EXHIBIT G
CUSTODY AGREEMENT
AGREEMENT, dated as of September 12, 2003 between New River Funds, a
statutory trust organized and existing under the laws of the State of Delaware
having its principal office and place of business at 0000 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000 (the "Fund") and The Bank of New York, a New York corporation
authorized to do a banking business having its principal office and place of
business at Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual promises hereinafter set forth the
Fund and Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1.1. "ADMINISTRATOR" shall mean Gemini Fund Services, LLC and its
successors or permitted assigns.
1.2. "AUTHORIZED PERSON" shall be any person, whether or not an officer or
employee of the Fund and including officers or employees of the
Administrator, duly authorized by the Board to execute any
Certificate or to give any Oral Instruction with respect to one or
more Accounts, such persons to be designated in a Certificate annexed
hereto as Schedule I hereto or such other Certificate as may be
received by Custodian from time to time.
1.3. "BNY AFFILIATE" shall mean any office, branch or subsidiary of The
Bank of New York Company, Inc.
1.4. "BOARD"shall mean the Board of Trustees of the Fund.
1.5. "BOOK-ENTRY SYSTEM" shall mean the Federal Reserve/Treasury
book-entry system for receiving and delivering securities, its
successors and nominees.
1.6. "BUSINESS DAY" shall mean any day on which Custodian and any relevant
Depositories are open for business.
1.7. "CERTIFICATE" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to
Custodian, which is actually received by Custodian by letter or
facsimile transmission and signed on behalf of the Fund by an
Authorized Person or a person reasonably believed by Custodian to be
an Authorized Person.
1.8. "COMPOSITE CURRENCY UNIT" shall mean the Euro or any other composite
currency unit consisting of the aggregate of specified amounts of
specified currencies, as such unit may be constituted from time to
time.
1.9. "DEPOSITORY" shall include (a) the Book-Entry System, (b) the
Depository Trust Company, (c) any other clearing agency or securities
depository registered with the United States Securities and Exchange
Commission ("SEC") identified to the Fund from time to time, and (d)
the respective successors and nominees of the foregoing.
1.10. "FOREIGN DEPOSITORY" shall mean (a) Euroclear, (b) Clearstream
Banking, societe anonyme, (c) each Eligible Securities Depository as
defined in Rule 17f-7 under the Investment Company Act of 1940, as
amended (the "'40 Act"), identified to the Fund from time to time,
and (d) the respective successors and nominees of the foregoing.
1.11. "INSTRUCTIONS" shall mean communications transmitted by electronic or
telecommunications media, including S.W.I.F.T., computer-to-computer
interface, or dedicated transmission lines.
1.12. "ORAL INSTRUCTIONS" shall mean verbal instructions received by
Custodian from an Authorized Person or from a person reasonably
believed by Custodian to be an Authorized Person.
1.13. "SERIES" shall mean the various portfolios, if any, of the Fund
listed on Schedule II hereto, and if none are listed references to
Series shall be references to the Fund.
1.14. "SECURITIES" shall include, without limitation, any common stock and
other equity securities, bonds, debentures and other debt securities,
notes, mortgages or other obligations, and any instruments
representing rights to receive, purchase, or subscribe for the same,
or representing any other rights or interests therein (whether
represented by a certificate or held in a Depository or by a
Subcustodian).
1.15. "SUBCUSTODIAN" SHALL MEAN A BANK (INCLUDING ANY BRANCH THEREOF) OR
OTHER FINANCIAL INSTITUTION (other than a Foreign Depository) located
outside the U.S. which is utilized by Custodian in connection with
the purchase, sale or custody of Securities hereunder and identified
to the Fund from time to time, and their respective successors and
nominees.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
2.1. (a) The Fund hereby appoints Custodian as custodian of all Securities
and cash at any time delivered to Custodian during the term of this
Agreement, and authorizes Custodian to hold Securities in registered
form in its name or the name of its nominees. Custodian hereby
accepts such appointment and agrees to establish and maintain one or
more securities accounts and cash accounts for each Series in which
Custodian will hold Securities and cash as provided herein. Custodian
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shall maintain books and records segregating the assets of each
Series from the assets of any other Series. Such accounts (each, an
"Account"; collectively, the "Accounts") shall be in the name of the
Fund.
(b) Custodian may from time to time establish on its books and
records such sub-accounts within each Account as the Fund and
Custodian may agree upon (each a "Special Account"), and Custodian
shall reflect therein such assets as the Fund may specify in a
Certificate or Instructions.
(c) Custodian may from time to time establish, pursuant to a written
agreement with any broker, dealer, future commission merchant or
other third party identified in a Certificate or Instructions, such
accounts on such terms and conditions as the Fund and Custodian shall
agree, and Custodian shall transfer to such account such Securities
and money as the Fund may specify in a Certificate or Instructions.
2.2. The Fund hereby represents and warrants, which representations and
warranties shall be continuing and shall be deemed to be reaffirmed
upon each delivery of a Certificate or each giving of Oral
Instructions or Instructions by the Fund, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement, and to
perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered
by the Fund, approved by a resolution of its Board, constitutes a
valid and legally binding obligation of the Fund, enforceable in
accordance with its terms, and there is no statute, regulation, rule,
order or judgment binding on it, and no provision of its charter or
by-laws, nor of any mortgage, indenture, credit agreement or other
contract binding on it or affecting its property, which would
prohibit its execution or performance of this Agreement;
(c) It is conducting its business in substantial compliance with all
applicable laws and requirements, both state and federal, and has
obtained all regulatory licenses, approvals and consents necessary to
carry on its business as now conducted;
(d) It will not use the services provided by Custodian hereunder in
any manner that is, or will result in, a violation of any law, rule
or regulation applicable to the Fund;
(e) Its Board or its foreign custody manager, as defined in Rule
17f-5 under the '40 Act, has determined that use of each Subcustodian
(including any Replacement Custodian) each Depository which Custodian
or any Subcustodian is authorized to utilize in accordance with
Section 1(a) of Article III hereof, satisfies the applicable
requirements of the `40 Act and Rules 17f-4 or 17f-5 thereunder, as
the case may be;
(f) The Fund or its investment adviser will determine that the
custody arrangements of each Foreign Depository provide reasonable
safeguards against the custody risks associated with maintaining
assets with such Foreign Depository within the meaning of Rule 17f-7
under the '40 Act;
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(g) It is fully informed of the protections and risks associated with
various methods of transmitting Instructions and Oral Instructions
and delivering Certificates to Custodian, understands that there may
be more secure methods of transmitting or delivering the same than
the methods selected by the Fund, agrees that the security procedures
(if any) to be utilized provide a commercially reasonable degree of
protection in light of its particular needs and circumstances, and
acknowledges and agrees that Instructions need not be reviewed by
Custodian, may conclusively be presumed by Custodian to have been
given by person(s) duly authorized, and may be acted upon as given;
(h) It shall manage its borrowings, including, without limitation,
any advance or overdraft (including any day-light overdraft) in the
Accounts, so that the aggregate of its total borrowings for each
Series does not exceed the amount such Series is permitted to borrow
under the `40 Act;
(i) Its transmission or giving of, and Custodian acting upon and in
reliance on, Certificates, Instructions, or Oral Instructions
pursuant to this Agreement shall at all times comply with the `40
Act;
(j) It shall impose and maintain restrictions on the destinations to
which cash may be disbursed by Instructions to ensure that each
disbursement is for a proper purpose; and
(k) It has the right to make the pledge and grant the security
interest and security entitlement to Custodian contained in Section 1
of Article V hereof, free of any right of redemption or prior claim
of any other person or entity, such pledge and such grants shall have
a first priority subject to no setoffs, counterclaims, or other liens
or grants prior to or on a parity therewith, and it shall take such
additional steps as Custodian may require to assure such priority.
2.3. The Fund hereby covenants that it shall from time to time complete
and execute and deliver to Custodian upon Custodian's request a Form
FR U-1 (or successor form) whenever the Fund borrows from Custodian
any money to be used for the purchase or carrying of margin stock as
defined in Federal Reserve Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
3.1. (a)Subject to the terms hereof, the Fund hereby authorizes Custodian
to hold any Securities received by it from time to time for the
Fund's account. Custodian shall be entitled to utilize Depositories,
Subcustodians, and, subject to subsection(c) of this Section III,
Foreign Depositories, to the extent possible in connection with its
performance hereunder. Securities and cash held in a Depository or
Foreign Depository will be held subject to the rules, terms and
conditions of such entity. Securities and cash held through
Subcustodians shall be held subject to the terms and conditions of
Custodian's agreements with such Subcustodians. Subcustodians may be
authorized to hold Securities in Foreign Depositories in which such
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Subcustodians participate. Unless otherwise required by local law or
practice or a particular subcustodian agreement, Securities deposited
with a Subcustodian, a Depositary or a Foreign Depository will be
held in a commingled account, in the name of Custodian, holding only
Securities held by Custodian as custodian for its customers.
Custodian shall identify on its books and records the Securities and
cash belonging to the Fund, whether held directly or indirectly
through Depositories, Foreign Depositories, or Subcustodians.
Custodian shall, directly or indirectly through Subcustodians,
Depositories, or Foreign Depositories, endeavor, to the extent
feasible, to hold Securities in the country or other jurisdiction in
which the principal trading market for such Securities is located,
where such Securities are to be presented for cancellation and/or
payment and/or registration, or where such Securities are acquired.
Custodian at any time may cease utilizing any Subcustodian and/or may
replace a Subcustodian with a different Subcustodian (the
"Replacement Subcustodian"). In the event Custodian selects a
Replacement Subcustodian, Custodian shall not utilize such
Replacement Subcustodian until after the Board or foreign custody
manager has determined that utilization of such Replacement
Subcustodian satisfies the requirements of the `40 Act and Rule 17f-5
thereunder.
(b) Unless Custodian has received a Certificate or Instructions to
the contrary, Custodian shall hold Securities indirectly through a
Subcustodian only if (i) the Securities are not subject to any right,
charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors or operators, including a receiver or
trustee in bankruptcy or similar authority, except for a claim of
payment for the safe custody or administration of Securities on
behalf of the Fund by such Subcustodian, and (ii) beneficial
ownership of the Securities is freely transferable without the
payment of money or value other than for safe custody or
administration.
(c) With respect to each Foreign Depository, Custodian shall exercise
reasonable care, prudence, and diligence (i) to provide the Fund with
an analysis of the custody risks associated with maintaining assets
with the Foreign Depository, and (ii) to monitor such custody risks
on a continuing basis and promptly notify the Fund of any material
change in such risks. The Fund acknowledges and agrees that such
analysis and monitoring shall be made on the basis of, and limited
by, information gathered from Subcustodians or through publicly
available information otherwise obtained by Custodian, and shall not
include any evaluation of Country Risks. As used herein the term
"Country Risks" shall mean with respect to any Foreign Depository:
(a) the financial infrastructure of the country in which it is
organized, (b) such country's prevailing custody and settlement
practices, (c) nationalization, expropriation or other governmental
actions, (d) such country's regulation of the banking or securities
industry, (e) currency controls, restrictions, devaluations or
fluctuations, and (f) market conditions which affect the order
execution of securities transactions or affect the value of
securities.
3.2. The Custodian shall maintain the Accounts, in the name of each
Series, and shall credit to the separate Account for each Series all
moneys received by it for the account of the Fund with respect to
such Series. Money credited to a separate Account for a Series shall
be disbursed by the Custodian only:
(a) As hereinafter provided in this Agreement;
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(b) Pursuant to Certificates setting forth the name and address of
the person to whom the payment is to be made, the Series account from
which payment is to be made and the purpose for which payment is to
be made; or
(c) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to such Series.
3.3. The Custodian shall furnish the Fund and the Administrator with an
advice of daily transactions, including a confirmation of each
transfer of Securities, and a monthly summary of all transfers to or
from the Accounts.
3.4. With respect to all Securities held hereunder, Custodian shall,
unless otherwise instructed to the contrary:
(a) Receive all income and other payments and advise the Fund as
promptly as practicable of any such amounts due but not paid;
(b) Present for payment and receive the amount paid upon all
Securities which may mature and advise the Fund as promptly as
practicable of any such amounts due but not paid;
(c) Forward to the Fund copies of all information or documents that
it may actually receive from an issuer of Securities which, in the
opinion of Custodian, are intended for the beneficial owner of
Securities;
(d) Execute, as custodian, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or
hereafter in effect in connection with the collection of bond and
note coupons;
(e) Hold directly or through a Depository, a Foreign Depository, or a
Subcustodian all rights and similar Securities issued with respect to
any Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other negotiable
instruments.
3.5. (a) Custodian shall notify the Fund of rights or discretionary
actions with respect to Securities held hereunder, and of the date or
dates by when such rights must be exercised or such action must be
taken, provided that Custodian has actually received, from the issuer
or the relevant Depository (with respect to Securities issued in the
United States) or from the relevant Subcustodian, Foreign Depository,
or a nationally or internationally recognized bond or corporate
action service to which Custodian subscribes, timely notice of such
rights or discretionary corporate action or of the date or dates such
rights must be exercised or such action must be taken. Absent actual
receipt of such notice, Custodian shall have no liability for failing
to so notify the Fund.
(b) Whenever Securities (including, but not limited to, warrants,
options, tenders, options to tender or non-mandatory puts or calls)
confer discretionary rights on the Fund or provide for discretionary
action or alternative courses of action by the Fund, the Fund shall
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be responsible for making any decisions relating thereto and for
directing Custodian to act. In order for Custodian to act, it must
receive the Fund's Certificate or Instructions at Custodian's
offices, addressed as Custodian may from time to time request, not
later than noon (New York time) at least two (2) Business Days prior
to the last scheduled date to act with respect to such Securities (or
such earlier date or time as Custodian may specify to the Fund).
Absent Custodian's timely receipt of such Certificate or
Instructions, Custodian shall not be liable for failure to take any
action relating to or to exercise any rights conferred by such
Securities.
3.6. All voting rights with respect to Securities, however registered,
shall be exercised by the Fund or its designee. For Securities issued
in the United States, Custodian's only duty shall be to mail to the
Fund any documents (including proxy statements, annual reports and
signed proxies) actually received by Custodian relating to the
exercise of such voting rights. With respect to Securities issued
outside of the United States, Custodian's only duty shall be to
provide the Fund with access to a provider of global proxy services
at the Fund's request. The Fund shall be responsible for all costs
associated with its use of such services.
3.7. Custodian shall promptly advise the Fund upon Custodian's actual
receipt of notification of the partial redemption, partial payment or
other action affecting less than all Securities of the relevant
class. If Custodian, any Subcustodian, any Depository, or any Foreign
Depository holds any Securities in which the Fund has an interest as
part of a fungible mass, Custodian, such Subcustodian, Depository, or
Foreign Depository may select the Securities to participate in such
partial redemption, partial payment or other action in any
non-discriminatory manner that it customarily uses to make such
selection.
3.8. Custodian shall not under any circumstances accept bearer interest
coupons, which have been stripped from United States federal, state
or local government or agency securities, unless explicitly agreed to
by Custodian in writing.
3.9. The Fund shall be liable for all taxes, assessments, duties and other
governmental charges, including any interest or penalty with respect
thereto ("Taxes"), with respect to any cash or Securities held on
behalf of the Fund or any transaction related thereto. The Fund shall
indemnify Custodian and each Subcustodian for the amount of any Tax
that Custodian, any such Subcustodian or any other withholding agent
is required under applicable laws (whether by assessment or
otherwise) to pay on behalf of, or in respect of income earned by or
payments or distributions made to or for the account of the Fund
(including any payment of Tax required by reason of an earlier
failure to withhold), except those payments arising out of
Custodian's own negligence or willful misconduct. Custodian shall, or
shall instruct the applicable Subcustodian or other withholding agent
to, withhold the amount of any Tax which is required to be withheld
under applicable law upon collection of any dividend, interest or
other distribution made with respect to any Security and any proceeds
or income from the sale, loan or other transfer of any Security. In
the event that Custodian or any Subcustodian is required under
applicable law to pay any Tax on behalf of the Fund, Custodian is
hereby authorized to withdraw cash from any cash account for the
respective Fund or series in the amount required to pay such Tax and
to use such cash, or to remit such cash to the appropriate
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Subcustodian or other withholding agent, for the timely payment of
such Tax in the manner required by applicable law. If the aggregate
amount of cash in all cash accounts is not sufficient to pay such
Tax, Custodian shall promptly notify the Fund of the additional
amount of cash (in the appropriate currency) required, and the Fund
shall directly deposit such additional amount in the appropriate cash
account promptly after receipt of such notice, for use by Custodian
as specified herein. In the event that Custodian reasonably believes
that Fund is eligible, pursuant to applicable law or to the
provisions of any tax treaty, for a reduced rate of, or exemption
from, any Tax which is otherwise required to be withheld or paid on
behalf of the Fund under any applicable law, Custodian shall, or
shall instruct the applicable Subcustodian or withholding agent to,
either withhold or pay such Tax at such reduced rate or refrain from
withholding or paying such Tax, as appropriate; provided that
Custodian shall have received from the Fund all documentary evidence
of residence or other qualification for such reduced rate or
exemption required to be received under such applicable law or
treaty. In the event that Custodian reasonably believes that a
reduced rate of, or exemption from, any Tax is obtainable only by
means of an application for refund, Custodian and the applicable
Subcustodian shall have no responsibility for the accuracy or
validity of any forms or documentation provided by the Fund to
Custodian hereunder. Except for any liability arising out of the
Custodian's or a Subcustodian's own negligence or willful misconduct,
the Fund hereby agrees to indemnify and hold harmless Custodian and
each Subcustodian in respect of any liability arising from any
underwithholding or underpayment of any Tax which results from the
inaccuracy or invalidity of any such forms or other documentation,
and such obligation to indemnify shall be a continuing obligation of
the Fund, its successors and assigns notwithstanding the termination
of this Agreement.
3.10. (a) For the purpose of settling Securities and foreign exchange
transactions, the Fund shall provide Custodian with sufficient
immediately available funds for all transactions by such time and
date as conditions in the relevant market dictate. As used herein,
"sufficient immediately available funds" shall mean either (i)
sufficient cash denominated in U.S. dollars to purchase the necessary
foreign currency, or (ii) sufficient applicable foreign currency, to
settle the transaction. Custodian shall provide the Fund with
immediately available funds each day which result from the actual
settlement of all sale transactions, based upon advices received by
Custodian from Subcustodians, Depositories, and Foreign Depositories.
Such funds shall be in U.S. dollars or such other currency as the
Fund may specify to Custodian.
(b) Any foreign exchange transaction effected by Custodian in
connection with this Agreement may be entered with Custodian or a BNY
Affiliate acting as principal or otherwise through customary banking
channels. The Fund may issue a standing Certificate or Instructions
with respect to foreign exchange transactions, but Custodian may
establish rules or limitations concerning any foreign exchange
facility made available to the Fund. The Fund shall bear all risks of
investing in Securities or holding cash denominated in a foreign
currency.
(c)To the extent that Custodian has agreed to provide pricing or
other information services in connection with this Agreement,
Custodian is authorized to utilize any vendor (including brokers and
dealers of Securities) reasonably believed by Custodian to be
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reliable to provide such information. The Fund understands that
certain pricing information with respect to complex financial
instruments (e.g., derivatives) may be based on calculated amounts
rather than actual market transactions and may not reflect actual
market values, and that the variance between such calculated amounts
and actual market values may or may not be material. Where vendors do
not provide information for particular Securities or other property,
an Authorized Person may advise Custodian in a Certificate regarding
the fair market value of, or provide other information with respect
to, such Securities or property as determined by it in good faith.
Except for any liability arising out of the Custodian's or a
Subcustodian's own negligence or willful misconduct, Custodian shall
not be liable for any loss, damage or expense incurred as a result of
errors or omissions with respect to any pricing or other information
utilized by Custodian hereunder.
3.11. Custodian shall promptly send to the Fund (a) any reports it receives
from a Depository on such Depository's system of internal accounting
control, and (b) such reports on its own system of internal
accounting control as the Fund may reasonably request from time to
time.
3.12. Until such time as Custodian receives a certificate to the contrary
with respect to a particular Security, Custodian may release the
identity of the Fund to an issuer which requests such information
pursuant to the Shareholder Communications Act of 1985 for the
specific purpose of direct communications between such issuer and
shareholder.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
4.1 Promptly after each purchase or sale of Securities by the Fund, the
Fund shall deliver or cause the Administrator to deliver to Custodian
a Certificate or Instructions, or with respect to a purchase or sale
of a Security generally required to be settled on the same day the
purchase or sale is made, Oral Instructions specifying all
information Custodian may reasonably request to settle such purchase
or sale. Custodian shall account for all purchases and sales of
Securities on the actual settlement date unless otherwise agreed by
Custodian.
4.2. The Parties shall agree upon written procedures designed to make sure
that each Certificate and Oral Instruction is authentic and
authorized. The Fund understands that when Custodian is instructed to
deliver Securities against payment, delivery of such Securities and
receipt of payment therefor may not be completed simultaneously.
Notwithstanding any provision in this Agreement to the contrary,
settlements, payments and deliveries of Securities may be effected by
Custodian or any Subcustodian in accordance with the customary or
established securities trading or securities processing practices and
procedures in the jurisdiction in which the transaction occurs,
including, without limitation, delivery to a purchaser or dealer
therefor (or agent) against receipt with the expectation of receiving
later payment for such Securities. The Fund assumes full
responsibility for all risks, including, without limitation, credit
risks, involved in connection with such deliveries of Securities.
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4.3. Custodian may, as a matter of bookkeeping convenience or by separate
agreement with the Fund, credit the Account with the proceeds from
the sale, redemption or other disposition of Securities or interest,
dividends or other distributions payable on Securities prior to its
actual receipt of final payment therefor. All such credits shall be
conditional until Custodian's actual receipt of final payment and may
be reversed by Custodian to the extent that final payment is not
received. Payment with respect to a transaction will not be "final"
until Custodian shall have received immediately available funds which
under applicable local law, rule and/or practice are irreversible and
not subject to any security interest, levy or other encumbrance, and
which are specifically applicable to such transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
5.1. If Custodian should in its sole discretion advance funds on behalf of
any Series which results in an overdraft (including, without
limitation, any day-light overdraft) because the money held by
Custodian in an Account for such Series shall be insufficient to pay
the total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate, Instructions
or Oral Instructions, or if an overdraft arises in the separate
account of a Series for some other reason, including, without
limitation, because of a reversal of a conditional credit or the
purchase of any currency, or if the Fund is for any other reason
indebted to Custodian with respect to a Series, including any
indebtedness to The Bank of New York under the Fund's Cash Management
and Related Services Agreement (except a borrowing for investment or
for temporary or emergency purposes using Securities as collateral
pursuant to a separate agreement and subject to the provisions of
Section 2 of this Article), such overdraft or indebtedness shall be
deemed to be a loan made by Custodian to the Fund for such Series
payable on demand and shall bear interest from the date incurred at a
rate per annum ordinarily charged by Custodian to its institutional
customers as such rate may be adjusted from time-to-time, provided
such advance did not arise out of Custodian's own negligence or
willful misconduct. In addition, the Fund hereby agrees that
Custodian shall to the maximum extent permitted by law have a
continuing lien, security interest, and security entitlement in and
to any property, including, without limitation, any investment
property or any financial asset, of such Series at any time held by
Custodian for the benefit of or control or in possession or control
of any third party acting in Custodian's behalf. The Fund authorizes
Custodian, in its sole discretion, at any time to charge any such
overdraft or indebtedness together with interest due thereon against
any balance of account standing to such Series' credit on Custodian's
books.
5.2. If the Fund borrows money from any bank (including Custodian if the
borrowing is pursuant to a separate agreement) for investment or for
temporary or emergency purposes using Securities held by Custodian
hereunder as collateral for such borrowings, the Fund shall deliver
to Custodian a Certificate specifying with respect to each such
borrowing: (a) the Series to which such borrowing relates; (b) the
name of the bank, (c) the amount of the borrowing, (d) the time and
date, if known, on which the loan is to be entered into, (e) the
total amount payable to the Fund on the borrowing date, (f) the
Securities to be delivered as collateral for such loan, including the
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name of the issuer, the title and the number of shares or the
principal amount of any particular Securities, and (g) a statement
specifying whether such loan is for investment purposes or for
temporary or emergency purposes and that such loan is in conformance
with the `40 Act and the Fund's prospectus. Custodian shall deliver
on the borrowing date specified in a Certificate the specified
collateral against payment by the lending bank of the total amount of
the loan payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. Custodian may, at the option
of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. Custodian
shall deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any transaction
described in this Section. The Fund shall cause all Securities
released from collateral status to be returned directly to Custodian,
and Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails
to specify in a Certificate the Series, the name of the issuer, the
title and number of shares or the principal amount of any particular
Securities to be delivered as collateral by Custodian, Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
6.1. Whenever the Fund shall sell any shares issued by the Fund ("Shares")
it shall deliver or cause the Administrator to deliver to Custodian a
Certificate or Instructions specifying the amount of money and/or
Securities to be received by Custodian for the sale of such Shares
and specifically allocated to an Account for such Series.
6.2. Upon receipt of such money, Custodian shall credit such money to an
Account in the name of the Series for which such money was received.
6.3. Upon issuance of any Shares of any Series described in the foregoing
provisions of this Article, the Custodian shall pay, out of the money
held for the account of such Series, all original issue or other
taxes required to be paid by the Fund in connection with such
issuance upon the receipt of a Certificate specifying the amount to
be paid.
6.4. Except as provided hereinafter, whenever the Fund desires Custodian
to make payment out of the money held by Custodian hereunder in
connection with a redemption of any Shares, it shall furnish to
Custodian a Certificate or Instructions specifying the total amount
to be paid for such Shares. Custodian shall make payment of such
total amount to the transfer agent specified in such Certificate or
Instructions out of the money held in an Account of the appropriate
Series.
6.5. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the
Fund, Custodian, unless otherwise instructed by a Certificate or
Instructions, shall, upon presentment of such check, charge the
amount thereof against the money held in the Account of the Series of
the Shares being redeemed, provided, that if the Fund or its agent
timely advises Custodian that such check is not to be honored,
Custodian shall return such check unpaid.
-11-
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
7.1. Whenever the Fund shall determine to pay a dividend or distribution
on Shares it shall furnish or cause the Administrator to furnish to
Custodian Instructions or a Certificate setting forth with respect to
the Series specified therein the date of the declaration of such
dividend or distribution, the total amount payable, and the payment
date.
7.2. Upon the payment date specified in such Instructions or Certificate,
Custodian shall pay out of the money held for the account of such
Series the total amount payable to the dividend agent of the Fund
specified therein.
ARTICLE VIII
CONCERNING CUSTODIAN
8.1. (a) Except as otherwise expressly provided herein, Custodian shall
not be liable for any costs, expenses, damages, liabilities or
claims, including attorneys' and accountants' fees (collectively,
"Losses"), incurred by or asserted against the Fund, except those
Losses arising out of Custodian's own negligence or willful
misconduct. The Custodian agrees to indemnify and hold harmless the
Fund and Fund's Trustees and officers to the extent described above
(including reasonable counsel fees) incurred or assessed against any
of them as a result of any breach or violation of this Agreement by
the Custodian or its officers, employees and agents or its nominees,
resulting from its negligence, willful misconduct, lack of good
faith, or reckless disregard of its duties. The Custodian shall be
liable to the Fund for any loss or damage resulting from the use of
any Depository arising by reason of any negligence, willful
misconduct, lack of good faith, or reckless disregard of its duties
on the part of the Custodian or any of its employees or agents. With
respect to any Losses incurred by the Fund as a result of the acts or
any failures to act by any Subcustodian (other than a BNY Affiliate),
Custodian shall take appropriate action to recover such Losses from
such Subcustodian; and Custodian's sole responsibility and liability
to the Fund shall be limited to amounts so received from such
Subcustodian (exclusive of costs and expenses incurred by Custodian).
In no event shall Custodian be liable to the Fund or any third party
for special, indirect or consequential damages, or lost profits or
loss of business, arising in connection with this Agreement, nor
shall Custodian or any Subcustodian be liable: (i) for acting in
accordance with any Certificate or Oral Instructions actually
received by Custodian and reasonably believed by Custodian to be
given by an Authorized Person; (ii) for acting in accordance with
Instructions without reviewing the same; (iii) for conclusively
presuming that all Instructions are given only by person(s) duly
authorized; (iv) for conclusively presuming that all disbursements of
cash directed by the Fund, whether by a Certificate, an Oral
Instruction, or an Instruction, are in accordance with Section 2(i)
of Article II hereof; (v) for holding property in any particular
country, including, but not limited to, Losses resulting from
nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; exchange or
currency controls or restrictions, devaluations or fluctuations;
-12-
availability of cash or Securities or market conditions which prevent
the transfer of property or execution of Securities transactions or
affect the value of property; (vi) for any Losses due to forces
beyond the control of Custodian, including without limitation
strikes, work stoppages, acts of war or terrorism, insurrection,
revolution, nuclear or natural catastrophes or acts of God, or
interruptions, loss or malfunctions of utilities, communications or
computer (software and hardware) services; (vii) for the insolvency
of any Subcustodian (other than a BNY Affiliate), any Depository, or,
except to the extent such action or inaction is a direct result of
the Custodian's failure to fulfill its duties hereunder, any Foreign
Depository; or (viii) for any Losses arising from the applicability
of any law or regulation now or hereafter in effect, or from the
occurrence of any event, including, without limitation,
implementation or adoption of any rules or procedures of a Foreign
Depository, which may affect, limit, prevent or impose costs or
burdens on, the transferability, convertibility, or availability of
any currency or Composite Currency Unit in any country or on the
transfer of any Securities, and in no event shall Custodian be
obligated to substitute another currency for a currency (including a
currency that is a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been affected,
limited, or prevented by such law, regulation or event, and to the
extent that any such law, regulation or event imposes a cost or
charge upon Custodian in relation to the transferability,
convertibility, or availability of any cash currency or Composite
Currency Unit, such cost or charge shall be for the account of the
Fund, and Custodian may treat any account denominated in an affected
currency as a group of separate accounts denominated in the relevant
component currencies.
(b) Custodian may enter into subcontracts, agreements and
understandings with any BNY Affiliate, whenever and on such terms and
conditions as it deems necessary or appropriate to perform its
services hereunder. No such subcontract, agreement or understanding
shall discharge Custodian from its obligations hereunder.
(c) The Fund agrees to indemnify Custodian and hold Custodian
harmless from and against any and all Losses sustained or incurred by
or asserted against Custodian by reason of or as a result of any
action or inaction, or arising out of Custodian's performance
hereunder, including reasonable fees and expenses of counsel incurred
by Custodian in a successful defense of claims by the Fund; provided
however, that the Fund shall not indemnify Custodian for those Losses
arising out of Custodian's own negligence or willful misconduct. This
indemnity shall be a continuing obligation of the Fund, its
successors and assigns, notwithstanding the termination of this
Agreement.
8.2. Without limiting the generality of the foregoing, Custodian shall be
under no obligation to inquire into, and shall not be liable for:
(a) Any Losses incurred by the Fund or any other person as a result
of the receipt or acceptance of fraudulent, forged or invalid
Securities, or Securities which are otherwise not freely transferable
or deliverable without encumbrance in any relevant market;
-13-
(b) The validity of the issue of any Securities purchased, sold, or
written by or for the Fund, the legality of the purchase, sale or
writing thereof, or the propriety of the amount paid or received
therefor;
(c) The legality of the sale or redemption of any Shares, or the
propriety of the amount to be received or paid therefor;
(d) The legality of the declaration or payment of any dividend or
distribution by the Fund;
(e) The legality of any borrowing by the Fund;
(f) The legality of any loan of portfolio Securities, nor shall
Custodian be under any duty or obligation to see to it that any cash
or collateral delivered to it by a broker, dealer or financial
institution or held by it at any time as a result of such loan of
portfolio Securities is adequate security for the Fund against any
loss it might sustain as a result of such loan, which duty or
obligation shall be the sole responsibility of the Fund. In addition,
Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities
of the Fund are lent makes payment to it of any dividends or interest
which are payable to or for the account of the Fund during the period
of such loan or at the termination of such loan, provided, however
that Custodian shall promptly notify the Fund in the event that such
dividends or interest are not paid and received when due;
(g) The sufficiency or value of any amounts of money and/or
Securities held in any Special Account in connection with
transactions by the Fund; whether any broker, dealer, futures
commission merchant or clearing member makes payment to the Fund of
any variation margin payment or similar payment which the Fund may be
entitled to receive from such broker, dealer, futures commission
merchant or clearing member, or whether any payment received by
Custodian from any broker, dealer, futures commission merchant or
clearing member is the amount the Fund is entitled to receive, or to
notify the Fund of Custodian's receipt or non-receipt of any such
payment; or
(h) Whether any Securities at any time delivered to, or held by it or
by any Subcustodian, for the account of the Fund and specifically
allocated to a Series are such as properly may be held by the Fund or
such Series under the provisions of its then current prospectus and
statement of additional information, or to ascertain whether any
transactions by the Fund, whether or not involving Custodian, are
such transactions as may properly be engaged in by the Fund.
Custodian may, with respect to questions of law specifically
regarding an Account, obtain the advice of counsel and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice.
8.3. Custodian shall be under no obligation to take action to collect any
amount payable on Securities in default, or if payment is refused
after due demand and presentment.
-14-
8.4. Custodian shall have no duty or responsibility to inquire into, make
recommendations, supervise, or determine the suitability of any
transactions affecting any Account.
8.5. The Fund shall pay to the Administrator the fees and charges set
forth in Exhibit A and such fees and charges shall be promptly
remitted to the Custodian.
8.6. Custodian shall be entitled to receive and the Fund agrees to pay to
the Administrator all out-of-pocket expenses reasonably incurred by
Custodian and such compensation as may be agreed upon from time to
time between Custodian and the Fund. The Fund represents that the
Administrator has agreed to pay such compensation and expenses
promptly to Custodian upon receipt of statements therefor, and hereby
directs Custodian to (i) send all statements for compensation to its
attention care of Administrator at the following address: 000 Xxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000, and (ii) accept all
payments made by the Administrator in the Fund's name as if such
payments were made directly by the Fund. Should the Administrator
fail to pay or remit such compensation to Custodian, Custodian will
be entitled to debit the Custody Account directly for such
compensation. The Custodian may charge such compensation and any
expenses with respect to a Series incurred by Custodian in the
performance of its duties pursuant to such agreement against any
money specifically allocated to such Series. Unless and until the
Fund or the Administrator instructs Custodian by a Certificate to
apportion any loss, damage, liability or expense among the Series in
a specified manner, Custodian shall also be entitled to charge
against any money held by it for the account of a Series such Series'
pro rata share (based on such Series net asset value of all Series at
that time) of the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The expenses
for which Custodian shall be entitled to reimbursement hereunder
shall include, but are not limited to, the expenses of sub-custodians
and foreign branches of Custodian incurred in settling outside of New
York City transactions involving the purchase and sale of Securities
of the Fund.
8.7. Custodian has the right to debit the cash account of the respective
Fund series for any amount payable by the Series in connection with
any and all obligations of the Series to Custodian. In addition to
the rights of Custodian under applicable law and other agreements, at
any time when the Fund shall not have honored any of its obligations
to Custodian, Custodian shall have the right without notice to the
Fund to retain or set-off, against such obligations of the Fund, any
Securities or cash Custodian or a BNY Affiliate may directly or
indirectly hold for the account of the Fund, and any obligations
(whether matured or unmatured) that Custodian or a BNY Affiliate may
have to the Fund in any currency or Composite Currency Unit. Any such
asset of, or obligation to, the Fund may be transferred to Custodian
and any BNY Affiliate in order to effect the above rights.
8.8. The Fund agrees to forward or cause the Administrator to forward to
Custodian a Certificate or Instructions confirming Oral Instructions
by the close of business of the same day that such Oral Instructions
are given to Custodian. The Fund agrees that the fact that such
confirming Certificate or Instructions are not received or that a
contrary Certificate or contrary Instructions are received by
Custodian shall in no way affect the validity or enforceability of
transactions authorized by such Oral Instructions and effected by
-15-
Custodian in the absence of negligence by the Custodian. If the Fund
elects to transmit Instructions through an on-line communications
system offered by Custodian, the Fund's use thereof shall be subject
to the Terms and Conditions attached as Appendix I hereto, and
Custodian shall provide user and authorization codes, passwords and
authentication keys only to an Authorized Person or a person
reasonably believed by Custodian to be an Authorized Person.
8.9. The books and records pertaining to the Fund, which are in possession
of Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the `40 Act
and the rules thereunder. The Fund, or its authorized
representatives, shall have access to such books and records during
Custodian's normal business hours. Upon the reasonable request of the
Fund, copies of any such books and records shall be provided by
Custodian to the Fund or its authorized representative. Upon the
reasonable request of the Fund, Custodian shall provide in hard copy
or on computer disc any records included in any such delivery which
are maintained by Custodian on a computer disc, or are similarly
maintained.
8.10. It is understood that Custodian is authorized to supply any
information regarding the Accounts which is required by any law,
regulation or rule now or hereafter in effect. The Custodian shall
provide the Fund with any report obtained by the Custodian on the
system of internal accounting control of a Depository, and with such
reports on its own system of internal accounting control as the Fund
may reasonably request from time to time.
8.11. Custodian shall have no duties or responsibilities whatsoever except
such duties and responsibilities as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied
against Custodian in connection with this Agreement.
ARTICLE IX
TERMINATION
9.1. Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the
date of giving of such notice. In the event such notice is given by
the Fund, it shall be followed, within a reasonable time, by a copy
of a resolution of the Board, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which shall
be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event such notice is
given by Custodian, the Fund shall, on or before the termination
date, deliver to Custodian a copy of a resolution of the Board,
certified by the Secretary or any Assistant Secretary, designating a
successor custodian or custodians. In the absence of such designation
by the Fund, Custodian may designate a successor custodian which
shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set
forth in such notice this Agreement shall terminate, and Custodian
shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor custodian
all Securities and money then owned by the Fund and held by it as
Custodian, after deducting all fees, expenses and other amounts for
the payment or reimbursement of which it shall then be entitled.
-16-
9.2. If a successor custodian is not designated by the Fund or Custodian
in accordance with the preceding Section, the Fund shall upon the
date specified in the notice of termination of this Agreement and
upon the delivery by Custodian of all Securities (other than
Securities which cannot be delivered to the Fund) and money then
owned by the Fund be deemed to be its own custodian and Custodian
shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities
which cannot be delivered to the Fund to hold such Securities
hereunder in accordance with this Agreement.
ARTICLE X
CONFIDENTIALITY
10.1. Each party shall keep confidential any information relating to the
other party's business ("Confidential Information"). Confidential
Information shall include (a) any data or information that is
competitively sensitive material, and not generally known to the
public, including, but not limited to, information about product
plans, marketing strategies, finances, operations, customer
relationships, customer profiles, customer lists, sales estimates and
business plans of the Fund or Custodian, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of them; and (b) anything designated as
confidential. Notwithstanding the foregoing, information shall not be
subject to such confidentiality obligations if it: (a) is already
known to the receiving party at the time it is obtained; (b) is or
becomes publicly known or available through no wrongful act of the
receiving party; (c) is rightfully received from a third party who,
to the best of the receiving party's knowledge, is not under a duty
of confidentiality; (d) is released by the protected party to a third
party without restriction; (e) is required to be disclosed by the
receiving party pursuant to a requirement of a court order, subpoena,
governmental or regulatory agency or law (provided the receiving
party will provide the other party written notice of such
requirement, and, upon request, will to the extent reasonable
coordinate any such production with the Fund or the Fund's counsel,
to the extent such notice is permitted); (f) is relevant to the
defense of any claim or cause of action asserted against the
receiving party; or (g) has been or is independently developed or
obtained by the receiving party.
ARTICLE XI
DISASTER RECOVERY
11.1. Custodian shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment
to the extent appropriate equipment is available. In the event of
equipment failures, Custodian shall, at no additional expense to the
Fund, take reasonable steps to minimize service interruptions.
11.2. Custodian shall have no liability with respect to the loss of data or
service interruptions caused by equipment failure provided such loss
or interruption is not caused by Custodian's own willful misfeasance,
bad faith, negligence or reckless disregard of its duties or
obligations under this Agreement.
-17-
ARTICLE XII
MISCELLANEOUS
12.1. The Fund agrees to furnish to Custodian a new Certificate of
Authorized Persons in the event of any change in the then present
Authorized Persons. Until such new Certificate is received, Custodian
shall be fully protected in acting upon Certificates or Oral
Instructions of such present Authorized Persons.
12.2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Custodian, shall be sufficiently given
if addressed to Custodian and received by it at its offices at 000
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
Custodian may from time to time designate in writing.
12.3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if
addressed to Doit X. Xxxxxxx XX, Chairman, and received at its
offices at 0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 with a copy to
Xxxx X. Xxxxxxx, Esq., Stradley, Ronon, Xxxxxxx & Young, LLP, 0000
00xx Xxxxxx, XX, Xxxxx 000, Xxxxxxxxxx, XX 00000 , or at such other
place as the Fund or the Administrator may from time to time
designate in writing.
12.4. In the event Custodian is advised by the Fund that the Fund is no
longer utilizing the services of the Administrator, then Custodian
shall furnish or give to the Fund the statements or notices described
above as to be furnished or given to the Administrator.
12.5. Each and every right granted to either party hereunder or under any
other document delivered hereunder or in connection herewith, or
allowed it by law or equity, shall be cumulative and may be exercised
from time to time. No failure on the part of either party to
exercise, and no delay in exercising, any right will operate as a
waiver thereof, nor will any single or partial exercise by either
party of any right preclude any other or future exercise thereof or
the exercise of any other right.
12.6. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any exclusive jurisdiction, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected thereby. This Agreement may not be
amended or modified in any manner except by a written agreement
executed by both parties, except that any amendment to the Schedule I
hereto need be signed only by the Fund and any amendment to Appendix
I hereto need be signed only by Custodian. This Agreement shall
extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party without the written
consent of the other.
12.7. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws
principles thereof. The Fund and Custodian hereby consent to the
jurisdiction of a state or federal court situated in Xxx Xxxx Xxxx,
-00-
Xxx Xxxx in connection with any dispute arising hereunder. The Fund
hereby irrevocably waives to the fullest extent permitted by
applicable law, any objection which it may now or hereafter have to
the laying of venue of any such proceeding brought in such a court
and any claim that such proceeding brought in such a court has been
brought in an inconvenient forum. The Fund and Custodian each hereby
irrevocably waives any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Agreement.
12.8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
NEW RIVER FUNDS
By:
------------------------------------------
Title:
THE BANK OF NEW YORK
By:
------------------------------------------
Title:
-19-
EXHIBIT A
NEW RIVER FUNDS
DOMESTIC CUSTODY FEE SCHEDULE
Annual fee based upon market value
1 (.0001) base points per year
Minimum annual fee per fund - $4,000
Investment transactions (purchase, sale, exchange, tender, redemption, maturity,
receipt, delivery):
$ 5.00 per disbursement
$ 8.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$12.00 per mutual fund trade
$50.00 per Euroclear
$6.00 per principal reduction on pass-through certificates
$5.00 per short sale/liability transaction
$10.00 per option/futures contract
$10.00 per variation margin
$5.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is 1/4
of 1%, is deducted from the variable amount note income at the time it is
credited to your account.
Plus out-of-pocket expenses, and extraordinary expenses based upon complexity.
Fees are billed monthly, based upon market value at the beginning of the month.
-20-
SCHEDULE I
CERTIFICATE OF AUTHORIZED PERSONS
(THE FUND - ORAL AND WRITTEN INSTRUCTIONS)
The undersigned hereby certifies that he is the duly elected
____________ of New River Funds (the "Fund"), and further certifies that the
following officers or employees of the Fund, and the Administrator, have been
duly authorized in conformity with the Fund's Agreement and Declaration of Trust
and By-Laws to deliver Certificates and Oral Instructions to The Bank of New
York ("Custodian") pursuant to the Custody Agreement between the Fund and
Custodian dated _______________, and that the signatures appearing opposite
their names are true and correct:
Name Title Signature
Name Title Signature
Name Title Signature
Name Title Signature
Name Title Signature
Name Title Signature
Name Title Signature
Name Title Signature
This certificate supersedes any Certificate of Authorized Persons you
may currently have on file.
[seal] By:
Title:
Date:
-21-
SCHEDULE II
SERIES
New River Core Equity Fund
New River Core Fixed Income Fund
New River Small Cap Fund
-22-
APPENDIX I
THE BANK OF NEW YORK
ON-LINE COMMUNICATIONS SYSTEM (THE "SYSTEM")
TERMS AND CONDITIONS
1. LICENSE; USE. Upon delivery to an Authorized Person or a person
reasonably believed by Custodian to be an Authorized Person of the Fund of
software enabling the Fund to obtain access to the System (the "Software"),
Custodian grants to the Fund a personal, nontransferable and nonexclusive
license to use the Software solely for the purpose of transmitting Written
Instructions, receiving reports, making inquiries or otherwise communicating
with Custodian in connection with the Account(s). The Fund shall use the
Software solely for its own internal and proper business purposes and not in the
operation of a service bureau. Except as set forth herein, no license or right
of any kind is granted to the Fund with respect to the Software. The Fund
acknowledges that Custodian and its suppliers retain and have title and
exclusive proprietary rights to the Software, including any trade secrets or
other ideas, concepts, know-how, methodologies, or information incorporated
therein and the exclusive rights to any copyrights, trademarks and patents
(including registrations and applications for registration of either), or other
statutory or legal protections available in respect thereof. The Fund further
acknowledges that all or a part of the Software may be copyrighted or
trademarked (or a registration or claim made therefor) by Custodian or its
suppliers. The Fund shall not take any action with respect to the Software
inconsistent with the foregoing acknowledgments, nor shall the Fund attempt to
decompile, reverse engineer or modify the Software. The Fund may not copy, sell,
lease or provide, directly or indirectly, any of the Software or any portion
thereof to any other person or entity without Custodian's prior written consent.
The Fund may not remove any statutory copyright notice or other notice included
in the Software or on any media containing the Software. The Fund shall
reproduce any such notice on any reproduction of the Software and shall add any
statutory copyright notice or other notice to the Software or media upon
Custodian's request.
2. EQuIPMENT. The Fund shall obtain and maintain at its own cost and
expense all equipment and services, including but not limited to communications
services, necessary for it to utilize the Software and obtain access to the
System, and Custodian shall not be responsible for the reliability or
availability of any such equipment or services.
3. PROPRIETARY INFORMATION. The Software, any data base and any
proprietary data, processes, information and documentation made available to the
Fund (other than which are or become part of the public domain or are legally
required to be made available to the public) (collectively, the "Information"),
are the exclusive and confidential property of Custodian or its suppliers. The
Fund shall keep the Information confidential by using the same care and
discretion that the Fund uses with respect to its own confidential property and
trade secrets, but not less than reasonable care. Upon termination of the
Agreement or the Software license granted herein for any reason, the Fund shall
return to Custodian any and all copies of the Information which are in its
possession or under its control.
-23-
4. MODIFICATIONS. Custodian reserves the right to modify the Software
from time to time and the Fund shall install new releases of the Software as
Custodian may direct. The Fund agrees not to modify or attempt to modify the
Software without Custodian's prior written consent. The Fund acknowledges that
any modifications to the Software, whether by the Fund or Custodian and whether
with or without Custodian's consent, shall become the property of Custodian.
5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS
AND SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE
SOFTWARE, SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. THE FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY
DATABASE ARE PROVIDED "AS IS." IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE
LIABLE FOR ANY DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL,
WHICH THE FUND MAY INCUR IN CONNECTION WITH THE SOFTWARE, SERVICES OR ANY
DATABASE, EVEN IF CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES. IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS
OF GOD, MACHINE OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR
MALFUNCTION OF COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR
OR DISSIMILAR CAUSE BEYOND THEIR REASONABLE CONTROL.
6. SECURITY; Reliance; UNAUTHORIZED USE. The Fund will cause all
persons utilizing the Software and System to treat all applicable user and
authorization codes, passwords and authentication keys with extreme care, and it
will establish internal control and safekeeping procedures to restrict the
availability of the same to persons duly authorized to give Instructions.
Custodian is hereby irrevocably authorized to act in accordance with and rely on
Instructions received by it through the System. The Fund acknowledges that it is
its sole responsibility to assure that only persons duly authorized use the
System and that Custodian shall not be responsible nor liable for any
unauthorized use thereof.
7. SYSTEM ACKNOWLEDGMENTS. Custodian shall acknowledge through the
System its receipt of each transmission communicated through the System, and in
the absence of such acknowledgment Custodian shall not be liable for any failure
to act in accordance with such transmission and the Fund may not claim that such
transmission was received by Custodian.
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8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY
UNITED STATES LAW. THE FUND MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT,
TRANSFER, TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO
ANY OTHER COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO THE FUND OUTSIDE OF
THE UNITED STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN
ACCORDANCE WITH THE EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO
U.S. LAW IS PROHIBITED. The Fund hereby authorizes Custodian to report its name
and address to government agencies to which Custodian is required to provide
such information by law.
9. ENCRYPTION. The Fund acknowledges and agrees that encryption may
not be available for every communication through the System, or for all data.
The Fund agrees that Custodian may deactivate any encryption features at any
time, without notice or liability to the Fund, for the purpose of maintaining,
repairing or troubleshooting the System or the Software.
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