shown in The Trust Company's account on the books of a Securities Depository or
Book-Entry System. At least quarterly and from time to time, The Trust Company
shall furnish the Fund with a detailed statement of the Property held for the
Fund under this Agreement.
8. Use of Securities Depository or Book-Entry System. The Fund shall deliver
to The Trust Company a certified resolution of the Board of Trustees of the Fund
approving, authorizing and instructing The Trust Company on a continuous and
ongoing basis until instructed to the contrary by Proper Instructions actually
received by The Trust Company (i) to deposit in a Securities Depository or Book-
Entry System all securities of the Fund eligible for deposit therein and (ii) to
utilize a Securities Depository or Book-Entry System to the extent possible in
connection with the performance of its duties hereunder, including without
limitation settlements of purchases and sales of securities by the Fund.
Without limiting the generality of such use, it is agreed that the following
provisions shall apply thereto:
(a) Securities and any cash of the Fund deposited in a Securities
Depository or Book-Entry System will at all times (1) be represented in an
account of The Trust Company in the Securities Depository or Book Entry System
(the "Account") and (2) be segregated from any assets and cash controlled by The
Trust Company in other than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities. The Trust Company will
effect payment for securities and receive and deliver securities in accordance
with accepted industry
practices as set forth in (b) below, unless the Fund has given The Trust Company
Proper Instructions to the contrary. The records of The Trust Company with
respect to securities of the Fund maintained in a Securities Depository or Book
Entry System shall identify by book-entry those securities belonging to the
Fund.
(b) The Trust Company shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the Securities Depository or Book
Entry System that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of The Trust Company to reflect such
payment and transfer for the account of the Fund. Upon receipt of Proper
Instructions, The Trust Company shall transfer securities sold for the account
of the Fund upon (i) receipt of advice from the Securities Depository or Book
Entry System that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of The Trust Company to
reflect such transfer and payment for the account of the Fund. Copies of all
advices from the Securities Depository or Book Entry System of transfers of
securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by The Trust Company and be provided to the Fund at its request.
Upon request, The Trust Company shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written advice or
notice and shall furnish to the Fund copies of daily transaction sheets
reflecting that day's transactions in a Securities Depository or Book Entry
System for the account of the Fund.
(c) The Trust Company shall provide the Fund with any report obtained by
The Trust Company on the Securities Depository or Book Entry System's accounting
system, internal accounting control and procedures for safeguarding securities
deposited in the Securities Depository or Book Entry System;
(d) All Books and records maintained by The Trust Company which relate to
the Fund participation in a Securities Depository or Book-Entry System will at
all times during The Trust Company's regular business hours be open to the
inspection of the Fund's duly authorized employees or agents, and the Fund will
be furnished with all information in respect of the services rendered to it as
it may require.
(e) Anything to the contrary in this Agreement notwithstanding, The Trust
Company shall be liable to the Fund for any loss or damage to the Fund resulting
from any negligence, misfeasance or misconduct of The Trust Company or any of
its agents or of any of its or their employees in connection with its or their
use of the Securities Depository or Book Entry Systems or from failure of The
Trust Company or any such agent to enforce effectively such rights as it may
have against such Securities Depository or Book Entry System; at the election of
the Fund, it shall be entitled to be subrogated to the rights of The Trust
Company with respect to any claim against the Securities Depository or Book
Entry System or any other person which The Trust Company may have as a
consequence of any such loss or damage if and to the extent that the Fund has
not been made whole for any such loss or damage.
9. Segregated Account. The Trust Company shall upon receipt of Proper
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/or securities upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees 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 trust purposes.
10. Instructions Consistent with the Declaration, etc.
(a) Unless otherwise provided in this Agreement, The Trust Company shall
act only upon Proper Instructions. The Trust Company may assume that any Proper
Instruction received hereunder are not in any way inconsistent with any
provision of the Declaration or By-Laws or any vote or resolution of the Fund's
Board of Trustees. The Trust Company shall be entitled to rely upon any Proper
Instructions actually received by The Trust Company pursuant to this Agreement.
The Fund agrees that The Trust Company shall incur no liability in acting in
good faith upon Proper Instructions given to The Trust Company, except to the
extent such liability was incurred as a result of The Trust Company's negligence
or willful misconduct. In accord with instructions from the Fund, as required by
accepted industry practice or as The Trust Company may elect in effecting the
execution of Fund instructions, advances of cash or other Property made by The
Trust Company, arising from the purchase, sale, redemption, transfer or other
disposition of Property of the Fund, or in connection with the disbursement of
funds to any party, or in payment of fees, expenses, claims or liabilities owed
to The Trust Company by the Fund, or to any other party which has secured
judgment in a court of law against the Fund which creates an overdraft in the
accounts or overdelivery of Property, shall be deemed a loan by The Trust
Company to the Fund, payable on demand, bearing interest at such rate
customarily charged by The Trust Company for similar loans.
(b) The Fund agrees that test arrangements, authentication methods or
other security devices to be used with respect to instructions which the Fund
may give by telephone, telex, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as The Trust Company may put into effect and modify from time to
time. The Fund shall safeguard any test keys, identification codes or other
security devices which The Trust Company makes available to the Fund and agrees
that the Fund shall be responsible for any loss, liability or damage incurred by
The Trust Company or by the Fund as a result of The Trust Company's acting in
accordance with instructions from any unauthorized person using the proper
security device except to the extent such loss, liability or damage was incurred
as a result of The Trust Company's negligence or willful misconduct. The Trust
Company may electronically record, but shall not be obligated to so record, any
instructions given by telephone and any other telephone discussions with respect
to the Fund. In the event that the Fund uses The Trust Company's electronic
communications or information system, the Fund agrees that The Trust Company is
not responsible for the consequences of the failure of that system to perform
for any reason, beyond the reasonable control of The Trust Company, or the
failure of any communications carrier, utility, or communications network. In
the event that system is inoperable, the Fund agrees that it
will accept the communication of transaction instructions by telephone,
facsimile transmission on equipment compatible to The Trust Company's facsimile
receiving equipment or by letter, at no additional charge to the Fund.
(c) The Trust Company shall transmit promptly to the Fund all written
information (including, without limitation, pendency of maturities of securities
and expirations of rights in connection therewith received by The Trust Company
from issuers of the securities being held for the Fund. With respect to tender
or exchange offers, The Trust Company shall transmit promptly by facsimile to
the Fund all written information received by The Trust Company from issuers of
the securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take action
with respect to any tender offer, exchange offer or any other similar
transaction, the Fund shall notify The Trust Company at least three business
days prior to the date on which The Trust Company is to take such action or upon
the date such notification is first received by the Fund, if later. If any
Property registered in the name of a nominee of The Trust Company is called for
partial redemption by the issuer of such property, The Trust Company is
authorized to allot the called portion to the respective beneficial holders of
the Property in such manner deemed to be fair and equitable by The Trust Company
in its sole discretion.
11. Transactions not Requiring Instructions. The Trust Company is authorized
to take the following action without Proper Instructions:
(a) Collection of Income and Other Payments. The Trust Company shall:
(i) collect and receive on a timely basis for the account of the
Fund, all income and other payments and distributions included or to be included
in the Property of the Fund, and promptly advise the Fund of such receipt and
shall credit such income, as collected, to the Fund. From time to time, The
Trust Company may elect, but shall not be obligated, to credit the account with
interest, dividends or principal payments on payable or contractual settlement
date, in anticipation of receiving same from a payor, central depository, broker
or other agent employed by the Fund or The Trust Company. Any such crediting and
posting shall be at the Fund's sole risk, and The Trust Company shall be
authorized to reverse any such advance posting in the event it does not receive
good funds from any such payor, central depository, broker or agent of the
Customer. The Trust Company agrees to promptly notify the Fund of the reversal
of any such advance posting.
(ii) endorse and deposit for collection in the name of the Fund,
checks, drafts, or other orders for the payment of money on the same day as
received;
(iii) present for payment and collect the amount payable upon all
securities which may mature or be redeemed, or otherwise become payable on the
date such securities become payable;
(iv) take any action which may be necessary and proper in connection
with the collection and receipt of such income and other payments and the
endorsement for collection of checks, drafts and other negotiable instruments;
(v) to effect an exchange of the securities where the par value is
changed, and to surrender securities at maturity or upon an earlier redemption,
or when securities otherwise become payable, against payment therefore in
accordance with accepted industry practice. If any Property registered in the
name of a nominee of The Trust Company is called for partial redemption by the
issuer of such property, The Trust Company is authorized to allot the called
portion to the respective beneficial holders of the Property in such manner
deemed to be fair and equitable by The Trust Company in its sole discretion.
12. Transactions Requiring Instructions. In addition to the actions requiring
Proper Instructions set forth herein, upon receipt of Proper Instructions and
not otherwise, The Trust Company, directly or through the use of a Securities
Depository or Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Proper Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any securities may be
exercised;
(b) Deliver any securities held for the Fund against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
issuer of securities or corporation, or the exercise of any conversion
privilege;
(c) Deliver any securities held for the Fund to any protective committee,
reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale of assets of any
issuer of securities or corporation, against receipt of such certificates of
deposit, interim receipts or other instruments or documents, and cash, if any,
as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in said instructions to be for the purpose
of effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
(e) Surrender, in connection with their exercise, warrants, rights or
similar securities, provided that in each case, the new securities and cash, if
any, are to be delivered to The Trust Company;
(f) Deliver securities upon receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Fund;
(g) Deliver securities pursuant to any other proper corporate purpose, but
only upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of
Trustees signed by an officer of the Funds and certified by the Secretary or an
Assistant Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such purpose to be
a proper trust purpose, and naming the person or persons to whom delivery of
such securities shall be made.
13. Purchase of Securities. Promptly after the purchase of securities by the
investment manager, the Fund shall deliver to The Trust Company (as Custodian)
Proper Instructions specifying with respect to such purchase: (a) the name of
the issuer, (b) the number of shares, (c) the total amount payable upon such
purchase and (d) the Fund name. The Trust Company shall upon receipt of
securities purchased by or for the Fund registered in the name of the Fund or in
the name of a nominee of The Trust Company or of the Fund, pay out of the monies
held for the account of the Fund the total amount payable to the person from
whom or the broker through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Proper Instructions.
Except as specifically stated otherwise in this Agreement, in any and every case
where payment for purchase of securities for the account of the Fund is made by
The Trust Company in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund to so pay in advance, The
Trust Company shall be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by The Trust Company.
14. Sale of Securities. Promptly after each sale of securities by the Fund at
the instruction of the investment advisor, the Fund shall deliver to The Trust
Company (as Custodian) Proper Instructions, specifying with respect to each such
sale; (a) the name of the issuer, (b) the number of shares sold, and accrued
interest, if any, (c) the date of sale, (d) the sale price, (e) the total amount
payable to the Fund upon such sale and (f) the Fund name. The Trust Company
shall deliver the securities upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the total amount payable
as set forth in such Proper Instructions. Subject to the foregoing, The Trust
Company may accept payment in such form as shall be satisfactory to it, and may
deliver securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.
15. Authorized Shares. The Fund has an unlimited number of authorized shares.
16. Records. The books and records pertaining to the Fund which are in the
possession of The Trust Company shall be the property of the Fund. Such books
and records shall be prepared and maintained as required by the 1940 Act, as
amended, and other applicable securities laws and rules and regulations. The
Fund, or the Fund's authorized representative, shall have access to such books
and records at all times during The Trust Company's normal business hours, and
such books and records shall be surrendered to the Fund promptly upon request.
Upon reasonable request of the Fund, copies of any such books and records shall
be provided by The Trust Company to the Fund or the Fund's authorized
representative at the Fund's expense.
17. Cooperation with Accountants. The Trust Company shall cooperate with the
Fund's independent certified public accountants and shall take all reasonable
action in the performance
of its obligations under this Agreement to assure that the necessary information
is made available to such accountants for the expression of their unqualified
opinion, including but not limited to the opinion included in the Fund's Form N-
2, Form N-SAR and other reports to the securities and Exchange Commission and
with respect to any other requirement of such Commission.
18. Reports to Fund by Independent Public Accountants. The Trust Company shall
provide the Fund, at such times as the Fund may reasonably require, with reports
by independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, including securities
deposited and/or maintained in a Securities Depository or Book Entry System,
relating to the services provided by The Trust Company under this Contract; such
reports shall be of sufficient scope and in sufficient detail, as may reasonably
be required by the Fund to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
19. Confidentiality. The Trust Company agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the Fund
all records and other information relative to the Fund and its prior, present or
potential Shareholders and relative to the managers and its prior, present or
potential customers, and not to use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where The Trust
Company may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund. Nothing contained herein,
however, shall prohibit The Trust Company from advertising or soliciting the
public generally with respect to other products or services, regardless of
whether such advertisement or solicitation may include prior, present or
potential Shareholders of the Fund.
20. Equipment Failures. In the event of equipment failures beyond The Trust
Company's control, The Trust Company shall, at no additional expense to the
Fund, take reasonable steps to minimize service interruptions but shall not have
liability with respect thereto. The Trust Company shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provisions for back up emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
21. Right to Receive Advice.
(a) If The Trust Company shall be in doubt as to any action to be taken or
omitted by it, it may request, and shall receive, from the Fund clarification or
advice.
(b) If The Trust Company shall be in doubt as to any question of law
involved in any action to be taken or omitted by The Trust Company, it may
request advice at its own cost from counsel of its own choosing (who may be
counsel for the Fund or The Trust Company, at the option of The Trust Company).
(c) In case of conflict between directions or advice received by The Trust
Company pursuant to subparagraph (a) of this paragraph and advice received by
The Trust Company pursuant to subparagraph (b) of this paragraph, U.S. Trust
shall be entitled to rely on and follow the advice received pursuant to the
latter provision alone.
(d) The Trust Company shall be protected in any action or inaction which
it takes or omits to take in reliance on any directions or advice received
pursuant to subparagraphs (a) or (b) of this section which The Trust Company,
after receipt of any such directions or advice, in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon The Trust Company any obligation (i) to seek
such directions or advice, or (ii) to act in accordance with such directions or
advice when received, unless, under the terms of another provision of this
Agreement, the same is a condition to The Trust Company's properly taking or
omitting to take such action. Nothing in this subsection shall excuse The Trust
Company when an action or omission on the part of The Trust Company constitutes
willful misfeasance, bad faith, negligence or reckless disregard by The Trust
Company of its duties under this Agreement.
22. Compliance with Governmental Rule and Regulations. The Fund assumes full
responsibility for insuring that the contents of each Prospectus of the Fund
complies with all applicable requirements of the 1933 Act, the 1940 Act, and any
laws, rules and regulations of governmental authorities having jurisdiction.
23. Compensation. As compensation for the services rendered by The Trust
Company during the term of this Agreement, the Fund will pay to The Trust
Company, in addition to reimbursement of its out-of-pocket expenses, quarterly
fees as outlined in Exhibit A.
24. Indemnification. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless The Trust Company and its nominees from all taxes,
charges, expenses, assessments, claims, and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the Securities Exchange Act
of 1934, the 1940 Act, and any state and foreign securities and blue sky laws,
all as or to be amended from time to time) and expenses, including (without
limitation) attorney's fees and disbursements (hereafter "liabilities and
expenses"), arising directly or indirectly from any action or thing which The
Trust Company takes or does or omits to take or do (i) at the request or on the
direction of or in reliance on the advice of the Fund, or (ii) upon Proper
Instructions, provided, that neither The Trust Company nor any of its nominees
or subcustodians shall be indemnified against any liability to the Fund or to
its Shareholders (or any expenses incident to such liability) arising out of (x)
The Trust Company's or such nominee's or subcustodian's own willful misfeasance,
bad faith, negligence or reckless disregard of its duties under this Agreement
or any agreement between The Trust Company and any nominee or subcustodian or
(y) The Trust Company's own negligent failure to perform its duties under this
Agreement. The Trust Company similarly agrees to indemnify and hold harmless the
Fund from all liabilities and expenses arising directly or indirectly from The
Trust Company's or such nominee's or sub-custodian's willful misfeasance, bad
faith, negligence or reckless disregard in performing its duties under this
Agreement. In the event of any advance of cash for any purpose
made by The Trust Company resulting from orders or Proper Instructions of the
Fund, or in the event that The Trust Company or its nominee or subcustodian
shall incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Agreement, except such as
may arise from its or its nominee's or subcustodian's own negligent action,
negligent failure to act, willful misconduct, or reckless disregard, the Fund
shall promptly reimburse The Trust Company for such advance of cash or such
taxes, charges, expenses, assessments, claims or liabilities.
25. Responsibility of The Trust Company. In the performance of its duties
hereunder, The Trust Company shall be obligated to exercise care and diligence
and to act in good faith to insure the accuracy and completeness of all services
performed under this Agreement. The Trust Company shall be responsible for its
own negligent failure or that of any subcustodian it shall appoint to perform
its duties under this Agreement but to the extent that duties, obligations and
responsibilities are not expressly set forth in this Agreement, The Trust
Company shall not be liable for any act or omission which does not constitute
willful misfeasance, bad faith, or negligence on the part of The Trust Company
or such subcustodian or reckless disregard of such duties, obligations and
responsibilities. Without limiting the generality of the foregoing or of any
other provision of this Agreement, The Trust Company in connection with its
duties under this Agreement shall, so long as and to the extent it is in the
exercise of reasonable care, not be under any duty or obligation to inquire into
and shall not be liable for or in respect of (a) the validity or invalidity or
authority or lack thereof of any advice, direction, notice or other instrument
which conforms to the applicable requirements of this Agreement, if any, and
which The Trust Company believes to be genuine, (b) the validity of the issue of
any securities purchased or sold by the Fund, the legality of the purchase or
sale thereof or the propriety of the amount paid or received therefor, (c) the
legality of the issue or sale of any Shares, or the sufficiency of the amount to
be received therefor, (d) the legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor, (e) the legality of the declaration
or payment of any dividend or distribution on Shares, of (f) delays or errors or
loss of data occurring by reason of circumstances beyond The Trust Company's
control, including acts of civil or military authority, national emergencies,
labor difficulties, fire, mechanical breakdown (except as provided in Section
20), flood or catastrophe, acts of God, insurrection, war, riots, or failure of
the mail, transportation, communication or power supply.
26. Collection of Income. The Trust Company shall collect on a timely basis
all income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by The Trust Company or its
agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, The Trust
Company shall detach and present for payment all coupons and other income items
requiring presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Fund on securities loaned
pursuant to the provisions of Section 9 shall be the responsibility of the Fund.
The Trust
Company will have no duty or responsibility in connection therewith, other than
to provide the Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
27. Ownership Certificates for Tax Purposes. The Trust Company shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of the Fund held by it and in connection with transfers of
securities.
28. Effective Period: Termination and Amendment.
This Agreement shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however, that The Trust Company shall not act under Section 8 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees of the Fund has approved the initial use of
a particular Securities Depository or Book Entry System and the receipt of an
annual certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by the Fund of such Securities Depository and/or
Book Entry System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended; provided further, however, that the Fund shall
not amend or terminate this Agreement in contravention of any applicable federal
or state regulations, or any provision of the Declaration of Trust, and further
provided, that the Fund may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for The Trust Company by giving notice
as described above to The Trust Company, or (ii) immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for The
Trust Company or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund shall pay to The Trust Company
such compensation as may be due as of the date of such termination and shall
likewise reimburse The Trust Company for its costs, expenses and disbursements.
29. Successor Custodian.
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, The Trust Company shall, upon termination, deliver to such successor
custodian at the office of the custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities Depository or Book Entry System.
If no such successor custodian shall be appointed, The Trust Company shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at
the office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
The Trust Company on or before the date when such termination shall become
effective, then The Trust Company shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the 1940 Act, of its own
selection having an aggregate capital, surplus, and undivided profits, as shown
by its last published report, of not less than $25,000,000, all securities,
funds and other properties held by The Trust Company and all instruments held by
The Trust Company relative thereto and all other property held by it under this
Agreement and to transfer to an account of such successor custodian all of the
Fund's securities held in any Securities Depository or Book Entry System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of The Trust Company after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, The Trust Company shall
be entitled to fair compensation for its services during such period as The
Trust Company retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations of
The Trust Company shall remain in full force and effect.
30. Notices. All notices and other communications (collectively referred to as
"Notice" or "Notices") in this section hereunder shall be in writing and shall
be first sent by telegram, cable, telex, or facsimile sending device and
thereafter by overnight mail for delivery on the next business day. Notices
shall be addressed (a) if to The Trust Company, at the The Trust Company's
address, 000 Xxxxxx Xxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000,
facsimile number (000) 000-0000; (b) if to the Fund, at the Fund's address, 0000
Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxx 00000, facsimile number
(000) 000-0000; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication. Notices sent by overnight mail shall be deemed to have been given
the next business day. Notices sent by messenger shall be deemed to have been
given on the day delivered, and notices sent by confirming telegram, cable,
telex or facsimile sending device shall be deemed to have been given
immediately. All postage, cable, telegram, telex and facsimile sending device
charges arising from the sending of a Notice hereunder shall be paid by the
sender.
31. Further Action. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
32. Amendments. This Agreement or any part hereof may be changed or waived
only by an instrument in writing signed by the party against which enforcement
of such change or waiver is sought.
33. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in Alabama and
governed by Alabama law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE TRUST COMPANY OF STERNE,
AGEE & XXXXX, INC.
Attest: By:
Xxxxxxx X. Xxxxx, President
XXX TRUST PREFERRED FUND I
Attest: By:
Xxxxx X. Xxxxxxxx, Xx., President
EXHIBIT A
CUSTODY SERVICE FEE
Administration and Maintenance Fee:
Transaction Fees:
$______ Per Book Entry Transaction
$______ Per Physical Transaction
$______ Per Wire Transfer
THE TRUST COMPANY OF STERNE,
AGEE & XXXXX, INC.
Attest: By:
Xxxxxxx X. Xxxxx, President
Date:
XXX TRUST PREFERRED FUND I
Attest: By:
Xxxxx X. Xxxxxxxx, Xx., President
Date:
