Exhibit 8.3
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective December 31, 1997, and is among THE CHASE
MANHATTAN BANK ("Bank"), FIRSTAR TRUST COMPANY ("Customer') and LKCM FUND
("Company") on behalf of its LKCM INTERNATIONAL FUND ("Fund").
1. CUSTOMER ACCOUNTS.
Bank, acting as "Securities Intermediary" (as defined in Section 15(g)
hereof) shall establish and maintain the following accounts ("Accounts"): (a) a
Custody Account (as defined in Section 15(b) hereof) in the name of Customer on
behalf of Fund for any and all Financial Assets, which shall, except as modified
by Section 15(d) hereof, mean stocks, shares, bonds, debentures, notes,
mortgages or other obligations for the payment of money, bullion, coin and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same or evidencing or representing any
other rights or interests therein and other similar property whether
certificated or uncertificated as may be received by Bank or its Subcustodian
(as defined in Section 3 hereof) for the account of Customer on behalf of Fund,
including as an "Entitlement Holder" as defined in Section 15(c) hereof); and
(b) an account in the name of Customer ("Deposit Account") for any and
all cash in any currency received by Bank or its Subcustodian for the account of
Customer on behalf of Fund, which cash shall not be subject to withdrawal by
draft or check.
Customer warrants its authority to: 1) deposit the cash and Financial
Assets (collectively "Assets") received in the Accounts and 2) give Instructions
(as defined in Section 11 hereof) concerning the Accounts. Bank may deliver
Financial Assets of the same class in place of those deposited in the Custody
Account.
Upon written agreement among Bank, Company and Customer, additional
Accounts may be established and separately accounted for as additional Accounts
hereunder.
2. MAINTENANCE OF FINANCIAL ASSETS AND CASH AT BANK AND SUBCUSTODIAN LOCATIONS.
Unless Instructions specifically require another location acceptable to
Bank:
(a) Financial Assets shall be held in the country or other jurisdiction
in which the principal trading market for such Financial Assets is located,
where such Financial Assets are to be presented for payment or where such
Financial Assets are acquired; and
(b) Cash shall be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular currency.
To the extent Instructions are issued and Bank can comply with such
Instructions, Bank is authorized to maintain cash balances on deposit for
Customer on behalf of Fund with itself or one of its "Affiliates" at such
reasonable rates of interest as may from time to time be paid on such accounts,
or in non-interest bearing accounts as Customer on behalf of Fund may direct, if
acceptable to Bank.
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For purposes hereof, the term "Affiliate" shall mean an entity controlling,
controlled by, or under common control with, Bank.
If Customer wishes to have any of its Assets held in the custody of an
institution other than the established Subcustodians as defined in Section 3 (or
their securities depositories), such arrangement must be authorized by a written
agreement, signed by Bank, Customer and Company.
3. SUBCUSTODIANS AND SECURITIES DEPOSITORIES.
Bank may act hereunder through the subcustodians listed in Schedule A
hereof with which Bank has entered into subcustodial agreements
("Subcustodians"). Customer and Company authorize Bank to hold Assets in the
Accounts in accounts which Bank has established with one or more of its branches
or Subcustodians. Bank and Subcustodians are authorized to hold any of Financial
Assets in their account with any securities depository in which they
participate.
Bank reserves the right to add new, replace or remove Subcustodians.
Customer and Company shall be given reasonable notice by Bank of any amendment
to Schedule A. Upon request by Customer or Company, Bank shall identify the
name, address and principal place of business of any Subcustodian of Company's
Assets and the name and address of the governmental agency or other regulatory
authority that supervises or regulates such Subcustodian.
4. USE OF SUBCUSTODIAN.
(a) Bank shall identify the Assets on its books as belonging to Customer
on behalf of Fund.
(b) A Subcustodian shall hold such Assets together with assets belonging
to other customers of Bank in accounts identified on such Subcustodian's books
as custody accounts for the exclusive benefit of customers of Bank.
(c) Any Assets in the Accounts held by a Subcustodian shall be subject
only to the instructions of Bank or its agent. Any Financial Assets held in a
securities depository for the account of a Subcustodian shall be subject only to
the instructions of such Subcustodian.
(d) Any agreement Bank enters into with a Subcustodian for holding
Bank's customers' assets shall provide that such assets shall not be subject to
any right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian except for safe custody or administration, and that the beneficial
ownership of such assets shall be freely transferable without the payment of
money or value other than for safe custody or administration, or, in the case of
cash deposits, except for liens or rights in favor of creditors of the
Subcustodian arising under bankruptcy, insolvency or similar laws. Where
Securities are deposited by a Subcustodian with a securities depository, Bank
shall cause the Subcustodian to identify on its books as belonging to Bank, as
agent, the Securities shown on the Subcustodian's account on the books of such
securities depository. The foregoing shall not apply to the extent of any
special agreement or arrangement made by Customer with any particular
Subcustodian.
5. DEPOSIT ACCOUNT TRANSACTIONS.
(a) Bank or its Subcustodians shall make payments from the Deposit
Account upon receipt of Instructions which include all information required by
Bank.
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(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, Bank, in its discretion, may
advance Company such excess amount which shall be deemed a loan payable on
demand, bearing interest at the rate customarily charged by Bank on similar
loans.
(c) If Bank credits the Deposit Account on a payable date, or at any
time prior to actual collection and reconciliation to the Deposit Account, with
interest, dividends, redemptions or any other amount due, Company shall promptly
return any such amount upon oral or written notification: (i) that such amount
has not been received in the ordinary course of business or (ii) that such
amount was incorrectly credited. If Company does not promptly return any amount
upon such notification, Bank shall be entitled, upon oral or written
notification to Company, to reverse such credit by debiting the Deposit Account
for the amount previously credited. Bank shall advise Customer, Company or an
Authorized Person regarding default in the payment of principal or income on
Securities; provided that, failure to give such advice shall not render Bank
liable for any such amount. Bank or its Subcustodian shall have no duty or
obligation to institute legal proceedings, file a claim or a proof of claim in
any insolvency proceeding or take any other action with respect to the
collection of such amount, but may act for Customer upon Instructions after
consultation with Customer and Company on behalf of Fund.
6. CUSTODY ACCOUNT TRANSACTIONS.
(a) Financial Assets shall be transferred, exchanged or delivered by
Bank or its Subcustodian upon receipt by Bank of Instructions which include all
information required by Bank. Settlement and payment for Financial Assets
received for, and delivery of Financial Assets out of, the Custody Account may
be made in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivery of
Financial Assets to a purchaser, dealer or their agents against a receipt with
the expectation of receiving later payment and free delivery. Delivery of
Financial Assets out of the Custody Account may also be made in any manner
specifically required by Instructions acceptable to Bank.
(b) Bank, in its discretion, may credit or debit the Accounts on a
contractual settlement date with cash or Financial Assets with respect to any
sale, exchange or purchase of Financial Assets. Otherwise, such transactions
shall be credited or debited to the Accounts on the date cash or Financial
Assets are actually received by Bank and reconciled to the Account.
(i) Bank may reverse credits or debits made to the Accounts in its
discretion if the related transaction fails to settle within a reasonable
period, determined by Bank in its discretion, after the contractual settlement
date for the related transaction.
(ii) If any Financial Assets delivered pursuant to this Section 6 are
returned by the recipient thereof, Bank may reverse the credits and debits of
the particular transaction at any time.
7. ACTIONS OF BANK.
Bank shall follow Instructions received regarding Assets held in the
Accounts. However, until it receives Instructions to the contrary, Bank shall:
(a) Present for payment any Financial Assets which are called, redeemed
or retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that Bank or
Subcustodian is actually aware of such opportunities.
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(b) Execute in the name of Company such ownership and other certificates
as may be required to obtain payments in respect of Financial Assets.
(c) Exchange interim receipts or temporary Financial Assets for
definitive Financial Assets.
(d) Appoint brokers and agents for any transaction involving the
Financial Assets, including, without limitation, Affiliates of Bank or any
Subcustodian.
(e) Issue statements to Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
Bank shall send Customer an advice or notification of any transfers of
Assets to or from the Accounts. Such statements, advices or notifications shall
indicate the identity of the entity having custody of the Assets. Unless
Customer sends Bank a written exception or objection to any Bank statement
within ninety (90) days of receipt, Customer shall be deemed to have approved
such statement. In such event, or where Customer has otherwise approved any such
statement, Bank shall, to the extent permitted by law, be released, relieved and
discharged with respect to all matters set forth in such statement or reasonably
implied therefrom as though it had been settled by the decree of a court of
competent jurisdiction in an action where Customer and all persons having or
claiming an interest in Customer or Customer's Accounts on behalf of the Fund
were parties.
All collections of funds or other property paid or distributed in
respect of Financial Assets in the Custody Account shall be made at the risk of
Customer. Bank shall have no liability for any loss occasioned by delay in the
actual receipt of notice by Bank or by its Subcustodians of any payment,
redemption or other transaction regarding Financial Assets in the Custody
Account in respect of which Bank has agreed to take any action hereunder.
8. CORPORATE ACTIONS; PROXIES; TAX RECLAIMS.
(a) Corporate Actions. Whenever Bank receives information concerning the
Financial Assets which requires discretionary action by the beneficial owner of
the Financial Assets (other than a proxy), such as subscription rights, bonus
issues, stock repurchase plans and rights offerings, or legal notices or other
material intended to be transmitted to securities holders ("Corporate Actions"),
Bank shall: (1) give Customer prompt notice of such Corporate Actions to the
extent that Bank's central corporate actions department has actual knowledge of
a Corporate Action in time to afford timely notice its customers; and (2) take
such steps as may reasonably be necessary to secure or otherwise prevent the
loss of rights relating to any Securities; provided that the timely monitoring
of publications typically used by custodians to monitor such actions, together
with the giving of the prompt notice referred to herein, shall fulfill Bank's
obligations under this Section 8(a).
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, Bank shall endeavor to obtain
Instructions from Customer or its Authorized Person (as defined in Section 10
hereof), but if Instructions are not received in time for Bank to take timely
action, or actual notice of such Corporate Action was received too late to seek
Instructions, Bank is authorized to sell such rights entitlement or fractional
interest and to credit the Deposit Account with the proceeds or take any other
action it deems, in good faith, to be appropriate in which case it shall be held
harmless for any such action.
(b) Proxy Voting. Bank shall provide proxy voting services, if elected
by Customer, in accordance with the terms of the proxy voting services rider
hereto. Proxy voting services may be provided by
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Bank or, in whole or in part, by one or more third parties appointed by Bank
(which may be Affiliates of Bank).
(c) Tax Reclaims.
(i) Subject to the provisions hereof, Bank shall apply for a reduction
of withholding tax and any refund of any tax paid or tax credits which apply in
each applicable market in respect of income payments on Financial Assets for the
benefit of Customer and Company which Bank believes may be available to such
Customer.
(ii) The provision of tax reclaim services by Bank is conditional upon
Bank receiving from the beneficial owner of Financial Assets (A) a declaration
of its identity and place of residence and (B) certain other documentation (pro
forma copies of which are available from Bank). Customer and Company acknowledge
that, if Bank does not receive such declarations, documentation and information,
additional United Kingdom taxation shall be deducted from all income received in
respect of Financial Assets issued outside the United Kingdom and that U.S.
non-resident alien tax or U.S. backup withholding tax shall be deducted from
U.S. source income. Customer and Company shall provide to Bank such
documentation and information as it may require in connection with taxation, and
warrants that, when given, this information shall be true and correct in every
respect, not misleading in any way, and contain all material information.
Customer undertakes to notify Bank immediately if any such information requires
updating or amendment.
(iii) Bank shall not be liable to Customer, the Company or any third
party for any taxes, fines or penalties payable by Bank, Company or Customer,
and shall be indemnified by the appropriate party to this Agreement accordingly,
whether these result from the inaccurate completion of documents by Customer,
Company or any third party acting as agent for Customer or Company, or as a
result of the provision to Bank or any third party of inaccurate or misleading
information or the withholding of material information by Customer, Company or
any other third party, or as a result of any delay of any revenue authority or
any other matter beyond the control of Bank.
(iv) Customer and Company confirm that Bank is authorized to deduct from
any cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority for whatever reason in respect
of the Securities or Cash Accounts.
(v) Bank shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to Customer
from time to time and Bank may, by notification in writing, at its absolute
discretion, supplement or amend the markets in which the tax reclaim services
are offered. Other than as expressly provided in this sub-clause, Bank shall
have no responsibility with regard to Customer's and Company's tax position or
status in any jurisdiction.
(vi) Customer confirms that Bank is authorized to disclose any
information requested by any revenue authority or any governmental body in
relation to Customer or the Financial Assets and/or Cash held for Customer.
(vii) Tax reclaim services may be provided by Bank or, in whole or in
part, by one or more third parties appointed by Bank (which may be Affiliates of
Bank); provided that Bank shall be liable for the performance of any such third
party to the same extent as Bank would have been if it performed such services
itself.
9. NOMINEES.
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Financial Assets which are ordinarily held in registered form may be
registered in a nominee name of Bank, Subcustodian or securities depository, as
the case may be. Bank may without notice to Customer or Company cause any such
Financial Assets to cease to be registered in the name of any such nominee and
to be registered in the name of Company on behalf of Fund. In the event that any
Financial Assets registered in a nominee name are called for partial redemption
by the issuer, Bank may allot the called portion to the respective beneficial
holders of such class of security in any manner Bank deems to be fair and
equitable. Customer shall hold Bank, Subcustodians, and their respective
nominees harmless from any liability arising directly or indirectly from their
status as a mere record holder of Financial Assets in the Custody Account.
10. AUTHORIZED PERSONS.
As used herein, the term "Authorized Person" means employees or agents
including investment managers as have been designated by written notice from
Customer or Company or their respective designated agents to act on behalf of
Customer or Company on behalf of the Fund. Such persons shall continue to be
Authorized Persons until such time as Bank receives Instructions from Customer
or Company or their respective designated agent that any such employee or agent
is no longer an Authorized Person.
11. INSTRUCTIONS.
The term "Instructions" means instructions of any Authorized Person
received by Bank, via telephone, telex, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system
acceptable to Bank which Bank believes in good faith to have been given by
Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Bank may specify. Unless
otherwise expressly provided, all Instructions shall continue in full force and
effect until canceled or superseded. The term "Instructions" includes, without
limitation, instructions to sell, assign, transfer, deliver, purchase or receive
for the Custody Account, any and all stocks, bonds and other Financial Assets or
to transfer funds in the Cash Account.
Any Instructions delivered to Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but Customer and Company shall
hold Bank harmless for the failure of an Authorized Person to send such
confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or Bank's failure to produce such confirmation
at any subsequent time. Bank may electronically record any Instructions given by
telephone, and any other telephone discussions with respect to the Custody
Account. Customer shall be responsible for safeguarding any testkeys,
identification codes or other security devices which Bank shall make available
to Customer or its Authorized Persons.
12. STANDARD OF CARE; LIABILITIES.
(a) Bank shall be responsible for the performance of only such duties as
are set forth herein or expressly contained in Instructions which are consistent
with the provisions hereof as follows:
(i) Bank shall use reasonable care with respect to its obligations
hereunder and the safekeeping of Assets. The Bank shall be liable to the
Customer for any loss which shall occur as the result of the failure of a
Subcustodian to exercise reasonable care with respect to the safekeeping of such
Assets to the same extent that the Bank would be liable to the Customer if the
Bank were holding such Assets in New York. In the event of any loss to Customer
by reason of the failure of Bank or its Subcustodian to utilize reasonable care,
Bank shall be liable to Customer only to the extent of Customer's direct
damages, to be determined based on the market value of the property which is the
subject of the loss at the date of discovery of such loss and without reference
to any special conditions
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or circumstances. Bank shall have no liability whatsoever for any consequential,
special, indirect or speculative loss or damages (including, but not limited to,
lost profits) suffered by Customer or Company, as appropriate, in connection
with the transactions contemplated hereby and the relationship established
hereby even if Bank has been advised as to the possibility of the same and
regardless of the form of the action.
(ii) Subject to Bank having selected a Subcustodian with reasonable care
and Bank's duty to use reasonable care in the monitoring of a Subcustodian's
financial condition as reflected in its published financial statements and other
publicly available financial information, Bank shall not be responsible for the
insolvency of any Subcustodian which is not a branch or Affiliate of Bank. Bank
shall not be responsible for any act, omission, default or the solvency of any
broker or agent which it or a Subcustodian appoints unless such appointment was
made negligently or in bad faith.
(iii) Bank shall be indemnified by, and without liability to Customer or
Company for any action taken or omitted by Bank whether pursuant to Instructions
or otherwise within the scope hereof if such act or omission was in good faith,
without negligence. In performing its obligations hereunder, Bank may rely on
the genuineness of any document which it believes in good faith to have been
validly executed.
(iv) Company shall pay for and hold Bank harmless from any liability or
loss resulting from the imposition or assessment of any taxes or other
governmental charges, and any related expenses with respect to income from or
Assets in the Accounts.
(v) Bank shall be entitled to rely, and may act, upon the advice of
counsel (who may be counsel for Customer and/or Company) on all matters and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
(vi) Bank need not maintain any insurance for the benefit of Customer
and Company.
(vii) Without limiting the foregoing, Bank shall not be liable for any
loss which results from: 1) the general risk of investing, or 2) investing or
holding Assets in a particular country including, but not limited to, losses
resulting from malfunction, interruption of or error in the transmission of
information caused by any machines or system or interruption of communication
facilities, abnormal operating conditions, nationalization, expropriation or
other governmental actions; regulation of the banking or securities industry;
currency restrictions, devaluations or fluctuations; and market conditions which
prevent the orderly execution of securities transactions or affect the value of
Assets; except that, with respect to the failure of machines, systems,
interruption of communication facilities or abnormal operating conditions on
Bank or a Subcustodian's premises or otherwise within the control of Bank or a
Subcustodian, Bank shall not be so excused to the extent that such failure was
on account of Bank's or the Subcustodian's (as the case may be) negligence.
(viii) No party shall be liable to the others for any loss due to forces
beyond its control including, but not limited to strikes or work stoppages, acts
of war (whether declared or undeclared) or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that Bank shall have no duty or
responsibility to:
(i) question Instructions or make any suggestions to Customer,
Company, or an Authorized Person regarding such Instructions;
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(ii) supervise or make recommendations with respect to investments or
the retention of Financial Assets;
(iii) evaluate or report to Customer or an Authorized Person regarding
the financial condition of any broker, agent or other party to which Financial
Assets are delivered or payments are made pursuant hereto, except for brokers
appointed to dispose of fractional shares; and
(iv) review or reconcile trade confirmations received from brokers.
Customer, Company or its Authorized Persons issuing Instructions shall bear any
responsibility to review such confirmations against Instructions issued to and
statements issued by Bank.
(c) Customer and Company authorize Bank to act hereunder notwithstanding
that Bank or any of its divisions or Affiliates may have a material interest in
a transaction, or circumstances are such that Bank may have a potential conflict
of duty or interest including the fact that Bank or any of its Affiliates may
provide brokerage services to other customers, act as financial advisor to the
issuer of Financial Assets, act as a lender to the issuer of Financial Assets,
act in the same transaction as agent for more than one customer, have a material
interest in the issue of Financial Assets, or earn profits from any of the
activities listed herein.
13. FEES AND EXPENSES.
Customer on behalf of Fund shall pay Bank for its services hereunder the
fees set forth in Schedule B hereto or such other amounts as may be agreed upon
in writing, together with Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees. Bank shall have a lien on
and is authorized to charge any Accounts of Customer opened on behalf of Fund
for any amount owing by Customer on behalf of Fund to Bank under any provision
hereof
14. MISCELLANEOUS.
(a) Foreign Exchange Transactions. To facilitate the administration of
Customer's trading and investment activity on behalf of Fund, Bank is authorized
to enter into spot or forward foreign exchange contracts with Company or an
Authorized Person for Company and may also provide foreign exchange through its
subsidiaries, Affiliates or Subcustodians. Instructions, including standing
instructions, may be issued with respect to such contracts but Bank may
establish rules or limitations concerning any foreign exchange facility made
available. In all cases where Bank, its subsidiaries, Affiliates or
Subcustodians enter into a foreign exchange contract related to Accounts, the
terms and conditions of the then current foreign exchange contract of Bank, its
subsidiary, Affiliate or Subcustodian and, to the extent not inconsistent, this
Agreement shall apply to such transaction.
(b) Certification of Residency, etc. Customer and Company each certifies
that it is a resident of the United States and shall notify Bank of any changes
in residency. Bank may rely upon this certification or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
Customer or Company, as appropriate, shall indemnify Bank against all losses,
liability, claims or demands arising directly or indirectly from any such
certifications.
(c) Access to Records. Bank shall allow Customer's and Fund's
independent public accountant reasonable access to the records of Bank relating
to the Assets as is required in connection with their examination of books and
records pertaining to Customer's and Company's affairs. Subject to restrictions
under applicable law, Bank shall also obtain an undertaking to permit Customer's
and Company's independent
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public accountants reasonable access to the records of any Subcustodian which
has physical possession of any Assets as may be required in connection with the
examination of Customer's and Company's books and records.
(d) Governing Law; Successors and Assigns, Captions THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED IN NEW YORK and shall not be assignable by any party, but
shall bind the successors in interest of Customer, Company and Bank. The
captions given to the sections and subsections of this Agreement are for
convenience of reference only and are not to be used to interpret this
Agreement.
(e) Entire Agreement; Applicable Riders. Customer and Company each
represent that the Assets deposited in the Accounts are (Check one):
X Investment Company assets subject to certain U.S. Securities and
--- Exchange Commission rules and regulations;
--- Other (specify)
This Agreement consists exclusively of this document together with
Schedules A and B, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
x INVESTMENT COMPANY
--
PROXY VOTING
--
SPECIAL TERMS AND CONDITIONS
--
There are no other provisions hereof and this Agreement supersedes any
other agreements, whether written or oral, between the parties. Any amendment
hereto must be in writing, executed by both parties.
(f) Severability. In the event that one or more provisions hereof are
held invalid, illegal or unenforceable in any respect on the basis of any
particular circumstances or in any jurisdiction, the validity, legality and
enforceability of such provision or provisions under other circumstances or in
other jurisdictions and of the remaining provisions shall not in any way be
affected or impaired.
(g) Waiver. Except as otherwise provided herein, no failure or delay on
the part of either party in exercising any power or right hereunder operates as
a waiver, nor does any single or partial exercise of any power or right preclude
any other or further exercise, or the exercise of any other power or right. No
waiver by a party of any provision hereof, or waiver of any breach or default,
is effective unless in writing and signed by the party against whom the waiver
is to be enforced.
(h) Representations and Warranties. (i) Customer hereby represents and
warrants to Bank that: (A) it has full authority and power to deposit and
control the Financial Assets and cash deposited in the Accounts; (B) it has all
necessary authority to use Bank as its custodian; (C) this Agreement constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms; (D) it shall have full authority and power to borrow moneys and enter
into foreign exchange transactions; and (E) it has not relied on any oral or
written representation made by Bank or any person on its behalf, and
acknowledges that this Agreement sets out to the fullest extent the duties of
Bank. (ii) Bank hereby represents and warrants to Customer and Company that: (A)
it has the full power and authority to perform its obligations hereunder, (B)
this Agreement constitutes its legal, valid and binding obligation; enforceable
in accordance with its terms; and (C) that it has taken all necessary action to
authorize the execution and delivery hereof. (iii) Company hereby represents and
warrants to Bank that: (A) it has the full power and authority to perform its
obligations hereunder,
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(B) this Agreement constitutes its legal, valid and binding obligation;
enforceable in accordance with its terms; and (C) that it has taken all
necessary action to authorize the execution and delivery hereof.
(i) Notices. All notices hereunder shall be effective when actually
received. Any notices or other communications which may be required hereunder
are to be sent to the parties at the following addresses or such other addresses
as may subsequently be given to the other party in writing: (a) Bank: The Chase
Manhattan Bank, 4 Chase MetroTech Center, Brooklyn, N.Y. 11245, Attention:
Global Investor Services, Investment Management Group; and (b) Customer: Firstar
Trust Company, 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, att: Xxxxxx
Xxxxxxxxx; (c) Fund LKCM Fund: LKCM International Fund, 000 Xxxxxxxx Xx, (Xxxxx
0000), Xxxx Xxxxx, XX 00000, att: Xxxxxx Xxxxxxxxxx.
(j) Termination. This Agreement may be terminated by Customer, Company
or Bank by giving sixty (60) days written notice to the other, provided that
such notice to Bank shall specify the names of the persons to whom Bank shall
deliver the Assets in the Accounts. If notice of termination is given by Bank,
Customer, on behalf of Fund, shall, within sixty (60) days following receipt of
the notice, deliver to Bank Instructions specifying the names of the persons to
whom Bank shall deliver the Assets. In either case Bank shall deliver the Assets
to the persons so specified, after deducting any amounts which Bank determines
in good faith to be owed to it under Section 13. If within sixty (60) days
following receipt of a notice of termination by Bank, Bank does not receive
Instructions from Customer specifying the names of the persons to whom Bank
shall deliver the Assets, Bank, at its election, may deliver the Assets to a
bank or trust company doing business in the State of New York to be held and
disposed of pursuant to the provisions hereof, or to Authorized Persons, or may
continue to hold the Assets until Instructions are provided to Bank.
(k) Money Laundering. Customer warrants and undertakes to Bank for
itself and its agents that all Customer's customers are properly identified in
accordance with U.S. Money Laundering Regulations as in effect from time to
time.
(l) Imputation of certain information. Bank shall not be held
responsible for and shall not be required to have regard to information held by
any person by imputation or information of which Bank is not aware by virtue of
a "Chinese Wall" arrangement. If Bank becomes aware of confidential information
which in good faith it feels inhibits it from effecting a transaction hereunder
Bank may refrain from effecting it.
(m) Separate Portfolio. The parties acknowledge that the Fund is a
separate investment portfolio of the Company. All obligations of the Company
hereunder are limited to the Fund and any amount owed by the Company hereunder
shall be paid only out of the assets and property of the Fund.
(n) Business Trust. A copy of the Certificate of Trust of the Company is
on file with the Secretary of the State of Delaware and notice is hereby given
that this Agreement is not binding upon any of the trustees, officers or
shareholders of the Company individually, but are binding only upon the assets
and property of Fund. Bank agrees that no shareholder, trustee or officer of
Company or Fund may be held personally liable or responsible for any obligation
of Fund arising hereunder.
15. DEFINITIONS.
As used herein, the following terms shall have the meaning hereinafter
stated:
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a) "Certificated Security" shall mean a security that is represented
by a certificate.
b) "Custody Account" means each Securities custody account on Bank's records to
which Financial Assets are or may be credited pursuant hereto.
c) "Entitlement Holder" shall mean the person on the records of a Securities
Intermediary as the person having a Securities Entitlement against the
Securities Intermediary.
d) "Financial Asset" shall mean, as the context requires, either the asset
itself or the means by which a person's claim to it is evidenced, including a
Certificated Security or Uncertificated Security, a security certificate, or a
Securities Entitlement.
e) "Securities" means stocks, bonds, rights, warrants and other negotiable and
non-negotiable paper whether issued as Certificated Securities or Uncertificated
Securities and commonly traded or dealt in on securities exchanges or financial
markets, and other obligations of an issuer, or shares, participations and
interests in an issuer recognized in an area in which it is issued or dealt in
as a medium for investment and any other property as shall be acceptable to Bank
for the Custody Account.
f) "Securities Entitlement" shall mean the rights and property interest of an
Entitlement Holder with respect to a Financial Asset as set forth in Part 5 of
the Uniform Commercial Code.
g) "Securities Intermediary" shall mean Bank, a Subcustodian, a securities
depository, and any other financial institution which in the ordinary course of
business maintains custody accounts for others and acts in that capacity.
h) "Uncertificated Security" shall mean a security that is not represented
by a certificate.
i) "Uniform Commercial Code" means Article 8 of the Uniform Commercial Code of
the State of New York, as the same may be amended from time to time.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first-above written.
LKCM FUND on behalf of the LKCM INTERNATIONAL FUND
By: /s/ Xxxxxx Xxxxxxxxxx
Title: Secretary and Treasurer
Date: 1/5/98
FIRSTAR TRUST COMPANY
By: /s/ Xxx Xxxxxxx
Title: Sr. Vice President
Date: January 2, 0000
XXX XXXXX XXXXXXXXX BANK
Xxxxxx X. Xx Xxxx
Vice President
January 8, 1998
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Investment Company Rider to Global Custody Agreement
among THE CHASE MANHATTAN BANK,
FIRSTAR TRUST COMPANY, and LKCM FUND
on behalf of its LKCM INTERNATIONAL FUND
effective December 31, 1997
The following modifications are made to the Agreement:
A. Add a new Section 16 to the Agreement as follows:
"16. Compliance with SEC rule 17f-5.
(a) Company's board of directors (or equivalent body) (hereinafter
`Board') hereby delegates to Bank, and, except as to the country or countries as
to which Bank may, from time to time, advise Company that it does not accept
such delegation, Bank hereby accepts the delegation to it, of the obligation to
perform as Company's `Foreign Custody Manager' (as that term is defined in SEC
rule 17f-5(a)(2)), both for the purpose of selecting Eligible Foreign Custodians
(as that term is defined in SEC rule 17f-5(a)(1), and as the same may be amended
from time to time, or that have otherwise been made exempt pursuant to an SEC
exemptive order) to hold Assets and of evaluating the contractual arrangements
with such Eligible Foreign Custodians (as set forth in SEC rule 17f-5(c)(2));
provided that, the term Eligible Foreign Custodian shall not include any
`Compulsory Depository.' A Compulsory Depository shall mean a securities
depository or clearing agency the use of which is compulsory because: (1) its
use is required by law or regulation, (2) securities cannot be withdrawn from
the depository, or (3) maintaining securities outside the depository is not
consistent with prevailing custodial practices in the country which the
depository serves. Compulsory Depositories used by Chase as of the date hereof
are set forth in Appendix 1-A hereto, and as the same may be amended on notice
to Company from time to time.
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Company's Board of the placement of Assets
with particular Eligible Foreign Custodians and of any material change in the
arrangements with such Eligible Foreign Custodians, with such reports to be
provided to Company's Board at such times as the Board deems reasonable and
appropriate based on the circumstances of Company's foreign custody arrangements
(and until further notice from Company such reports shall be provided not less
than quarterly with respect to the placement of Assets with particular Eligible
Foreign Custodians and with reasonable promptness upon the occurrence of any
material change in the arrangements with such Eligible Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing as
Company's Foreign Custody Manager as a person having responsibility for the
safekeeping of Assets would exercise;
(iii) in selecting an Eligible Foreign Custodian, first have determined that
Assets placed and maintained in the safekeeping of such Eligible Foreign
Custodian shall be subject to reasonable care, based on the standards applicable
to custodians in the relevant market, after having considered all factors
relevant to the safekeeping of such Assets, including, without limitation, those
factors set forth in SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with the Eligible Foreign Custodian
(or, in the case of an Eligible Foreign Custodians that is a securities
depository or clearing agency, such contract, the rules or established practices
or procedures of the depository, or any combination of the foregoing)
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requires that the Eligible Foreign Custodian will provide reasonable care for
Assets based on the standards applicable to custodians in the relevant market.
In making this determination, Bank shall consider the provisions of Rule
17f-5(c)(2), together with whether Bank shall be liable to Company for any loss
which shall occur as the result of the failure of the Eligible Foreign Custodian
to exercise reasonable care with respect to the safekeeping of such Assets to
the same extent that Bank would be liable to Company if Bank were holding such
Assets in New York; and
(v) have established a system to monitor the continued appropriateness of
maintaining Assets with particular Eligible Foreign Custodians and of the
governing contractual arrangements; it being understood, however, that in the
event that Bank shall have determined that the existing Eligible Foreign
Custodian in a given country would no longer afford Assets reasonable care and
that no other Eligible Foreign Custodian in that country would afford reasonable
care, Bank shall promptly so advise Company and shall then act in accordance
with the Instructions of Company with respect to the disposition of the affected
Assets.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Assets on behalf of Company with Eligible Foreign Custodians pursuant to a
written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer and Company shall be
solely responsible to assure that the maintenance of Assets hereunder complies
with the rules, regulations, interpretations and exemptive orders promulgated by
or under the authority of the SEC.
(d) Bank represents to Company that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Company represents to Bank that: (1) the Assets being placed and
maintained in Bank's custody are subject to the Investment Company Act of 1940,
as amended (the `1940 Act'), as the same may be amended from time to time; (2)
its Board: (i) has determined that it is reasonable to rely on Bank to perform
as Company's Foreign Custody Manager (ii) or its Foreign Custody Manager (other
than Bank) shall have determined that Company may maintain Assets in each
country in which Company's Assets shall be held hereunder and determined to
accept the risks arising therefrom (including, but not limited to, a country's
financial infrastructure (and including any Compulsory Depository operating in
such country), prevailing custody and settlement practices, laws applicable to
the safekeeping and recovery of Assets held in custody, and the likelihood of
nationalization, currency controls and the like)."
B. Add the following after the first sentence of Section 3 of the
Agreement: "At the request of Customer, Bank may, but need not, add to Schedule
A an Eligible Foreign Custodian that is either a bank or a non-Compulsory
Depository where Bank has not acted as Foreign Custody Manager with respect to
the selection thereof. Bank shall notify Customer in the event that it elects
not to add any such entity."
C. Add the following language to the end of Section 3 of the Agreement:
"The term Subcustodian as used herein shall mean the following:
(a) a `U.S. Bank,' which shall mean a U.S. bank as defined in SEC
rule 17f-5(a)(7);
(b) an `Eligible Foreign Custodian,' which shall mean (i) a banking
institution or trust company, incorporated or organized under the laws of a
country other than the United States, that is regulated as such by that
country's government or an agency thereof, (ii) a majority-owned direct or
indirect subsidiary of a U.S. bank or bank holding company which subsidiary is
incorporated or organized under the laws of a country other than the United
States; (iii) a securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States, that acts as
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a system for the central handling of securities or equivalent book-entries in
that country and that is regulated by a foreign financial regulatory authority
as defined under section 2(a)(50) of the 1940 Act, (iv) a securities depository
or clearing agency organized under the laws of a country other than the United
States to the extent acting as a transnational system for the central handling
of securities or equivalent book-entries, and (v) any other entity that shall
have been so qualified by exemptive order, rule or other appropriate action of
the SEC.
For purposes of clarity, it is agreed that as used in Section 12(a)(i), the term
Subcustodian shall include neither any Eligible Foreign Custodian as to which
Bank has not acted as Foreign Custody Manager nor any Compulsory Depository."
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Appendix 1-A
COMPULSORY DEPOSITORIES
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