CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of March 5, 2007, among AMERISTOCK ETF TRUST, a
Delaware statutory trust duly registered with the U.S. Securities and Exchange
Commission under the 1940 Act (the Trust) on behalf of a number of separate
investment portfolios listed on Schedule A hereto (each a Fund and collectively,
the Funds). AMERISTOCK CORPORATION, a California corporation duly registered
with the Securities and Exchange Commission under the Investment Advisers Act of
1940 (the Adviser), and XXXXX BROTHERS XXXXXXXX & CO., a limited partnership
formed under the laws of the State of New York (BBH&Co. or the Custodian).
WITNESSETH:
WHEREAS, under an Investment Advisory Agreement between the Trust and
Adviser, the Adviser serves as the investment adviser of each Fund, and has
agreed to pay most operating expenses of the Funds, including custodial
expenses; and
WHEREAS, the Trust and Adviser wish to employ BBH&Co. to act as custodian
for the Funds' Investments and to provide related services, all as provided
herein, and BBH&Co. is willing to accept such employment, subject to the terms
and conditions herein set forth:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, Trust on behalf of each Fund, the Adviser and BBH&Co. hereby
agree, as follows:
1. Appointment of Custodian. The Trust and Adviser hereby appoint BBH&Co. as the
Funds' custodian for their Investments, and BBH&Co. hereby accepts such
appointment. All Investments of a Fund delivered to the Custodian or its agents
or Subcustodians shall be dealt with as provided in this Agreement. The duties
of the Custodian with respect to a Fund's Investments shall be only as set forth
expressly in this Agreement, which duties are generally comprised of safekeeping
and various administrative duties that will be performed in accordance with
Instructions and as reasonably required to effect Instructions.
2. Representations, Warranties and Covenants of the Trust and Adviser. The Trust
and Adviser hereby represent, warrant and covenant each of the following:
2.1 This Agreement has been, and at the time of delivery of each
Instruction such Instruction will have been, duly authorized, executed and
delivered by the Trust and/or Adviser, or the duly appointed agent of either.
This Agreement does not violate any Applicable Law applicable to the Trust of
Adviser or conflict with or constitute a default under the Trust's Agreement and
Declaration of Trust, any Fund's prospectus or other organic document.
agreement, judgment, order or decree to which the Trust or a Fund is a party or
by which it or their Investments are bound.
2.2 By providing an Instruction with respect to the first acquisition
of an Investment in a jurisdiction other than the United States of America, the
Trust shall be deemed to have confirmed to the Custodian that it has (a) made
all determinations required to be made under
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Applicable Law, and (b) appropriately and adequately disclosed to shareholders
in the Funds and all persons who have rights in or to such Investments, all
material investment risks, including those relating to the custody and
settlement infrastructure or the servicing of securities in such jurisdiction.
2.3 The Trust shall safeguard and shall solely be responsible for the
safekeeping of any testkeys, identification codes, passwords, other security
devices or statements of account with which the Custodian provides it. In
furtherance and not limitation of the foregoing, in the event the Trust or the
Adviser utilizes any on-line service offered by the Custodian, the Trust, the
Adviser and the Custodian shall be fully responsible for the security of each
party's respective connecting terminal, access thereto and the proper and
authorized use thereof and the initiation and application of continuing
effective safeguards in respect thereof. Additionally, if the Trust uses any
on-line or similar communications service made available by the Custodian, the
Trust shall be solely responsible for ensuring the security of its access to the
service and for the use of the service, and shall only attempt to access the
service and the Custodian's computer systems as directed by the Custodian. If
the Custodian provides any computer software to the Trust relating to the
services described in this Agreement, the Trust and the Adviser will only use
the software for the purposes for which the Custodian provided the software to
the Trust and will abide by the license agreement accompanying the software and
any other security policies which the Custodian provides to the Trust.
3. Representation and Warranty of BBH&Co. BBH&Co. hereby represents and warrants
that this Agreement has been duly authorized, executed and delivered by BBH&Co.
and does not and will not violate any Applicable Law applicable to BBH&Co. or
conflict with or constitute a default under BBH&Co.'s limited partnership
agreement or any agreement, instrument, judgment, order or decree to which
BBH&Co. is a party or by which it is bound.
4. Instructions. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
Instruction shall mean a directive initiated by the Board of Trustees, acting
directly or through or other Authorized Persons, which directive shall conform
to the requirements of this Section 4.
4.1 Authorized Persons. For purposes hereof, an Authorized Person shall be
a person or entity authorized to give Instructions for or on behalf of the Trust
or a Fund by written notices to the Custodian or otherwise in accordance with
procedures delivered to and acknowledged by the Custodian. The Custodian may
treat any Authorized Person as having full authority of the Trust to issue
Instructions hereunder unless the notice of authorization contains explicit
limitations as to said authority. The Custodian shall be entitled to rely upon
the authority of Authorized Persons until it receives appropriate written notice
from the Trust to the contrary.
The Trust hereby designates the Distributor (as such term is defined under
an Authorized Purchaser Agreement entered into by the Trust on behalf of the
Funds, as approved by the Custodian (the Authorized Purchaser Agreement)) as an
Authorized Person from whom the Custodian is hereby authorized to receive
Instructions to accept deposits of cash and securities in connection with the
purchase of shares of the Funds and the distribution of cash and securities in
connection with the redemption of shares of the Funds. The specific securities
to be received in
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connection with a purchase of shares or to be distributed in connection with a
redemption of shares shall be the securities specified by the Trust or Adviser
in the applicable day's list of deposit securities or list of redemption
securities, as the case may be, unless specific Instructions to the contrary are
given to the Custodian.
4.2 Form of Instruction. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Trust or Authorized Persons from time to time unless the Trust
shall elect to transmit such Instruction in accordance with Subsections 4.2.1
through 4.2.3 of this Section.
4.2.1 Board of Trustees Designated Secured-Transmission Method.
Instructions may be transmitted through a secured or tested
electro-mechanical means identified by the Trust or by an Authorized
Person entitled to give Instruction and acknowledged and accepted by the
Custodian; it being understood that such acknowledgment shall authorize
the Custodian to receive and process such means of delivery but shall not
represent a judgment by the Custodian as to the reasonableness or security
of the method determined by the Authorized Person.
4.2.2 Written Instructions. Instructions may be transmitted in a
writing that bears the manual signature of Authorized Persons.
4.2.3 Other Forms of Instruction. Instructions may also be
transmitted by another means determined by the Trust or Authorized Persons
and acknowledged and accepted by the Custodian (subject to the same limits
as to acknowledgements as is contained in Subsection 4.2.1, above)
including Instructions given orally or by SWIFT, telex or telefax (whether
tested or untested).
When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. Oral Instructions shall be binding upon the Custodian only if and
when the Custodian takes action with respect thereto. With respect to telefax
instructions, the parties agree and acknowledge that receipt of legible
instructions cannot be assured, that the Custodian cannot verify that authorized
signatures on telefax instructions are original or properly affixed, and that
the Custodian shall not be liable for losses or expenses incurred through
actions taken in reliance on inaccurately stated, illegible or unauthorized
telefax instructions. The provisions of Section 4A of the Uniform Commercial
Code as currently in effect in the State of New York shall apply to the funds
transfers performed in accordance with Instructions. The Funds Transfer Services
Schedule and the Electronic and Online Services Schedule to this Agreement shall
each comprise a designation of form of a means of delivering Instructions for
purposes of this Section 4.2.
4.3 Completeness and Contents of Instructions. The Authorized Person shall
be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in a Fund's
Investments and upon any delivery and
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transfer of any Investment or moneys, the person initiating such Instruction
shall give the Custodian an Instruction with appropriate detail, including,
without limitation:
4.3.1 The transaction date and the date and location of settlement;
4.3.2 The specification of the type of transaction;
4.3.3 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money to be
received or delivered and currency information. Where an Instruction is
communicated by electronic means, or otherwise where an Instruction
contains an identifying number such as a CUSIP, SEDOL or ISIN number, the
Custodian shall be entitled to rely on such number as controlling
notwithstanding any inconsistency contained in such Instruction,
particularly with respect to Investment description; and
4.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian shall give prompt notice of such determination to the
Authorized Person and the Authorized Person shall thereupon amend or otherwise
reform such Instruction. In such event, the Custodian shall have no obligation
to take any action in response to the Instruction initially delivered until the
redelivery of an amended or reformed Instruction.
4.4 Timeliness of Instructions. In giving an Instruction, the Trust shall
take into consideration delays which may occur due to the involvement of a
Subcustodian or agent, differences in time zones, and other factors particular
to a given market, exchange or issuer. When the Custodian has established
specific timing requirements or deadlines with respect to particular classes of
Instruction, or when an Instruction is received by the Custodian at such a time
that it could not reasonably be expected to have acted on such instruction due
to time zone differences or other factors beyond its reasonable control, the
execution of any Instruction received by the Custodian after such deadline or at
such time (including any modification or revocation of a previous Instruction)
shall be at the risk of the Trust.
5. Safekeeping of Fund Assets. The Custodian shall hold Investments delivered to
it or Subcustodians for a Fund in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the safekeeping of
Investments not delivered or that are not caused to be issued to it or its
Subcustodians; or (b) pre-existing faults or defects in Investments that are
delivered to the Custodian, or its Subcustodians. The Custodian is hereby
authorized to hold with itself or a Subcustodian, and to record in one or more
accounts, all Investments delivered to and accepted by the Custodian, any
Subcustodian or their respective agents pursuant to an Instruction or in
consequence of any corporate action. The Custodian shall hold Investments for
the account of each Fund and shall segregate Investments from assets belonging
to the Custodian and shall cause its Subcustodians to segregate Investments from
assets belonging to the Subcustodian in an account held for that Fund or in an
account maintained by the Subcustodian generally for non-proprietary assets of
the Custodian.
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5.1 Use of Securities Depositories. The Custodian may deposit and maintain
Investments in any Securities Depository, either directly or through one or more
Subcustodians appointed by the Custodian. Investments held in a Securities
Depository shall be held (a) subject to the agreement, rules, statement of terms
and conditions or other document or conditions effective between the Securities
Depository and the Custodian or the Subcustodian, as the case may be, and (b) in
an account for a Fund or in bulk segregation in an account maintained for the
non-proprietary assets of the entity holding such Investments in the Depository.
If market practice or the rules and regulations of the Securities Depository
prevent the Custodian, the Subcustodian (or any agent of either) from holding
its client assets in such a separate account, the Custodian, the Subcustodian or
other agent shall as appropriate segregate such Investments for benefit of the
appropriate Fund or for the benefit of clients of the Custodian generally on its
own books.
5.2 Certificated Assets. Investments which are certificated may be held in
registered or bearer form: (a) in the Custodian's vault; (b) in the vault of a
Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities Depository;
all in accordance with customary market practice in the jurisdiction in which
any Investments are held.
5.3 Registered Assets. Investments which are registered may be registered
in the name of the Custodian, a Subcustodian, or in the name of a Fund or a
nominee for any of the foregoing, and may be held in any manner set forth in
paragraph 5.2 above with or without any identification of fiduciary capacity in
such registration.
5.4 Book Entry Assets. Investments which are represented by book-entry may
be so held in an account maintained by the Book-entry Agent on behalf of the
Custodian, a Subcustodian or another agent of the Custodian, or a Securities
Depository.
5.5 Replacement of Lost Investments. In the event of a loss of Investments
for which the Custodian is responsible under the terms of this Agreement, the
Custodian shall replace such Investment, or in the event that such replacement
cannot be effected, the Custodian shall pay to the Fund the fair market value of
such Investment based on the last available price as of the close of business in
the relevant market on the date that a claim was first made to the Custodian
with respect to such loss, or. if less, such other amount as shall be agreed by
the parties as the date for settlement.
6. Administrative Duties of the Custodian. The Custodian shall perform the
following administrative duties with respect to Investments of each Fund.
6.1 Purchase of Investments. Pursuant to Instruction, Investments
purchased for the account of any Fund shall be paid for (a) against delivery
thereof to the Custodian or a Subcustodian, as the case may be, either directly
or through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
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6.2 Sale of Investments. Pursuant to Instruction, Investments sold for the
account of any Fund shall be delivered (a) against payment therefor in cash or
by bank wire transfer, (b) by credit to the account of the Custodian or the
applicable Subcustodian, as the case may be, with a Clearing Corporation or a
Securities Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in accordance with an
Instruction, Applicable Law, generally accepted trade practices, or the terms of
the instrument representing such Investment.
6.3 Delivery and Receipt in Connection with Borrowings of the Fund or
other Collateral and Margin Requirements. Pursuant to Instruction, the Custodian
may deliver or receive Investments or cash of a Fund in connection with
borrowings or loans by the Fund and other collateral and margin requirements.
6.4 Futures and Over-the-Counter (OTC) Contracts. If, pursuant to an
Instruction, the Custodian shall become a party to an agreement with the Trust
on behalf of a Fund or any Fund and a futures commission merchant regarding
margin or a counterparty to an OTC contract (Tri-Party Agreement), the Custodian
shall (a) receive and retain, to the extent the same is provided to the
Custodian, confirmations or other documents evidencing the purchase or sale by
the Fund of exchange-traded futures contracts or the entering into of an option,
forward or other derivatives transaction by the Fund, (b) when required by such
Tri-Party Agreement, deposit and maintain in an account opened pursuant to such
Agreement (Margin Account) segregated either physically or by book-entry in a
Securities Depository for the benefit of any futures commission merchant, such
Investments as the Fund shall have designated as initial, maintenance or
variation "margin" deposits or other collateral intended to secure the Fund's
performance of its obligations under the terms of any exchange-traded futures
contracts and commodity options; and (c) thereafter pay, release or transfer
Investments into or out of the Margin Account in accordance with the provisions
of such Agreement. Alternatively, the Custodian may deliver Investments, in
accordance with an Instruction, to a futures commission merchant for margin
purposes or to the counterparty or its custodian. The Custodian shall in no
event be responsible for the acts and omissions of any futures commission
merchant or the counterparty or its custodian, to whom Investments are delivered
pursuant to this Section; for the sufficiency of Investments held in any Margin
Account; for funding margin deposits or otherwise providing Advances for the
purpose of margin or other collateral in any Margin Account; or for the
performance of any terms of any exchange-traded futures contracts, commodity
options, forward contracts and other derivative transactions.
6.5 Contractual Obligations and Similar Investments. From time to time, a
Fund's Investments may include Investments that are not ownership interests as
may be represented by certificate (whether registered or bearer), by entry in a
Securities Depository or by book entry agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If a Fund shall at any
time acquire such Investments, including without limitation deposit obligations,
loan participations, repurchase agreements and derivative arrangements, the
Custodian shall (a) receive and retain, to the extent the same are provided to
the Custodian, confirmations or other documents evidencing the arrangement; and
(b) perform on the Fund's account in accordance with the terms of the applicable
arrangement, but only to the extent
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directed to do so by Instruction. The Custodian shall have no responsibility for
agreements running to the Fund as to which it is not a party other than to
retain, to the extent the same are provided to the Custodian, documents or
copies of documents evidencing the arrangement and, in accordance with
Instruction, to include such arrangements in reports made to the Fund.
6.6 Exchange of Securities. Unless otherwise directed by Instruction, the
Custodian shall: (a) exchange securities held for the account of a Fund for
other securities in connection with any reorganization, recapitalization,
conversion, split-up, change of par value of shares or similar event, and (b)
deposit any such securities in accordance with the terms of any reorganization
or protective plan.
6.7 Surrender of Securities. Unless otherwise directed by Instruction, the
Custodian may surrender securities: (a) in temporary form for definitive
securities: (b) for transfer into the name of an entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of indebtedness.
6.8 Rights, Warrants, Etc. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deposit securities in
response to any invitation for the tender thereof.
6.9 Mandatory Corporate Actions. Unless otherwise directed by Instruction,
the Custodian shall: (a) comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions or similar rights of securities ownership
affecting securities held on a Fund's account and promptly notify the Trust of
such action, and (b) collect all stock dividends, rights and other items of like
nature with respect to such securities.
6.10 Income Collection. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to the Fund with respect to
Investments and promptly credit the amount collected to a Principal or Agency
Account; provided, however, that the Custodian shall not be responsible for
taking legal action to collect amounts due and payable with respect to
Investments that are in default. The Custodian is hereby authorized to endorse
and deliver any instrument required to be so endorsed and delivered to effect
collection of any amount due and payable to the Fund with respect to
Investments.
6.11 Ownership Certificates and Disclosure of the Fund's Interest. The
Custodian is hereby authorized to execute on behalf of each Fund ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
With respect to securities issued in the United States of America, the
Custodian [ X ] may [ ] may not release the identity of a Fund to an
issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
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communications between such issuer and the Fund. IF NO BOX IS CHECKED, THE
CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT RECEIVES CONTRARY
INSTRUCTIONS FROM THE FUND. A Fund may by Instruction change any election
made under this paragraph. With respect to securities issued outside of
the United States of America, information shall be released in accordance
with law or custom of the particular country in which such security is
located.
6.12 Proxy Materials. The Custodian shall promptly deliver, or cause to be
delivered, to the Trustees proxy forms, notices of meeting, and any other
notices or announcements materially affecting or relating to Investments
received by the Custodian or any nominee.
6.13 Taxes. The Custodian shall, where applicable, assist the Trust in the
reclamation of taxes withheld on dividends and interest payments received by a
Fund. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the advice of counsel
and upon information and advice regarding a Fund's tax status that is received
from or on behalf of the Fund without duty of separate inquiry.
6.14 Other Dealings. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
The Custodian shall attend to all nondiscretionary details in connection
with the sale or purchase or other administration of Investments, except as
otherwise directed by an Instruction, and may make payments to itself or others
for minor expenses of administering Investments under this Agreement; provided
that the Trust shall have the right to request an accounting with respect to
such expenses.
In fulfilling the duties set forth in Sections 6.6 through 6.10 above, the
Custodian shall promptly provide to the Trust all material information
pertaining to a corporate action which the Custodian actually receives; provided
that the Custodian shall not be responsible for the completeness or accuracy of
such information. Information relative to any pending corporate action made
available to the Trust or Authorized Person via any of the services described in
the Electronic and Online Services Schedule shall constitute the delivery of
such information by the Custodian hereunder. Any advance credit of cash or
shares expected to be received as a result of any corporate action shall be
subject to actual collection and may, when the Custodian deems collection
unlikely, be reversed by the Custodian.
The Custodian may at any time or times in its discretion appoint (and may
at any time remove) agents (other than Subcustodians) to carry out some or all
of the administrative provisions of this Agreement (Agents), provided, however,
that the appointment of such agent shall not relieve the Custodian of its
administrative obligations under this Agreement.
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7. Cash Accounts, Deposits and Money Movements. Subject to the terms and
conditions set forth in this Section 7, the Trust hereby authorizes the
Custodian to open and maintain, with itself or with Subcustodians, cash accounts
in United States Dollars.
7.1 Types of Cash Accounts. Cash accounts opened on the books of the
Custodian (Principal Accounts) shall be opened in the name of each Fund. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 7 and the general liability provisions
contained in Section 9. Cash accounts opened on the books of a Subcustodian may
be opened in the name of a Fund or the Custodian or in the name of the Custodian
for its customers generally (Agency Accounts). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Fund. Accordingly, the Custodian shall be responsible for exercising reasonable
care in the administration of such accounts but shall not be liable for their
repayment in the event such Subcustodian, by reason of its bankruptcy,
insolvency or otherwise, fails to make repayment.
7.1.1 Administrative Accounts. In connection with the services
provided hereunder, the Custodian is hereby directed to open cash accounts
on its books and records from time to time for the purposes of receiving
subscriptions and/or processing redemptions on behalf of the Funds, and/or
for the purposes of aggregating, netting and/or clearing transactions
(including, without limitation repurchase agreements, capital stock
activity, expense payment) or other administrative purposes (each an
"Account"). Each such Account shall be subject to the terms and conditions
of this Agreement and each Fund shall be liable for the satisfaction of
its own obligations in connection with each Account.
7.2 Payments and Credits with Respect to the Cash Accounts. The Custodian
shall make payments from or deposits to any of said accounts in the course of
carrying out its administrative duties, including but not limited to income
collection with respect to the Fund's Investments, and otherwise in accordance
with Instructions. The Custodian and its Subcustodians shall be required to
credit amounts to the cash accounts only when moneys are actually received in
cleared funds in accordance with banking practice in the country and currency of
deposit. Any credit made to any Principal or Agency Account before actual
receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
7.3 Delays. If no event of Force Majeure shall have occurred and be
continuing and in the event that a delay shall have been caused by the
negligence or willful misconduct of the Custodian in carrying out an Instruction
to credit or transfer cash, the Custodian shall be liable to each Fund: (a) with
respect to Principal Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Custodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected; and,
(b) with respect to Agency Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Subcustodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have
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been effected until the day it is in fact effected. The Custodian shall not be
liable for delays in carrying out such Instructions to transfer cash which are
not due to the Custodian's own negligence or willful misconduct.
7.4 Advances. If, for any reason in connection with this Agreement the
Custodian or any Subcustodian makes an Advance to facilitate settlement or
otherwise for the benefit of a Fund (whether or not any Principal or Agency
Account shall be overdrawn either during, or at the end of, any Business Day
(defined as any day other than a day on which the American Stock Exchange, the
New York Stock Exchange or the U.S. Government securities markets are closed for
regular trading)), the Trust hereby does:
7.4.1 acknowledge that the Fund shall have no right, title or
interest in or to any Investments purchased with such Advance or proceeds
of such Investments, and that any credit to an account of Fund shall be
provisional, until: (a) the debit of the Principal or Agency Account by
Custodian for an amount equal to Advance Costs; and/or (b) if such debit
produces an overdraft in such account, reimbursement to the Custodian or
Subcustodian for the amount of such overdraft;
7.4.2 acknowledge that the Custodian has an automatically perfected
statutory security interest in Investments purchased with any such Advance
pursuant to Section 9-206 of the Uniform Commercial Code as in effect in
the State of New York from time to time;
7.4.3 in addition, in order to secure the obligations of the Fund to
pay or perform any and all obligations of the Fund pursuant to this
Agreement, including without limitation to repay any Advance made pursuant
to this Agreement, grant to the Custodian a security interest in all
Investments and proceeds thereof (as defined in the Uniform Commercial
Code as currently in effect in the State of New York); and agree to take,
and agree that the Custodian may take, in respect of the security interest
referenced above, any further actions that the Custodian may reasonably
require.
7.5 Custodian's Rights Neither the Custodian nor any Subcustodian shall be
obligated to make any Advance or to allow an Advance to occur to a Fund, and in
the event that the Custodian or any Subcustodian does make or allow an Advance,
any such Advance and any transaction giving rise to such Advance shall be for
the account and risk of the Fund and shall not be deemed to be a transaction
undertaken by the Custodian for its own account and risk. If such Advance shall
have been made or allowed by a Subcustodian or any other person, the Custodian
may assign all or part of its security interest referenced above and any other
rights granted to the Custodian hereunder to such Subcustodian or other person.
If the Fund shall fail to repay the Advance Costs when due, the Custodian or its
assignee, as the case may be, shall be entitled to a portion of the available
cash balance in any Agency or Principal Account equal to such Advance Costs, and
the Trust authorizes the Custodian, on behalf of the Fund, to pay an amount
equal to such Advance Costs irrevocably to such Subcustodian or other person,
and to dispose of any property in such Account to the extent necessary to make
such payment. Any Investments and funds credited to accounts subject to this
Agreement created pursuant hereto shall be treated as financial assets credited
to securities accounts under Articles 8 and 9 of the
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Uniform Commercial Code as in effect in the State of New York from time to time.
Accordingly, the Custodian and any Subcustodian shall have the rights and
benefits of a secured creditor that is a securities intermediary under such
Articles 8 and 9.
7.6 Integrated Account. For purposes hereof, deposits maintained in all
Principal Accounts shall collectively constitute a single and indivisible
current account with respect to a Fund's obligations to the Custodian or its
assignee, and balances in the Principal Accounts shall be available for
satisfaction of the Fund's obligations under this Section 7. The Custodian shall
further have a right of offset against the balances in any Agency Account for a
Fund maintained hereunder to the extent that the aggregate of all Principal
Accounts for that Fund is overdrawn.
8. Subcustodians and Securities Depositories. Subject to the provisions
hereinafter set forth in this Section 8 and, with respect to securities
depositories, set forth in Section 5.1, the Trust each hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of any Fund and to
appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form, in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and clearing agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
8.1 Domestic Subcustodians and Securities Depositories. The Custodian may
deposit and/or maintain, either directly or through one or more agents appointed
by the Custodian, Investments of the Fund in any Securities Depository in the
United States of America, including The Depository Trust Company, provided such
Depository meets applicable requirements of the Federal Reserve Bank or of the
Securities and Exchange Commission. The Custodian may, at any time and from time
to time, appoint any bank meeting the requirements of a custodian and the rules
and regulations thereunder, to act on behalf of the Fund as a Subcustodian for
purposes of holding Investments of the Fund in the United States. Pursuant to
Rule l7f-4 under the 1940 Act, the Custodian shall require each Subcustodian at
a minimum to exercise reasonable care in accordance with reasonable commercial
standards in discharging its duties as a Subcustodian.
8.2 Responsibility for Subcustodians. The Custodian shall be liable to
each Fund for any loss or damage to the Fund caused by or resulting from the
acts or omissions of any domestic Subcustodian to the extent that such acts or
omissions would be deemed to be negligence, gross negligence or willful
misconduct in accordance with the terms of the relevant subcustodian agreement
under the laws, circumstances and practices prevailing in the place where the
act or omission occurred.
9. Responsibility of the Custodian. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is effected. Subject to
the specific provisions of this Section, the Custodian
11
shall be liable for any direct damage incurred by a Fund in consequence of the
Custodian's negligence, bad faith or willful misconduct. In no event shall the
Custodian be liable hereunder for any special, indirect, punitive or
consequential damages arising out of, pursuant to or in connection with this
Agreement even if the Custodian has been advised of the possibility of such
damages. It is agreed that the Custodian shall have no duty to assess the risks
inherent in the Fund's Investments or to provide investment advice with respect
to such Investments and that the Fund as principal shall bear any risks
attendant to particular Investments such as failure of counterparty or issuer.
9.1 Limitations of Performance. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not be
liable hereunder for any loss or damage in association with such failure to
perform, for or in consequence of the following causes:
9.1.1 Force Majeure. Force Majeure shall mean any circumstance or
event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other agent of the Custodian or the Subcustodian,
including any event caused by, arising out of or involving (a) an act of
God, (b) accident, fire, water damage or explosion, (c) any computer,
system or other equipment failure or malfunction caused by any computer
virus or the malfunction or failure of any communications medium, (d) any
interruption of the power supply or other utility service, (e) any strike
or other work stoppage, whether partial or total, (f) any delay or
disruption resulting from or reflecting the occurrence of any Sovereign
Risk, (g) any disruption of, or suspension of trading in, the securities,
commodities or foreign exchange markets, whether or not resulting from or
reflecting the occurrence of any Sovereign Risk, (h) any encumbrance on
the transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, or (i)
any other cause similarly beyond the reasonable control of the Custodian.
9.1.2 Sovereign Risk. Sovereign Risk shall mean, in respect of any
jurisdiction, including the United States of America, where Investments
are acquired or held hereunder or under a Subcustody Agreement, (a) any
act of war, terrorism, riot, insurrection or civil commotion, (b) the
imposition of any investment, repatriation or exchange control
restrictions by any Governmental Authority, (c) the confiscation.
expropriation or nationalization of any Investments by any Governmental
Authority, whether de facto or de jure, (d) any devaluation or revaluation
of the currency, (e) the imposition of taxes, levies or other charges
affecting Investments, (f) any change in the Applicable Law, or (g) any
other economic or political risk incurred or experienced.
9.1.3 Duty to Mitigate. Nothing in this Section 9.1 shall relieve
the Custodian from responsibility or liability for any loss or damage
caused by its failure to take commercially reasonable steps to minimize
the amount of loss or damage sustained by a Fund in connection with any
Force Majeure event.
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9.2 Limitations on Liability. The Custodian shall not be liable for any
loss, claim, damage or other liability arising from the following causes:
9.2.1 Failure of Third Parties. The failure of the following third
parties: (a) any futures commission merchant(s); (b) any issuer of
Investments or book-entry or other agent of and issuer; (c) any
counterparty with respect to any Investment, including any issuer of
exchange-traded or other futures, option, derivative or commodities
contract; (d) failure of the Adviser or other agent of the Fund; or (e)
failure of other third parties similarly beyond the control or choice of
the Custodian.
9.2.2 Information Sources. The Custodian may rely upon information
received from issuers of Investments or agents of such issuers,
information received from Subcustodians and from other commercially
reasonable sources such as commercial data bases and the like, but shall
not be responsible for specific inaccuracies in such information, provided
that the Custodian has relied upon such information in good faith and has
no reason to believe that any such information is inaccurate, or for the
failure of any commercially reasonable information provider.
9.2.3 Reliance on Instruction. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such action
conflicts with, or is contrary to any provision of the Declaration of
Trust, prospectus, Applicable Law, or actions by the trustees or
shareholders of the Trust.
9.2.4 Restricted Securities. The limitations inherent in the rights,
transferability or similar investment characteristics of a given
Investment of a Fund.
10. Indemnification.
10.1 The Trust and Adviser hereby indemnify the Custodian and each
Subcustodian. and their respective agents, nominees and the partners, employees,
officers and directors, and agrees to hold each of them harmless from and
against all claims and liabilities, including counsel fees and taxes, reasonably
incurred or assessed against any of them in connection with the performance of
this Agreement and any Instruction, provided that such person is not subject to
liability under any provision of this Agreement, including Section 9, or is
required to indemnify a Fund or the Adviser under Section 10.2 of this
Agreement.
10.2 The Custodian hereby indemnifies each Fund and the Adviser, and their
respective agents, nominees and the partners, employees, officers and directors,
and agrees to hold each of them harmless from and against all claims and
liabilities, including counsel fees and taxes, reasonably incurred or assessed
against any of them as a direct result of the Custodian's negligence, willful
misconduct or bad faith in its performance of this Agreement and any
Instruction.
11. Reports and Records. The Custodian shall:
13
11.1 create and maintain records relating to the performance of its
obligations under this Agreement;
11.2 make available to the Trust, its auditors, agents and employees, upon
reasonable request and during normal business hours of the Custodian, all
records maintained by the Custodian pursuant to Section II.l above, subject,
however, to all reasonable security requirements of the Custodian then
applicable to the records of its custody customers generally;
11.3 make available to the Trust all Electronic Reports; it being
understood that the Custodian shall not be liable hereunder for the inaccuracy
or incompleteness thereof or for errors in any information included therein;
11.4 pursuant to Rule 17f-4 under the 1940 Act, provide to the Trust,
promptly upon the Trust's request, such reports as are available concerning the
internal accounting controls and financial strength of the Custodian.
The Trust shall examine all records, howsoever produced or transmitted,
promptly upon receipt thereof and notify the Custodian promptly of any
discrepancy or error therein. Unless the Trust delivers written notice of any
such discrepancy or error within a reasonable time after its receipt thereof,
such records shall be deemed to be true and accurate. It is understood that the
Custodian now obtains and will in the future obtain information on the value of
assets from outside sources which may be utilized in certain reports made
available to the Trust. The Custodian deems such sources to be reliable but it
is acknowledged and agreed that the Custodian does not verify nor represent nor
warrant as to the accuracy or completeness of such information and accordingly
shall be without liability in selecting and using such sources and furnishing
such information.
12. Miscellaneous.
12.1 Proxies, etc. The Trust or an Authorized Person will promptly execute
and deliver, upon request, such proxies, powers of attorney or other instruments
as may be necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
12.2 Entire Agreement. This Agreement (including any schedules and
exhibits attached hereto and thereto) contains all of the agreements among the
parties hereto and thereto with respect to the transactions contemplated hereby
and thereby and supersedes all prior agreements or understandings, whether
written or oral, among the parties with respect thereto.
12.3 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by a written instrument executed by all parties hereto.
12.4 Successors and Assigns; Assignment All the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns. This Agreement shall not be
assigned by any party without the
14
prior written consent of the other parties and any assignment without such
consent shall be null and void.
12.5 Waiver of Compliance. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but any such waiver, or the failure to insist upon strict compliance
with any obligation, covenant, agreement or condition herein, shall not operate
as a waiver of, or estoppel with respect to, any subsequent or other failure or
breach.
12.6 Severability. The parties hereto desire that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
12.7 Notices. All notices, waivers, or other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
delivered personally, by facsimile (and. if sent by facsimile, followed by
delivery by nationally-recognized express courier), sent by
nationally-recognized express courier or mailed by registered or certified mail
(return receipt requested), postage prepaid, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(1) if to the Trust or Adviser
0000 Xxxxxx Xxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(2) if to the Custodian, to:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
15
Telephone: (000) 000-0000
Facsimile: (000) 000-0000,
or such other address as the Trust or the Custodian may have designated in
writing to the other.
All such notices and other communications shall be deemed to have been
delivered and received (i) in the case of personal delivery or delivery by a
nationally-recognized express courier, on the date of such delivery if delivered
during business hours on a Business Day or, if not delivered during business
hours on a Business Day, the first Business Day thereafter, and (ii) in the case
of mailing or delivery by facsimile, upon receipt by the intended party.
12.8 Governing Law; Jurisdiction.
12.8.1 All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of New York, without
giving effect to any choice or conflict of law provision or rule (whether
in the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
York. In furtherance of the foregoing, the internal law of the State of
New York will control the interpretation and construction of this
Agreement, even if under such jurisdiction's choice of law or conflict of
law analysis, the substantive law of some other jurisdiction would
ordinarily or necessarily apply.
12.8.2 Each party irrevocably consents and agrees, for the benefit
of the other parties, that any legal action, suit or proceeding against it
with respect to its obligations, liabilities or any other matter arising
out of or in connection with this Agreement or any related agreement may
be brought in the courts of the State of New York and hereby irrevocably
consents and submits to the non-exclusive jurisdiction of each such court
in personam, generally and unconditionally with respect to any action,
suit or proceeding for itself and in respect of its properties, assets and
revenues. Each party irrevocably waives any immunity to jurisdiction to
which it may otherwise be entitled or become entitled (including sovereign
immunity, immunity to pre-judgment attachment and execution) in any legal
suit, action or proceeding against it arising out of or based on this
Agreement or any related agreement or the transactions contemplated hereby
or thereby which is instituted in any court of the State of New York.
The provisions of this Section 12.8 shall survive any termination of this
Agreement, in whole or in part.
12.9 No Partnership. The Custodian acts as an independent contractor with
respect to the services provided under this Agreement. The terms and conditions
of this Agreement do not create a partnership relationship between the Custodian
and the Trust or any Fund or between the Custodian and the Adviser. The Trust
and Adviser acknowledge that the Custodian may enter into similar agreements
with others without the consent of the Trust or Adviser.
12.10 Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
16
12.11 No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party.
12.12 Counterparts; Facsimile Signatures. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original bul all
of which together shall constitute one and the same instrument. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
12.13 Other Usages. The following usages shall apply in interpreting this
Agreement: (i) references to a governmental or quasi-governmental agency,
authority or instrumentality shall also refer to a regulatory body that succeeds
to the functions of such agency, authority or instrumentality; and (ii)
"including" means "including, but not limited to."
12.14 Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement. The Custodian agrees
that it shall treat confidentially all information provided to it by the Trust
or Adviser regarding the Trust's or Adviser's business or operations, and the
Trust and Adviser agree that they shall treat confidentially all information
provided to them by the Custodian regarding the Custodian's business or
operations. All confidential information provided by a party hereto shall be
used by a party hereto solely for the purpose of rendering or obtaining services
pursuant to this Agreement and. except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the prior consent
of such providing party. The foregoing shall not apply to any information that
is publicly available when provided or thereafter becomes publicly available
other than through a breach of this Agreement, or that is required to be
disclosed by or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by judicial or
administrative process or otherwise by Applicable Law.
12.15 Counsel. In fulfilling its duties hereunder, the Custodian shall be
entitled to receive and act upon the advice of (i) counsel regularly retained by
the Custodian in respect of such matters, (ii) counsel for the Trust or a Fund
or (iii) such counsel as the Trust and the Custodian may agree upon, with
respect to all matters. The Custodian shall not be considered to have engaged in
any misconduct or to have acted negligently when soliciting and following such
advice.
12.16 Conflict. Nothing contained in this Agreement shall prevent the
Custodian and its associates from, to the extent not prohibited by Applicable
Law, (i) dealing as a principal or an intermediary in the sale, purchase or loan
of a Fund's Investments to, or from the Custodian or its associates; (ii) acting
as a custodian, a subcustodian, a trustee, an agent, securities dealer, an
investment manager or in any other capacity for any other client; or (iii)
buying, holding, lending, and dealing in any way in any assets for the benefit
of its own account, for the account of any other client, or for the account of a
Fund.
12.17 Privacy. In the course of carrying out its obligations under this
Agreement, each party shall maintain physical, procedural and/or electronic
safeguards reasonably designed to
17
protect information regarding each Fund and its investors that such party has
obtained or to which such party has gained access.
13. Definitions. The following defined terms will have the respective meanings
set forth below.
13.1 Advance(s) shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian, or paid to third parties for
account of a Fund or in discharge of any expense, tax or other item payable by a
Fund.
13.2 Advance Costs shall mean any Advance, interest on the Advance and any
related expenses, including without limitation any xxxx to market loss of the
Custodian or Subcustodian on any Investment to which Section 7.4.1 applies.
13.3 Agency Account(s) shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 7.1.
13.4 Agent(s) shall have the meaning set forth in the last sentence of
Section 6.
13.5 Applicable Law shall mean with respect to each jurisdiction, all (a)
laws, statutes. treaties, regulations, guidelines (or their equivalents); (b)
orders, interpretations, licenses and permits; and (c) judgments, decrees,
injunctions, writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
13.6 Authorized Person(s) shall mean any person or entity authorized to
give Instructions on behalf of a Fund in accordance with Section 4.1.
13.7 Book-entry Agent shall mean an entity acting as agent for the issuer
of Investments for purposes of recording ownership or similar entitlement to
Investments, including without limitation a transfer agent or registrar.
13.8 Clearing Corporation shall mean any entity or system established for
purposes of providing securities settlement and movement and associated
functions for a given market.
13.9 Electronic and Online Services Schedule shall mean any separate
agreement entered into between the Custodian and the Trust or its authorized
representative with respect to certain matters concerning certain electronic and
online services as described therein and as may be made available from time to
time by the Custodian to the Trust or an Authorized Person.
13.10 Electronic Reports shall mean any reports prepared by the Custodian
and remitted to the Trust or its authorized representative via the internet or
electronic mail.
13.11 Funds Transfer Services Schedule shall mean any separate agreement
entered into among the Custodian, the Board of Trustees or an Authorized Person
with respect to certain matters concerning the processing of payment orders from
Principal Accounts of a Fund.
18
13.12 Instruction(s) shall have the meaning assigned in Section 4.
13.13 Investment(s) shall mean any investment asset of a Fund, including
without limitation: securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets.
13.14 Margin Account shall have the meaning set forth in Section 6.4
hereof.
13.15 Principal Account(s) shall mean deposit accounts of a Fund carried
on the books of BBH&Co. as principal in accordance with Section 7.
13.16 Safekeeping Account shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the interests
of a Fund (or clients of the Custodian or Subcustodian) from the assets of the
Custodian or any Subcustodian.
13.17 Securities Depository shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording the ownership
and/or entitlement to investment securities for a given market.
13.18 Subcustodian(s) shall mean each bank appointed by the Custodian
pursuant to Section 8 hereof, but shall not include Securities Depositories.
13.19 Tri-Party Agreement shall have the meaning set forth in Section 6.4
hereof.
13.20 1940 Act shall mean the Investment Company Act of 1940.
14. Compensation. The Adviser agrees to pay to the Custodian (a) a fee in an
amount set forth in the fee letter between the Adviser and the Custodian in
effect on the date hereof or as amended from time to time, and (b) all
reasonable out-of-pocket expenses incurred by the Custodian, including the fees
and expenses of all Subcustodians, and payable from time to time. Amounts
payable by the Adviser under and pursuant to this Section 14 shall be payable by
wire transfer to the Custodian at BBH&Co. in New York, New York.
15. Termination. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 Term, Notice and Effect. This Agreement shall have an initial term of
two (2) years from the date hereof. Thereafter, this Agreement shall
automatically renew for successive one (1) year periods unless any party
terminates this Agreement by written notice effective no sooner than
seventy-five (75) days following the date that notice to such effect shall be
delivered to the other parties at the addresses set forth in Section 12.5
hereof. Notwithstanding the foregoing provisions, the Trust or the Adviser
(together, the "Fund Parties") or the Custodian may terminate this Agreement at
any time (a) for cause, which is a material breach of the
19
Agreement not cured within 60 days, in which case termination shall be effective
upon receipt of written notice by the breaching party, (b) upon thirty (30) days
written notice by the Custodian to the Fund Parties in the event that a Fund
Party is adjudged bankrupt or insolvent, or there shall be commenced against
such Fund Party a case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect, or (c) upon thirty (30) days written
notice by a Fund Party to the Custodian in the event that the Custodian adjudged
bankrupt or insolvent, or there shall be commenced against the Custodian a case
under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect.
15.2 Successor Custodian. In the event of the appointment of a successor
custodian, it is agreed that the Investments of a Fund held by the Custodian or
any Subcustodian shall be delivered to the successor custodian in accordance
with reasonable Instructions. The Custodian agrees to cooperate with the Trust
in the execution of documents and performance of other actions necessary or
desirable in order to facilitate the succession of the new custodian. If no
successor custodian shall be appointed, the Custodian shall in like manner
transfer the Fund's Investments in accordance with Instructions.
15.3 Delayed Succession. If no Instruction has been given as of the
effective date of termination, Custodian may at any time on or after such
termination date and upon ten (10) consecutive calendar days written notice to
the Trust either (a) deliver the Investments of a Fund held hereunder to the
Trust at the address designated for receipt of notices hereunder; or (b) deliver
any investments held hereunder to a bank or trust company having a
capitalization of $50,000,000 equivalent and operating under the Applicable law
of the jurisdiction where such Investments are located, such delivery to be at
the risk of the Fund. In the event that Investments or moneys of a Fund remain
in the custody of the Custodian or its Subcustodians after the date of
termination owing to the failure of the Trust to issue Instructions with respect
to their disposition or owing to the fact that such disposition could not be
accomplished in accordance with such Instructions despite diligent efforts of
the Custodian, the Custodian shall be entitled to compensation for its services
with respect to such Investments and moneys during such period as the Custodian
or its Subcustodians retain possession of such items and the provisions of this
Agreement shall remain in full force and effect until disposition in accordance
with this Section is accomplished.
16. Compliance Policies and Procedures. To assist the Trust in complying with
Rule 38a-1 of the 1940 Act, BBH&Co. represents that it has adopted written
policies and procedures reasonably designed to prevent violation of the federal
securities laws in fulfilling its obligations under the Agreement and that it
has in place a compliance program to monitor its compliance with those policies
and procedures. BBH&Co will upon request provide the Trust with information
about its compliance program as mutually agreed.
20
The undersigned acknowledges that (I/we) have received a copy of this document.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Partner
Date: 3/6/07
AMERISTOCK ETF TRUST
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxxx Xxxxxx
Title: Director
Date: Xxxxx 0, 0000
XXXXXXXXXX CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Director
Date: March 5, 2007
21
FUNDS TRANSFER SERVICES SCHEDULE TO CUSTODIAN AGREEMENT
1. Execution of Payment Orders. Xxxxx Brothers Xxxxxxxx & Co. (the Custodian) is
hereby instructed by Ameristock ETF Trust (the 'Trust"), on behalf of its
separate investment portfolios ("Funds") to execute each payment order, whether
denominated in United States dollars or other applicable currencies, received by
the Custodian in a Fund's name as sender and authorized and confirmed by an
Authorized Person as defined in a Custodian Agreement dated as of Mar 5 2007 by
and among the Custodian, the Trust, and Ameristock Corporation, as amended or
restated from time to time thereafter (the Agreement), provided that the Fund
has sufficient available funds on deposit in a Principal Account as defined in
the Agreement and provided that the order (i) is received by the Custodian in
the manner specified in this Funds Transfer Services Schedule or any amendment
hereafter; (ii) complies with any written instructions and restrictions of the
Trust as set forth in this Funds Transfer Services Schedule or any amendment
hereafter; (iii) is authorized by the Trust or is verified by the Custodian in
compliance with a security procedure set forth in Paragraph 2 below for
verifying the authenticity of a funds transfer communication sent to the
Custodian in the name of a Fund or for the detection of errors set forth in any
such communication; and (iv) contains sufficient data to enable the Custodian to
process such transfer.
2. Security Procedure. Board of Trustees hereby elects to use the procedure
selected below as its security procedure (the Security Procedure). The Security
Procedure will be used by the Custodian to verify the authenticity of a payment
order or a communication amending or canceling a payment order. The Custodian
will act on instructions received provided the instruction is authenticated by
the Security Procedure. The Trust agrees and acknowledges in connection with (i)
the size, type and frequency of payment orders normally issued or expected to be
issued by the Trust to the Custodian, (ii) all of the security procedures
offered to the Trust by the Custodian, and (iii) the usual security procedures
used by customers and receiving banks similarly situated, that authentication
through the Security Procedure shall be deemed commercially reasonable for the
authentication of all payment orders submitted to the Custodian. The Trust
hereby elects (please choose one) the following Security Procedure as described
below:
[X] BIDS and BIDS Worldview Payment Products. BIDS and BIDS Worldview
Payment Products, are on-line payment order authorization facilities
with built-in authentication procedures. The Custodian and the Trust
shall each be responsible for maintaining the confidentiality of
passwords or other codes to be used by them in connection with BIDS.
The Custodian will act on instructions received through BIDS without
duty of further confirmation unless the Trust notifies the Custodian
that its password is not secure.
[ ] SWIFT. The Custodian and the Trust shall comply with SWIFT's
authentication procedures. The Custodian will act on instructions
received via SWIFT provided the instruction is authenticated by the
SWIFT system.
[ ] Tested Telex. The Custodian will accept payment orders sent by
tested telex, provided the test key matches the algorithmic key the
Custodian and the Trust have agreed to use.
22
[ ] Computer Transmission. The Custodian is able to accept transmissions
sent from the Trust or Authorized Persons computer facilities to the
Custodian's computer facilities provided such transmissions are
encrypted and digitally certified or are otherwise authenticated in
a reasonable manner based on available technology. Such procedures
shall be established in an operating protocol among the Custodian
and the Trust.
[ ] Telefax Instructions. A payment order transmitted to the Custodian
by telefax transmission shall transmitted by the Trust or Authorized
Person to a telephone number specified from time to time by the
Custodian for such purposes. If it detects no discrepancies, the
Custodian will then either:
1. If the telefax requests a repetitive payment order, the
Custodian may call the Trust or Authorized Person at its
last known telephone number, request to speak to an
Authorized Person, and confirm the authorization and
details of the payment order (a Callback); or
2. If the telefax requests a non-repetitive order, the
Custodian will perform a Callback.
All faxes must be accompanied by a fax cover sheet which indicates
the sender's name, Fund name, telephone number, fax number, number
of pages, and number of transactions or instructions attached.
[ ] Telephonic. A telephonic payment order shall be called into the
Custodian at the telephone number designated from time to time by
the Custodian for that purpose. The caller shall identify
herself/himself as an Authorized Person. The Custodian shall obtain
the payment order data from the caller. The Custodian shall then:
1. If a telephonic repetitive payment order, the Custodian
may perform a Callback; or
2. If a telephonic non-repetitive payment order, the
Custodian will perform a Callback.
In the event the Trust chooses a procedure which is not a Security Procedure as
described above, the Trust agrees to be bound by any payment order (whether or
not authorized) issued in its name and accepted by the Custodian in compliance
with the procedure selected by the Trust.
3. Rejection of Payment Orders. The Custodian shall give the Trust timely notice
of the Custodian's rejection of a payment order. Such notice may be given in
writing or orally by telephone, each of which is hereby deemed commercially
reasonable. In the event the Custodian fails to execute a properly executable
payment order and fails to give the Trust notice of the Custodian's
non-execution, the Custodian shall be liable only for each Fund's actual damages
and only to the extent that such damages are recoverable under UCC 4A (as
defined in Paragraph 7 below). Notwithstanding anything in this Funds Transfer
Services Schedule and the Agreement to the contrary, the Custodian shall in no
event be liable for any consequential or special damages
23
under this Funds Transfer Services Schedule, whether or not such damages relate
to services covered by UCC 4A, even if the Custodian has been advised of the
possibility of such damages. Whenever compensation in the form of interest is
payable by the Custodian to a Fund pursuant to this Funds Transfer Services
Schedule, such compensation will be payable in accordance with UCC 4A.
4. Cancellation of Payment Orders. The Trust or Authorized Person may cancel a
payment order but the Custodian shall have no liability for the Custodian's
failure to act on a cancellation instruction unless the Custodian has received
such cancellation instruction at a time and in a manner affording the Custodian
reasonable opportunity to act prior to the Custodian's execution of the order.
Any cancellation shall be sent and confirmed in the manner set forth in
Paragraph 2 above.
5. Responsibility for the Detection of Errors and Unauthorized Payment Orders.
Except as may be provided, the Custodian is not responsible for detecting any
Trust error contained in any payment order sent by the Trust or an Authorized
Person to the Custodian. In the event that the Trust's or Authorized Person's
payment order to the Custodian either (i) identifies the beneficiary by both a
name and an identifying or bank account number and the name and number identify
different persons or entities, or (ii) identifies any bank by both a name and an
identifying number and the number identifies a person or entity different from
the bank identified by name, the Custodian shall seek further Instructions from
the Trust when and if it becomes aware or has reason to know of the discrepancy.
If the Custodian is not aware and does not have reason to know of the
discrepancy or does not receive further Instructions within a reasonable time
after they are sought, execution of the payment order, payment to the
beneficiary, cancellation of the payment order or actions taken by any bank in
respect of such payment order may be made solely on the basis of the number. The
Custodian shall not be liable for interest on the amount of any payment order
that was not authorized or was erroneously executed unless the Trust so notifies
the Custodian within thirty (30) Business Days following the Trust's receipt of
notice that such payment order had been processed. If a payment order in the
name of a Fund and accepted by the Custodian was not authorized by the Trust or
Authorized Person, the liability of the parties will be governed by the
applicable provisions of UCC 4A.
6. Laws and Regulations. The rights and obligations of the Custodian and the
Trust with respect to any payment order executed pursuant to this Funds Transfer
Services Schedule will be governed by any applicable laws, regulations,
circulars and funds transfer system rules, the laws and regulations of the
United States of America and of other relevant countries including exchange
control regulations and limitations on dealings or other sanctions, and
including without limitation those sanctions imposed under the law of the United
States of America by the Office of Foreign Assets Control. Any taxes, fines,
costs, charges or fees imposed by relevant authorities on such transactions
shall be for the account of the appropriate Fund.
7. Miscellaneous. All accounts opened by the Trust or its authorized agents at
the Custodian subsequent to the date hereof shall be governed by this Funds
Transfer Schedule. All terms used in this Funds Transfer Services Schedule shall
have the meaning set forth in Article 4A of the Uniform Commercial Code as
currently in effect in the State of New York (UCC 4A) unless otherwise set forth
herein. The terms and conditions of this Funds Transfer Services
24
Schedule are in addition to, and do not modify or otherwise affect, the terms
and conditions of the Agreement and any other agreement or arrangement between
the parties hereto.
8. Indemnification. The Custodian does not recommend the sending of instructions
by telefax or telephonic means as provided in Paragraph 2. BY ELECTING TO SEND
INSTRUCTIONS BY TELEFAX OR TELEPHONIC MEANS, THE BOARD OF TRUSTEES AGREE TO
INDEMNIFY THE CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR LOSSES
THEREFROM.
----------------------------------
OPTIONAL: The Custodian will perform a Callback if instructions are
sent by telefax or telephonic means as provided in Paragraph 2.
THE BOARD OF TRUSTEES MAY, AT ITS OWN RISK AND BY HEREBY
AGREEING TO INDEMNIFY THE CUSTODIAN AND ITS PARTNERS, OFFICERS AND
EMPLOYEES FOR ALL LOSSES THEREFROM, ELECT TO WAIVE A CALLBACK BY
THE CUSTODIAN BY INITIALING HERE:____
----------------------------------
The undersigned acknowledges that (I/we) have received a copy of this document.
Accepted and agreed:
XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Partner
Date: 3/6/07
AMERISTOCK ETF TRUST
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxxx Xxxxxx
Title: Director
Date: March 5, 2007
25
ELECTRONIC AND ON-LINE SERVICES SCHEDULE
This Electronic and On-Line Services Schedule (this Schedule) to a Custodian
Agreement dated as of March 5, 2007 (as amended from time to time hereafter, the
Agreement) by and among Xxxxx Brothers Xxxxxxxx & Co. (we, us our), Ameristock
ETF Trust (you, your). and Ameristock Corporation provides general provisions
governing your use of and access to the Services (as hereinafter defined)
provided to you by us via the Internet (at xxx.xxxxx.xxx or such other URL as we
may instruct vou to use to access our products) and via a direct dial-up
connection between your computer and our computers, as of March , 5, 2007 (the
Effective Date). Use of the Services constitutes acceptance of the terms and
conditions of this Schedule, any Appendices hereto, the Terms and Conditions
posted on our web site, and any terms and conditions specifically governing a
particular Service or our other products, which may be set forth in the
Agreement or in a separate related agreement (collectively, the Related
Agreements).
1. General Terms.
You will be granted access to our suite of online products, which may
include, but shall not be limited to the following services via the
Internet or dial-up connection (each separate service is a Service;
collectively referred to as the Services):
1.1. BIDS(R) and BIDS WorldView, a system for effectuating securities and
fund trade instruction and execution, processing and handling
instructions, and for the input and retrieval of other information;
1.2. F/X WorldView, a system for executing foreign exchange trades;
1.3. Fund WorldView, a system for receiving fund and prospectus
information;
1.4. BBHCOnnect, a system for placing securities trade instructions and
following the status and detail of trades;
1.5. ActionView(SM), a system for receiving certain corporate action
information; 1.6. Risk View, an interactive portfolio risk analysis
tool; and
1.7. Such other services as we shall from time to time offer.
2. Security / Passwords.
2.1. A digital certificate and/or an encryption key may be required to
access certain Services. You may apply for a digital certificate
and/or an encryption key by following the procedures set forth at
xxxx://xxx.xxx.xxx/xxxxx/. You also will need an identification code
(ID) and password(s) (Password) to access the Services.
2.2. You agree to safeguard your digital certificate and/or encryption
key, ID, and Password and not to give or make available,
intentionally or otherwise, your digital certificate, ID, and/or
Password to any unauthorized person. You must immediately notify us
in writing if you believe that your digital certificate and/or
encryption key, Password, or ID has been compromised or if you
suspect unauthorized access to your account by means of the Services
or otherwise, or when a person to whom a digital certificate and/or
an encryption key, Password, or ID has been assigned leaves or is no
longer permitted to access the Services.
2.3. We will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your
failure (be it intentional, unintentional, or
20
negligent) to maintain the confidentiality of your ID and/or
Password and/or the security of your digital certificate and/or
encryption key.
3. Instructions.
3.1. Proper instructions under this Schedule shall be provided as
designated in the Related Agreements (Instructions).
3.2. The following additional provisions apply to Instructions provided
via the Services:
a. Instructions sent by electronic mail will not be accepted or
acted upon.
b. You authorize us to act upon Instructions received through the
Services utilizing your digital certificate, ID, and/or
Password as though they were duly authorized written
instructions, without any duty of verification or inquiry on
our part, and agree to hold us harmless for any losses you
experience as a result.
c. From time to time, the temporary unavailability of third party
telecommunications or computer systems required by the
Services may result in a delay in processing Instructions. In
such an event, we shall not be liable to you or any third
party for any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind
(including without limitation, reasonable attorneys',
accountants', consultants', or experts' fees and
disbursements) that you experience due to such a delay.
4. Electronic Documents.
We may make periodic statements, disclosures, notices, and other documents
available to you electronically, and, subject to any delivery and receipt
verification procedures required by law, you agree to receive such
documents electronically and to check the statements for accuracy. If you
believe any such statement contains incorrect information, you must follow
the procedures set forth in the Related Agreement(s).
5. Malicious Code.
You understand and agree that we will not be responsible to you for the
introduction by you, your employees, agents, or representatives into the
Services, whether intentional or unintentional, of (i) any virus or other
code, program, or sub-program that damages or interferes with the
operation of the computer system containing the code, program or
subprogram, or halts, disables, or interferes with the operation of the
Services themselves; or (ii) any device, method, or token whose knowing or
intended purpose is to permit any person to circumvent the normal security
of the Services or the system containing the software code for the
Services (Malicious Code), provided in any case that we have taken
commercially reasonable actions and precautions to protect the Services
form the introduction of, and to minimize the damage caused by, the
Malicious Code. You agree to take all necessary actions and precautions to
prevent the introduction and proliferation of any Malicious Code into
those systems that interact with the Services.
6. Indemnification.
For avoidance of doubt, you hereby agree that the provisions in the
Related Agreement(s) related to your indemnification of us and any
limitations on our liability and responsibilities to you shall be
applicable to this Agreement, and are hereby expressly incorporated
herein. You agree that the Services are comprised of telecommunications
and computer systems, and
27
that it is possible that Instructions, information, transactions, or
account reports might be added to, changed, or omitted by electronic or
programming malfunction, unauthorized access, or other failure of the
systems which comprise the Services, despite the security features that
have been designed into the Services. You agree that we will not be liable
for any action taken or not taken in complying with the terms of this
Schedule, except for our willful misconduct or negligence. The provisions
of this paragraph shall survive the termination of this Schedule and the
Related Agreements.
7. Payment.
You may be charged for services hereunder as set forth in a fee schedule
from time to time agreed by us.
8. Term/Termination.
8.1. This Schedule is effective as of the date you sign it or first use
the Services, whichever is first, and continues in effect until such
time as either you or we terminate the Schedule in accordance with
this Section 8 and/or until your off-line use of the Services is
terminated.
8.2. We may terminate your access to the Services at any time, for any
reason, with thirty (30) Business Days prior notice; provided that
we may terminate your access to the Services with no prior notice
(i) if your account with us is closed, (ii) if you fail to comply
with any of the terms of this Agreement, (iii) if we believe that
your continued access to the Services poses a security risk, or (iv)
if we believe that you are violating or have violated applicable
laws, and we will not be liable for any loss you may experience as a
result of such termination. You may terminate your access to the
Services at any time by giving us thirty (30) Business Days notice.
Upon termination, we will cancel all your Passwords and IDs and any
in-process or pending Instructions will be carried out or cancelled,
at our sole discretion.
9. Miscellaneous.
9.1. Notices. All notices, requests, and demands (other than routine
operational communications, such as Instructions) shall be in such
form and effect as provided in the Related Agreement(s).
9.2. Inconsistent Provisions. Each Service may be governed by separate
terms and conditions in addition to this Schedule and the Related
Agreement(s). Except where specifically provided to the contrary in
this Schedule, in the event that such separate terms and conditions
conflict with this Schedule and the Related Agreement(s), the
provisions of this Schedule shall prevail to the extent this
Schedule applies to the transaction in question.
9.3. Binding Effect; Assignment; Severability. This Schedule shall be
binding on you, your employees, officers and agents. We may assign
or delegate our rights and duties under this Schedule at any time
without notice to you. Your rights under this Schedule may not be
assigned without our prior written consent. In the event that any
provision of this Schedule conflicts with the law under which this
Schedule is to be construed or if any such provision is held invalid
or unenforceable by a court with jurisdiction over you and us, such
provision shall be deemed to be restated to effectuate as nearly as
possible the purposes of the Schedule in accordance with applicable
law. The remaining
28
provisions of this Schedule and the application of the challenged
provision to persons or circumstances other than those as to which
it is invalid or unenforceable shall not be affected thereby, and
each such provision shall be valid and enforceable to the full
extent permitted by law.
9.4. Choice of Law; Jury Trial. This Schedule shall be governed by and
construed, and the legal relations between the parties shall be
determined, in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of laws. Each
party agrees to waive its right to trial by jury in any action or
proceeding based upon or related to this Agreement. The parties
agree that all actions and proceedings based upon or relating to
this Schedule may be brought in the courts of the State of New York
and hereby irrevocably consents and submits to the non-exclusive
jurisdiction of each such court in personam.
9.5. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its
business and operations. All confidential information provided by a
party hereto shall be used by any other party hereto solely for the
purpose of rendering or obtaining services pursuant to this
Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the
prior consent of such providing party. The foregoing shall not be
applicable to any information that is publicly available when
provided or thereafter becomes publicly available other than through
a breach of this Agreement, or that is required to be disclosed by
or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by
judicial or administrative process or otherwise by Applicable Law.
29
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Partner
Date: 3/6/07
AMERISTOCK ETF TRUST
By: /s/ Xxxxxxxx Xxxxxx
-----------------------
Name: Xxxxxxxx Xxxxxx
Title: Director
Date: March 5, 2007
30