FORM OF
CUSTODY AGREEMENT
AGREEMENT, dated as of November __, 1996 by and between THE FBR FAMILY
OF FUNDS (the "Trust"), a business trust organized and existing under the laws
of the State of Delaware, acting with respect to and on behalf of each of the
series of the Trust that are identified on Exhibit A hereto (each, a
"Portfolio"), and CUSTODIAL TRUST COMPANY, a bank organized and existing under
the laws of the State of New Jersey (the "Custodian") and an affiliate of Bear,
Xxxxxxx & Co. Inc.
WHEREAS, the Trust desires that the securities, funds and other assets
of the Portfolios be held and administered by Custodian pursuant to this
Agreement;
WHEREAS, each Portfolio is an investment portfolio represented by a
series of Shares included among the shares of beneficial interest issued by the
Trust, an open-end management investment company registered under the 1940 Act;
WHEREAS, Custodian represents that it is a bank having the
qualifications prescribed in the 1940 Act to act as custodian for management
investment companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall mean:
1.1 "Authorized Person" means any person authorized by resolution of
the Board of Trustees to give Oral Instructions and Written Instructions on
behalf of the Trust and identified, by name or by office, in Exhibit B hereto or
any person designated to do so by an investment adviser of any Portfolio who is
named by the Trust in Exhibit C hereto.
1.2 "Board of Trustees" means the Board of Trustees of the Trust or,
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a
Federal Reserve Bank for securities of the United States government or of
agencies or instrumentalities thereof (including government-sponsored
enterprises).
1.4 "Business Day" means any day on which banks in the State of New
Jersey and New York are open for business.
1.5 "Custody Account" means, with respect to a Portfolio, the account
in the name of such Portfolio, which is provided for in Section 3.2 below.
1.6 "Domestic Securities Depository" means The Depository Trust Company
and any other clearing agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "Eligible Domestic Bank" means a bank as defined in the
1940 Act.
1.8 "Eligible Foreign Entity" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under the 1940 Act
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to act as a custodian for securities and other assets of a Portfolio held
outside the United States.
1.9 "Foreign Securities Depository" means a foreign securities
depository or clearing agency as defined in the 1940 Act.
1.10 "Master Repurchase Agreement" means the Master Repurchase
Agreement of even date herewith between the Trust and Bear, Xxxxxxx & Co. Inc.
as it may from time to time be amended.
1.11 "Master Securities Loan Agreement" means the Master Securities
Loan Agreement of even date herewith between the Trust and Bear, Xxxxxxx
Securities Corp. as it may from time to time be amended.
1.12 "1940 Act" means the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
1.13 "Oral Instructions" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) completed in
accordance with Custodian's requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust.
1.14 "Proper Instructions" means Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by the Trust and Custodian.
1.15 "Securities Depository" means any Domestic Securities
Depository or Foreign Securities Depository.
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1.16 "Shares" means, with respect to a Portfolio, those shares in a
series or class of beneficial interests of the Trust that represent interests in
such Portfolio.
1.17 "Written Instructions" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (b) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic tape, and (c)
completed in accordance with Custodian's requirements from time to time as to
content of instructions and their manner and timeliness of delivery by the
Trust.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby appoints Custodian as custodian of
all such securities, funds and other assets of each Portfolio as may be
acceptable to Custodian and from time to time delivered to it by the Trust or
others for the account of such Portfolio.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 Segregation. All securities and non-cash property of a Portfolio in
the possession of Custodian (other than securities maintained by Custodian with
a sub-custodian appointed pursuant to this Agreement or in a Securities
Depository or Book-Entry System) shall be physically segregated from other such
securities and non-cash property in the possession of Custodian. All cash,
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securities and other non-cash property of a Portfolio shall be identified as
belonging to such Portfolio.
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
department a custody account in the name of each Portfolio, subject only to
draft or order of Custodian, in which Custodian shall enter and carry all
securities, funds and other assets of such Portfolio which are delivered to
Custodian and accepted by it.
(b) If, with respect to any Portfolio, Custodian at any time fails to
receive any of the documents referred to in Section 3.10(a) below, then, until
such time as it receives such document, it shall not be obligated to receive any
securities into the Custody Account of such Portfolio and shall be entitled to
return to such Portfolio any securities that it is holding in such Custody
Account.
3.3 Securities in Physical Form. Custodian may, but shall not be
obligated to, hold securities that may be held only in physical form.
3.4 Disclosure to Issuers of Securities. Custodian is authorized to
disclose the Trust's and any Portfolio's names and addresses, and the securities
positions in such Portfolio's Custody Account, to the issuers of such securities
when requested by them to do so.
3.5 Appointment of Domestic Sub-Custodians. In its discretion, and upon
prior written notice to the Trust, Custodian may at any time and from time to
time appoint, and at any time remove, any Eligible Domestic Bank as
sub-custodian to hold securities and other assets of a Portfolio that are
maintained in the United States and to carry out such other provisions of this
Agreement as it may determine. The appointment of any such sub-custodian shall
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be at Custodian's expense and shall not relieve Custodian of any of its
obligations or liabilities under this Agreement.
3.6 Appointment of Foreign Sub-Custodians. (a) At any time and from
time to time, Custodian in its discretion may appoint in accordance with the
1940 Act (i) any overseas branch of any Eligible Domestic Bank, or (ii) any
Eligible Foreign Entity, in ach case as a foreign sub-custodian for securities
and other assets of a Portfolio that are maintained outside the United States,
provided, however, that any such appointment shall be subject to prior written
approval thereof by the Trust and, further, to prior written approval by the
Trust of (A) the agreement pursuant to which Custodian proposes to employ such
overseas branch or Eligible Foreign Entity, and (B) in the case of any Eligible
Foreign Entity, the country or countries in which such Foreign Eligible Entity
is to be authorized to hold securities and other assets of such Portfolio.
(b) Set forth on Exhibit D hereto, with respect to each Portfolio, are
the foreign sub-custodians appointed pursuant to Section 3.6(a) above and the
countries in which pursuant to Section 3.6(a) above they may hold securities and
other assets of such Portfolio. Exhibit D shall be revised from time to time as
foreign sub-custodians and countries are added or deleted.
(c) The Trust shall inform Custodian sufficiently in advance of a
proposed investment which is to be held in a country not listed in Exhibit D
hereto to allow the Trust to consider and give the approvals required under
Section 3.6(a) above and for Custodian to put appropriate arrangements in place
with a foreign sub-custodian. If a Portfolio invests in a security or other
asset to be held outside the United States before such approvals are given and
such arrangements are put in place, then such security or other asset may be
held by such agent as Custodian, in its discretion, may appoint.
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(d) Custodian shall have no greater liability to any Portfolio or the
Trust for the actions or omissions of any foreign sub-custodian appointed
pursuant to this Agreement (or any agent appointed pursuant to Section 3.6(c)
above) than any such foreign sub-custodian (or such agent) has to Custodian, and
Custodian shall not be required to discharge any such liability which may be
imposed on it unless and until such foreign sub-custodian (or agent) has
effectively indemnified Custodian against it or has otherwise discharged its
liability to Custodian in full.
(e) Upon the request of the Trust, Custodian shall annually furnish to
the Trust information concerning all foreign sub-custodians appointed pursuant
to this Agreement which shall be similar in kind and scope to that furnished to
the Trust in connection with the initial approval by the Trust of the agreements
pursuant to which Custodian employs such foreign sub-custodians or as otherwise
required by the 1940 Act.
3.7 Appointment of Other Agents. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear, Xxxxxxx & Co.
Inc. ("Bear Xxxxxxx") or Bear, Xxxxxxx Securities Corp.("BS Securities"), both
of which are securities broker-dealers, provided, however, that Custodian shall
not employ (a) BS Securities to hold any collateral pledged by BS Securities
under the Master Securities Loan Agreement or any other securities loan
agreement between the Trust and BS Securities, whether now or hereafter in
effect, or (b) Bear Xxxxxxx to hold any securities purchased from Bear Xxxxxxx
under the Master Repurchase Agreement or any other repurchase agreement between
the Trust and Bear Xxxxxxx, whether now or hereafter in effect. The appointment
of any agent pursuant to this Section 3.7 shall not relieve Custodian of any of
its obligations or liabilities under this Agreement.
3.8 Bank Accounts. In its discretion and from time to time Custodian
may open and maintain one or more demand deposit accounts
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with any Eligible Domestic Bank (any such accounts to be in the name of
Custodian and subject only to its draft or order), provided, however, that the
opening and maintenance of any such account shall be at Custodian's expense and
shall not relieve Custodian of any of its obligations or liabilities under this
Agreement.
3.9 Delivery of Assets to Custodian. Provided they are acceptable to
Custodian, the Trust shall deliver to Custodian the securities, funds and other
assets of each Portfolio, including (a) payments of income, payments of
principal and capital distributions received by such Portfolio with respect to
securities, funds or other assets owned by such Portfolio at any time during the
term of this Agreement, and (b) funds received by such Portfolio for the
issuance, at any time during such term, of Shares of such Portfolio. Custodian
shall not be under any duty or obligation to require the Trust to deliver to it
any securities or other assets owned by a Portfolio and shall have no
responsibility or liability for or on account of securities or other assets not
so delivered.
3.10 Domestic Securities Depositories and Book-Entry Systems. Custodian
and any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of any Portfolio in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of a Portfolio in any Domestic
Securities Depository or Book-Entry System, the Trust shall deliver to Custodian
a resolution of the Board of Trustees, certified by an officer of the Trust,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities Depository or Book-Entry System all securities eligible for deposit
therein and to make use of such Domestic Securities Depository or Book-Entry
System to the extent possible and practical in
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connection with the performance of its obligations hereunder (or under the
applicable sub-custody agreement in the case of such sub-custodian), including,
without limitation, in connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and returns of collateral
consisting of securities.
(b) Securities of a Portfolio kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers.
(c) The records of Custodian with respect to securities of a Portfolio
that are maintained in a Book-Entry System or Domestic Securities Depository
shall at all times identify such securities as belonging to such Portfolio.
(d) If securities purchased by a Portfolio are to be held in a
Book-Entry System or Domestic Securities Depository, Custodian (or any
sub-custodian appointed pursuant to Section 3.5 above) shall pay for such
securities upon (i) receipt of advice from the Book-Entry System or Domestic
Securities Depository that such securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such payment and transfer for the account
of such Portfolio. If securities sold by a Portfolio are held in a Book-Entry
System or Domestic Securities Depository, Custodian (or such sub-custodian)
shall transfer such securities upon (A) receipt of advice from the Book-Entry
System or Domestic Securities Depository that payment for such securities has
been transferred to the Depository Account, and (B) the making of an entry on
the
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records of Custodian (or of such sub-custodian) to reflect such transfer and
payment for the account of such Portfolio.
(e) Custodian shall provide the Trust with copies of any report
obtained by Custodian (or by any sub-custodian appointed pursuant to Section 3.5
above) from a Book-Entry System or Domestic Securities Depository in which
securities of a Portfolio are kept on the internal accounting controls and
procedures for safeguarding securities deposited in such Book-Entry System or
Domestic Securities Depository.
(f) At its election, the Trust shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to a Portfolio arising
from the use of such Book-Entry System or Domestic Securities Depository, if and
to the extent that such Portfolio has not been made whole for any such loss or
damage.
3.11 Foreign Securities Depositories. Custodian or any sub-custodian
appointed pursuant to Section 3.6 above may maintain securities of any Portfolio
in any Foreign Securities Depository in accordance with the 1940 Act. Set forth
on Exhibit D hereto are the Foreign Securities Depositories that Custodian or
any such sub-custodian are authorized in accordance with the 1940 Act to employ.
Exhibit D shall be revised from time to time as Foreign Securities Depositories
are added or deleted.
3.12 Relationship With Securities Depositories. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or
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sub-contractor of Custodian for purposes of Section 3.7 above or otherwise.
3.13 Payments from Custody Account. Upon receipt of Proper Instructions
with respect to a Portfolio but subject to its right to foreclose upon and
liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall make payments from the Custody Account of such Portfolio, but only in the
following cases, provided, first, that there are sufficient funds in such
Custody Account to make such payments, whether belonging to such Portfolio or
advanced to it by Custodian in its sole and absolute discretion as set forth in
Section 3.19 below, and, second, that after the making of such payments, such
Portfolio would not be in violation of any margin or other requirements agreed
upon pursuant to Section 3.19 below:
(a) For the purchase of securities for such Portfolio but only (i) in
the case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.21 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (ii) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of such Portfolio, the
Custodian, any such sub-custodian, or any nominee referred to in Section 3.21
below;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.14(f) below, of securities owned by such Portfolio;
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(c) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of such
Portfolio;
(d) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of such Portfolio;
(e) For the funding of any time deposit (whether certificated or not)
or other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Trust and such banking or other financial institution with
respect to the purchase of such loan participations and provided that Custodian
shall receive and retain such participation certificate or other evidence of
participation (if any) as such banking or other financial institution may
deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of such Portfolio pursuant to
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contracts between the Trust and any banking or other financial institution
(including Custodian, any sub-custodian appointed pursuant to this Agreement and
any affiliate of Custodian);
(h) For transfer to a securities broker-dealer as margin for a short
sale of securities for such Portfolio, or as payment in lieu of dividends paid
on securities sold short for such Portfolio;
(i) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of such
Portfolio;
(j) For the payment as provided in Article IV below of the redemption
price of the Shares of such Portfolio;
(k) For the payment of any expense or liability incurred by such
Portfolio, including but not limited to the following payments for the account
of such Portfolio: interest, taxes, and administration, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees, and
other operating expenses of such Portfolio; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as deferred
expenses; and
(l) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of such Portfolio, and naming the person or
persons to whom such payment is to be made.
3.14 Deliveries from Custody Account. Upon receipt of Proper
Instructions with respect to a Portfolio but subject to its right to foreclose
upon and liquidate collateral pledged to it pursuant to Section 9.3 below,
Custodian shall release and deliver securities and other assets from the Custody
Account of such
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Portfolio, but only in the following cases, provided, first, that there are
sufficient amounts and types of securities or other assets in such Custody
Account to make such delivery, and, second, that after the making of such
delivery, such Portfolio would not be in violation of any margin or other
requirements agreed upon pursuant to Section 3.19 below:
(a) Upon the sale of securities for the account of such Portfolio but,
subject to Section 3.15 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of such Portfolio; provided that, in any such
case, the funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different
number of certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new securities
are to be delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
such Portfolio, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for
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conversion contained in such securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying securities in connection with the
issuance or cancellation of depository receipts; provided that, in any such
case, the new securities and funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the
issuer of such warrants, rights or similar securities, or its agent, upon the
exercise thereof, provided that, in any such case, the new securities and funds,
if any, are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any loans
of securities for such Portfolio pursuant to any securities loan agreement
entered into by the Trust, but only against receipt by Custodian of such
collateral as is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from
such lender by such Portfolio that require a pledge of assets of such Portfolio,
but only against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of such
Portfolio or the Trust;
(k) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions of such Portfolio;
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(l) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian, and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of such Portfolio;
(m) For delivery to a securities broker-dealer as margin for
a short sale of securities for such Portfolio;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or its agent, against a
written receipt therefor adequately describing such ADRs, provided that such
ADRs are delivered together with instructions to deliver the securities
underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of such Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
3.15 Delivery Prior to Final Payment. When instructed by the Trust to
deliver securities of a Portfolio against payment, Custodian shall be entitled,
but only if in accordance with generally accepted market practice, to deliver
such securities
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prior to actual receipt of final payment therefor and, exclusively in the case
of securities in physical form, prior to receipt of payment therefor. In any
such case, such Portfolio shall bear the risk that final payment for such
securities may not be made or that such securities may be returned or otherwise
held or disposed of by or through the person to whom they were delivered, and
Custodian shall have no liability for any of the foregoing.
3.16 Credit Prior to Final Payment. In its sole discretion and from
time to time, Custodian may credit the Custody Account of a Portfolio, prior to
actual receipt of final payment thereof, with (a) proceeds from the sale of
securities of such Portfolio which it has been instructed to deliver against
payment, (b) proceeds from the redemption of securities or other assets in such
Custody Account, and (c) income from securities, funds or other assets in such
Custody Account. Any such credit shall be conditional upon actual receipt by
Custodian of final payment and may be reversed if final payment is not actually
received in full. Custodian may, in its sole discretion and from time to time,
permit a Portfolio to use funds so credited to its Custody Account in
anticipation of actual receipt of final payment. Any funds so used shall
constitute an advance subject to Section 3.19 below.
3.17 Definition of Final Payment. For purposes of this Agreement,
"final payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, xxxx, xxxx or other encumbrance.
3.18 Payments and Deliveries Outside United States. Notwithstanding
anything to the contrary that may be required by Section 3.13 or Section 3.14
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this
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Agreement may receive and deliver such securities or other assets, and may make
such payments, in accordance with the laws, regulations, customs, procedures and
practices applicable in the relevant local market outside the United States;
3.19 Clearing Credit. Custodian may, in its sole discretion and from
time to time, advance funds to the Trust to facilitate the settlement of a
Portfolio's transactions in the Custody Account of such Portfolio. Any such
advance (a) shall be repayable immediately upon demand made by Custodian, (b)
shall be fully secured as provided in Section 9.3 below, and (c) shall bear
interest at such rate, and be subject to such other terms and conditions, as
Custodian and the Trust may agree.
3.20 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, Custodian shall with respect to all securities and
other assets held for a Portfolio:
(a) Subject to Section 8.4 below, receive into the Custody Account of
such Portfolio any funds or other property, including payments of principal,
interest and dividends, due and payable on or on account of such securities and
other assets;
(b) Deliver securities of such Portfolio to the issuers of such
securities or their agents for the transfer thereof into the name of such
Portfolio, Custodian or any of the nominees referred to in Section 3.21 below;
(c) Endorse for collection, in the name of such Portfolio, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
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(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws of the United States, or the laws
or regulations of any other taxing authority, in connection with the transfer of
such securities or other assets or the receipt of income or other payments with
respect thereto;
(f) Receive and hold for such Portfolio all rights and similar
securities issued with respect to securities or other assets of such Portfolio;
(g) As may be required in the execution of Proper Instructions,
transfer funds from the Custody Account of such Portfolio to any demand deposit
account maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase and transfer of, and other
dealings in, such securities and other assets.
3.21 Registration and Transfer of Securities. All securities held for a
Portfolio that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for a Portfolio may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Trust shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.21 provided, any securities or other assets delivered to Custodian which are
registered in the name of a Portfolio.
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3.22 Records. (a) Custodian shall maintain complete and accurate
records with respect to securities, funds and other assets held for a Portfolio,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of securities and all
receipts and disbursements of funds; (ii) ledgers (or other records) reflecting
(A) securities in transfer, if any, (B) securities in physical possession, (C)
monies and securities borrowed and monies and securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall keep such other books and records with respect to securities, funds and
other assets of a Portfolio which are held hereunder as the Trust may reasonably
request.
(b) All such books and records maintained by Custodian for a Portfolio
shall (i) be maintained in a form acceptable to the Trust and in compliance with
rules and regulations of the Securities and Exchange Commission, (ii) be the
property of such Portfolio and at all times during the regular business hours of
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained under
the 1940 Act, be preserved for the periods prescribed therein.
3.23 Account Reports by Custodian. Custodian shall furnish the Trust
with a daily activity statement, including a summary of all transfers to or from
the Custody Account of each Portfolio (in the case of securities and other
assets maintained in the United States, on the day following such transfers). At
least monthly and from time to time, Custodian shall furnish the Trust with a
detailed statement of the securities, funds and other assets held for each
Portfolio under this Agreement.
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3.24 Other Reports by Custodian. Custodian shall provide the Trust with
such reports as the Trust may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.25 Proxies and Other Materials. (a) Unless otherwise instructed by
the Trust, Custodian shall promptly deliver to the Trust all notices of
meetings, proxies and proxy materials which it receives regarding securities
held in the Custody Account of a Portfolio. Before delivering them to the Trust,
Custodian shall cause all proxies relating to such securities which are not
registered in the name of a Portfolio to be promptly executed by the registered
holder of such securities, without indication of the manner in which such
proxies are to be voted. Unless otherwise instructed by the Trust, neither
Custodian nor any of its agents shall exercise any voting rights with respect to
securities held hereunder.
(b) Unless otherwise instructed by the Trust, Custodian shall promptly
transmit to the Trust all other written information received by Custodian from
issuers of securities held in the Custody Account of any Portfolio. With respect
to tender or exchange offers for such securities, Custodian shall promptly
transmit to the Trust all written information received by Custodian from the
issuers of the securities whose tender or exchange is sought and from the party
(or its agents) making the tender or exchange offer. If the Trust desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify Custodian (i) in the case of securities
maintained outside the United States, such number of Business Days prior to the
date on which Custodian is to take such action as will allow Custodian to take
such action in the relevant local market for such securities in a timely
fashion, and (ii) in the case of
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all other securities, at least five Business Days prior to the date on which
Custodian is to take such action.
3.26 Co-operation. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep the books
of account of a Portfolio and/or to compute the value of the assets of a
Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 Transfer of Funds. From such funds as may be available for the
purpose in the Custody Account of a Portfolio, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of such
Portfolio or to pay dividends or other distributions to holders of Shares of
such Portfolio, Custodian shall transfer each amount specified in such Proper
Instructions to such account of such Portfolio or of an agent thereof (other
than Custodian), at such bank, as the Trust may designate therein with respect
to such amount.
4.2 Sole Duty of Custodian. Custodian's sole obligation with respect to
the redemption of Shares of a Portfolio and the payment of dividends thereon and
of other distributions by a Portfolio shall be as set forth in Section 4.1
above, and Custodian shall not be required to make any payments to the various
holders from time to time of Shares of a Portfolio nor shall Custodian be
responsible for the payment or distribution by the Trust, or any agent
designated in Proper Instructions given pursuant to Section 4.1 above, of any
amount paid by Custodian to the account of the Trust or such agent in accordance
with such Proper Instructions.
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ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish
and maintain a segregated account or accounts for and on behalf of any
Portfolio, into which account or accounts funds and/or securities may be
transferred, including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the Trust,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of such Portfolio,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by such Portfolio or in connection with
financial futures contracts (or options thereon) purchased or sold by such
Portfolio,
(c) which constitute collateral for loans of securities made
by such Portfolio,
(d) for purposes of compliance by such Portfolio with requirements
under the 1940 Act for the maintenance of segregated accounts by registered
management investment companies in connection with reverse repurchase
agreements, when-issued, delayed delivery and firm commitment transactions, and
short sales of securities, and
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of such Portfolio.
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ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 Transactions. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Repurchase Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the seller
under the Master Repurchase Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Repurchase Agreement.
6.2 Collateral. Custodian shall daily xxxx to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of a Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such xxxx-to-market.
6.3 Events of Default. Custodian shall promptly notify the Trust of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
6.4 Master Repurchase Agreement. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Repurchase Agreement. The Trust
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
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ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 Transactions. If and to the extent that the necessary funds and
securities of a Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of such Portfolio,
shall from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make for the account of such Portfolio the transfers of funds and
deliveries of securities which such Portfolio is required to make pursuant to
the Master Securities Loan Agreement and shall receive for the account of such
Portfolio the transfers of funds and deliveries of securities which the borrower
under the Master Securities Loan Agreement is required to make pursuant thereto.
Custodian shall make and receive all such transfers and deliveries pursuant to,
and subject to the terms and conditions of, the Master Securities Loan
Agreement.
7.2 Collateral. Custodian shall daily xxxx to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
7.3 Defaults. Custodian shall promptly notify the Trust of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 Master Securities Loan Agreement. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Securities Loan Agreement. The
Trust shall provide Custodian, prior to the effectiveness thereof, with a copy
of any amendment to the Master Securities Loan Agreement.
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ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 Standard of Care. Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to any Portfolio or the Trust for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim which
does not arise from willful misfeasance, bad faith or negligence on the part of
Custodian. In no event shall Custodian be liable for special, incidental or
consequential damages, even if Custodian has been advised of the possibility of
such damages, or be liable in any manner whatsoever for any action taken or
omitted upon instructions from an Authorized Person.
8.2 Actual Collection Required. Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
8.3 No Responsibility for Title, etc. So long as and to the extent that
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any assets or evidence of title thereto
received or delivered by it or its agents.
8.4 Limitation on Duty to Collect. Custodian shall promptly notify the
Trust whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for a Portfolio is not timely received
by it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
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8.5 Express Duties Only. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account of any
Portfolio and is not a fiduciary to any Portfolio or the Trust. In particular,
Custodian shall not be under any obligation at any time to monitor or to take
any other action with respect to compliance by any Portfolio or the Trust with
the 1940 Act, the provisions of the Trust's charter documents or by-laws, or any
Portfolio's investment objectives, policies and limitations as in effect from
time to time.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. Each Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any federal, state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that securities or other assets in the Custody Account of such Portfolio are
registered in the name of any such nominee, or (b) from any action or inaction,
with respect to such Portfolio, by Custodian or such sub-custodian or nominee
(i) at the request or direction of or in reliance on the advice of the Trust or
any of its agents, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement with respect to such
Portfolio, provided that Custodian, any such sub-custodian or any nominee of any
of them shall not be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from willful
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misfeasance, bad faith or negligence on the part of Custodian or any such
sub-custodian or nominee.
9.2 Indemnity to be Provided. If the Trust requests Custodian to take
any action with respect to securities or other assets of a Portfolio, which may,
in the opinion of Custodian, result in Custodian or its nominee becoming liable
for the payment of money or incurring liability of some other form, Custodian
shall not be required to take such action until such Portfolio shall have
provided indemnity therefor to Custodian in an amount and form satisfactory to
Custodian.
9.3 Security. As security for the payment of any present or future
obligation or liability of any kind which a Portfolio may have to Custodian with
respect to or in connection with the Custody Account of such Portfolio or this
Agreement, the Trust hereby pledges to Custodian all securities, funds and other
assets of every kind which are in such Custody Account or otherwise held for
such Portfolio pursuant to this Agreement, and hereby grants to Custodian a
lien, right of set-off and continuing security interest in such securities,
funds and other assets.
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ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance
of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; strikes; epidemics; riots; power failures; computer
failure and any such circumstances beyond its reasonable control as may cause
interruption, loss or malfunction of utility, transportation, computer (hardware
or software) or telephone communication service; accidents; labor disputes; acts
of civil or military authority; actions by any governmental authority, de jure
or de facto; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 Representations With Respect to Portfolios. The Trust represents
and warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of each Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of each
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other instrument, restriction
or provision applicable to it or such Portfolio or by which it or such
Portfolio, or their respective assets, may be bound, and (c) this Agreement
constitutes a legal, valid and binding obligation of each Portfolio, enforceable
against it in accordance with its terms.
11.2 Representations of Custodian. Custodian represents and warrants
that (a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery
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by it of this Agreement, and the performance by it of its obligations hereunder,
have been duly authorized by all necessary action and will not violate any law,
regulation, charter, by-law, or other instrument, restriction or provision
applicable to it or by which it or its assets may be bound, and (c) this
Agreement constitutes a legal, valid and binding obligation of it, enforceable
against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
Each Portfolio shall pay Custodian such fees and charges as are set
forth in Exhibit E hereto, as such Exhibit E may from time to time be revised by
Custodian upon 14 days' prior written notice to the Trust. Any annual fee
payable by a Portfolio shall be calculated on the basis of the total market
value of the assets in the Custody Account of such Portfolio as determined on
the last Business Day of the month for which such fee is charged; and such fee,
and any transaction charges payable by such Portfolio, shall be paid monthly by
automatic deduction from such Custody Account. Out-of-pocket expenses incurred
by Custodian in the performance of its services hereunder, and all other proper
charges and disbursements of the Custody Account of any Portfolio, shall be
charged to such Custody Account by Custodian and paid therefrom.
ARTICLE XIII
TAXES
13.1 Taxes Payable by Portfolios. Any and all taxes, including any
interest and penalties with respect thereto, which may be levied or assessed
under present or future laws or in respect of the Custody Account of any
Portfolio or any income thereof shall be charged to such Custody Account by
Custodian and paid therefrom.
13.2 Tax Reclaims. Upon the written request of the Trust, Custodian
shall exercise, on behalf of any Portfolio, any tax
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reclaim rights of such Portfolio which arise in connection with foreign
securities in the Custody Account of such Portfolio.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 Authorized Persons. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication received by it
from the Trust which is reasonably believed by Custodian to have been given or
signed on behalf of the Trust by one of the Authorized Persons designated by the
Trust in Exhibit B hereto, as it may from time to time be revised. The Trust may
revise Exhibit B hereto at any time by notice in writing to Custodian given in
accordance with Section 14.4 below, but no revision of Exhibit B hereto shall be
effective until Custodian actually receives such notice.
14.2 Investment Advisers. Custodian may also act in accordance with any
Written or Oral Instructions given with respect to a Portfolio which are
reasonably believed by Custodian to have been given or signed by one of the
persons designated from time to time by any of the investment advisers of such
Portfolio who are specified in Exhibit C hereto (if any) as it may from time to
time be revised. The Trust may revise Exhibit C hereto at any time by notice in
writing to Custodian given in accordance with Section 14.4 below, and each
investment adviser specified in Exhibit C hereto (if any) may at any time by
like notice designate an Authorized Person or remove an Authorized Person
previously designated by it, but no revision of Exhibit C hereto (if any) and no
designation or removal by such investment adviser shall be effective until
Custodian actually receives such notice.
14.3 Oral Instructions. Custodian may rely upon and act in accordance
with Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the
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validity of the transaction authorized by such Oral Instructions or the
authorization given by an Authorized Person to effect such transaction.
Custodian shall incur no liability to any Portfolio or the Trust in acting upon
Oral Instructions. To the extent such Oral Instructions vary from any confirming
Written Instructions, Custodian shall advise the Trust of such variance but
unless confirming Written Instructions are timely received, such Oral
Instructions shall govern.
14.4 Addresses for Notices. Unless otherwise specified herein, all
demands, notices, instructions, and other communications to be given hereunder
shall be sent, delivered or given to the recipient at the address, or the
relevant telephone number, set forth after its name hereinbelow:
If to the Trust:
The FBR Family of Funds
for [INSERT NAME OF PORTFOLIO]
Potomac Tower
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: _____________________________
Telephone: (000) 000-0000
Facsimile: (703) -
If to Custodian:
Custodial Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Vice President - Trust Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
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14.5 Remote Clearance. Written Instructions for the receipt, delivery
or transfer of securities may include, and Custodian shall accept, Remote
Clearance Instructions (as defined hereinbelow) and Bulk Input Instructions (as
defined hereinbelow), provided that such Instructions are given in accordance
with the procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by Customer. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been given by an Authorized Person, and
Custodian is hereby irrevocably authorized to act in accordance therewith. For
purposes of this Agreement, "Remote Clearance Instructions" means instructions
that are input directly via a remote terminal which is located on the premises
of the Trust, or of an investment adviser named in Exhibit C hereto, and linked
to Custodian; and "Bulk Input Instructions" means instructions that are input by
bulk input computer tape delivered to Custodian by messenger or transmitted to
it via such transmission mechanism as the Trust and Custodian shall from time to
time agree upon.
ARTICLE XV
EFFECTIVENESS; DURATION
This Agreement shall become effective on the day and year first above
written. It shall continue in effect until the first anniversary of such day and
year and, thereafter, for successive annual periods, provided that such
continuance is specifically approved at least annually by the Board of Trustees.
ARTICLE XVI
TERMINATION
Either party hereto may terminate this Agreement with respect to one or
more of the Portfolios by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less than sixty (60)
days after the date of the giving
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of such notice. Upon the date set forth in such notice this Agreement shall
terminate with respect to each Portfolio specified in such notice, and Custodian
shall, upon receipt of a notice of acceptance by the successor custodian, on
that date (a) deliver directly to the successor custodian or its agents all
securities (other than securities held in a Book-Entry System or Securities
Depository) and other assets then owned by such Portfolio and held by Custodian
as custodian, and (b) transfer any securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of such Portfolio,
provided that such Portfolio shall have paid to Custodian all fees, expenses and
other amounts to the payment or reimbursement of which it shall then be
entitled.
ARTICLE XVII
LIMITATION OF LIABILITIES
Neither any trustee of the Trust, when acting in such capacity, nor any
officer thereof, when acting in such capacity, shall be personally liable to
Custodian for any act, omission or obligation of the Trust, of any Portfolio or
of any trustee or officer of the Trust.
ARTICLE XVIII
MISCELLANEOUS
18.1 Business Days. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
18.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
18.3 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed
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matter contained in the prospectus or statement of additional information for a
Portfolio and such other printed matter as merely identifies Custodian as
custodian for a Portfolio. The Trust shall submit printed matter requiring
approval to Custodian in draft form, allowing sufficient time for review by
Custodian and its counsel prior to any deadline for printing.
18.4 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
18.5 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
18.6 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
18.7 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
18.8 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 18.8 shall be void.
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18.9 Jurisdiction. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise.
18.10 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
THE FBR FAMILY OF FUNDS
By: ____________________
Name:
Title:
CUSTODIAL TRUST COMPANY
By: _____________________
Name:
Title:
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EXHIBIT A
PORTFOLIOS
- FBR Small Cap Financial Fund
- FBR Financial Services Fund
- FBR Growth/Value Fund
- FBR Information Technologies Fund
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EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Custody Accounts of the Portfolios.
Name Signature
---- ---------
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
______________________________ ______________________________
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EXHIBIT C
INVESTMENT ADVISERS
ALL PORTFOLIOS
FBR Fund Advisers, Inc.
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EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
ALL PORTFOLIOS
Foreign Sub-custodian Country(ies) Securities Depositories
--------------------- ------------ -----------------------
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EXHIBIT E
CUSTODY FEES AND TRANSACTION CHARGES
All fees and charges set forth in this Exhibit E shall be calculated
and paid in the manner provided in Article XII above.
Domestic Fees. Each Portfolio shall pay Custodian the following fees
for assets maintained by such Portfolio in the United States ("Domestic Assets")
and charges for transactions by such Portfolio in the United States, all such
fees and charges to be payable monthly:
(1) an annual fee of the greater of 0.02% (two basis points) per annum
of the value of the Domestic Assets in the Custody Account of such Portfolio or
$6,000;
(2) a transaction charge of $15 for each receive or deliver of
book-entry securities into or from the Custody Account of such Portfolio (but
not for any such receive or deliver in a repurchase transaction representing a
cash sweep investment for such Portfolio's account);
(3) a transaction charge of $25 for each receive or deliver into or
from such Portfolio's Custody Account of securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account of such Portfolio which represents a cash sweep investment for such
Portfolio's account, computed at a rate of 0.10% (ten basis points) per annum on
the amount of the purchase price paid by such Portfolio in such repurchase
transaction;
(5) a charge of $10 for each "free" transfer of funds from the
Custody Account of such Portfolio; and
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(6) a separately negotiated service charge for each holding of
securities or other assets of such Portfolio that are sold by way of private
placement or in such other manner as to require services by Custodian which in
its reasonable judgment are materially in excess of those ordinarily required
for the holding of publicly traded securities in the United States.
International Fees. Each Portfolio shall pay Custodian fees for assets
maintained by such Portfolio outside the United States ("Foreign Assets") and
charges for transactions by such Portfolio outside the United States (including,
without limitation, charges for funds transfers and tax reclaims) in accordance
with such schedule of fees and charges for each country in which Foreign Assets
of such Portfolio are held as Custodian shall from time to time provide to the
Trust. Any asset-based fee shall be based upon the total market value of the
applicable Foreign Assets as determined on the last Business Day of the month
for which such fee is charged.
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