EXHIBIT (g)
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of December 1, 2005, between THE COVENTRY GROUP,
on behalf of PathMaster Domestic Equity Fund, a management investment company
organized under the laws of the State of Massachusetts and registered with the
Commission under the Investment Company Act of 1940 ("xxx 0000 XXX") (the FUND),
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, the Fund wishes to employ BBH&Co. to act as custodian for the
Fund 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, the Fund and BBH&Co. hereby agree, as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby appoints BBH&Co. as the Fund's
Custodian, and BBH&Co. hereby accepts such appointment. All Investments of the
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
the 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 FUND. The Fund hereby
represents, warrants and covenants 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 Fund. Neither this Agreement nor any Instruction issued
thereunder violates any Applicable Law or conflicts with or constitutes a
default under the Fund's prospectus, articles of organization or other
constitutive document or any agreement, judgment, order or decree to which the
Fund is a party or by which it or its Investments is 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
Fund shall be deemed to have confirmed to the Custodian that the Fund has (a)
assessed and accepted all material Country or Sovereign Risks and accepted
responsibility for their occurrence, (b) made all determinations required to be
made by the Fund
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under the 1940 Act, and (iii) appropriately and adequately disclosed to its
shareholders, other investors 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 Fund 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. If the
Fund uses any on-line or similar communications service made available by the
Custodian, the Fund 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 Fund relating
to the services described in this Agreement, the Fund will only use the software
for the purposes for which the Custodian provided the software to the Fund, and
will abide by the license agreement accompanying the software and any other
security policies which the Custodian provides to the Fund.
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 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 Fund, acting through its
board of directors or trustees or other Authorized Person, 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 to the Custodian by written
notices or otherwise for or on behalf of the Fund in accordance with procedures
delivered to and acknowledged by the Custodian. The Custodian may treat any
Authorized Person as having the full authority of the Fund 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 Fund to
the contrary.
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 Fund from time to time unless the Fund shall elect to transmit
such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of this
Section.
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4.2.1 FUND DESIGNATED SECURED-TRANSMISSION METHOD. Instructions may
be transmitted through a secured or tested electro-mechanical means
identified by the Fund 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
accept such means of delivery but shall not represent a judgment by the
Custodian as to the reasonableness or security of the means utilized 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 Fund or Authorized Persons
and acknowledged and accepted by the Custodian (subject to the same limits
as to acknowledgements as are 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 the 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 shall apply to 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 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 the Fund's
Investments and upon any delivery and transfer of any Investment or moneys, the
person initiating the 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 the Instruction,
particularly with respect to Investment description; and
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4.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian determines that an Instruction is either unclear or
incomplete, the Custodian may give prompt notice of such determination to the
Fund, and the Fund shall thereupon amend or otherwise reform the 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 Fund 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 Fund.
5. SAFEKEEPING OF FUND ASSETS. The Custodian shall hold Investments delivered to
it or Subcustodians for the 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 or income event. The Custodian shall hold
Investments for the account of the 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 the
Fund or in an account maintained by the Subcustodian generally for
non-proprietary assets of the Custodian.
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 the 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
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account, the Custodian, the Subcustodian or other agent shall as appropriate
segregate such Investments for benefit of the Fund or for 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 the Fund or a
nominee for any of the foregoing, and may be held in any manner set forth in
Section 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 loss 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 such other lesser amount as shall
be agreed by the parties.
6. ADMINISTRATIVE DUTIES OF THE CUSTODIAN. The Custodian shall perform the
following administrative duties with respect to Investments of the Fund.
6.1 PURCHASE OF INVESTMENTS. Pursuant to Instruction, Investments
purchased for the account of the 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.
6.2 SALE OF INVESTMENTS. Pursuant to Instruction, Investments sold for the
account of the Fund shall be delivered (a) against payment therefor in cash, by
check or by bank wire transfer, (b) by credit to
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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 the Fund in connection with
borrowings or loans by the Fund and other collateral and margin requirements.
6.4 FUTURES AND OPTIONS. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures commission
merchant regarding margin (TRI-PARTY AGREEMENT), the Custodian shall (a) receive
and retain, to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the purchase or sale by the Fund of
exchange-traded futures contracts and commodity options, (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 purposes of
margin requirements in accordance with Rule 17f-6 under the 1940 Act. The
Custodian shall in no event be responsible for the acts and omissions of any
futures commission merchant to whom Investments are delivered pursuant to this
Section; for the sufficiency of Investments held in any Margin Account; or, for
the performance of any terms of any exchange-traded futures contracts and
commodity options.
6.5 CONTRACTUAL OBLIGATIONS AND SIMILAR INVESTMENTS. From time to time,
the 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 the 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 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
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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 the Fund for
other securities in connection with any reorganization, recapitalization,
conversion, stock split, 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 the issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deliver securities in
response to any tender offer.
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 the Fund's account and promptly notify the Fund 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: (a)
the collection of amounts due and payable with respect to Investments that are
in default or (b) the collection of cash or share entitlements with respect to
Investments that are not registered in the name of the Custodian or its
Subcustodians. 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 CORPORATE ACTION INFORMATION. In fulfilling the duties set forth in
Sections 6.6 through 6.10 above, the Custodian shall provide to the Fund such
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
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available to the Fund via any of the services described in the Electronic and
Online Services Schedule shall constitute the delivery of such information by
the Custodian. 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 be
reversed by the Custodian.
6.12 PROXY MATERIALS. The Custodian shall deliver, or cause to be
delivered, to the Fund proxy forms, notices of meeting, and any other notices or
announcements materially affecting or relating to Investments received by the
Custodian. Information relative to any pending corporate action made available
to the Fund via any of the services described in the Electronic and Online
Services Schedule shall constitute the delivery of such information by the
Custodian.
6.13 OWNERSHIP CERTIFICATES AND DISCLOSURE OF THE FUND'S INTEREST. The
Custodian is hereby authorized to execute on behalf of the 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 the Fund to an issuer which requests
such information pursuant to the Shareholder Communications Act of 1985 for the
specific purpose of direct communications between such issuer and the Fund. IF
NO BOX IS CHECKED, THE CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT
RECEIVES CONTRARY INSTRUCTIONS FROM THE FUND. 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.
6.14. TAXES. The Custodian shall, where applicable, assist the Fund in the
reclamation of taxes withheld on dividends and interest payments received by the
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 the Fund's tax status that is received
from or on behalf of the Fund without duty of separate inquiry.
6.15 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 the payment or delivery is made.
6.16 NONDISCRETIONARY DETAILS AND MINOR EXPENSES. The Custodian shall
attend to all
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nondiscretionary details in connection with the sale or purchase or other
administration of Investments, except as otherwise directed by Instruction, and
may make payments to itself or others for minor expenses of administering
Investments under this Agreement, provided that the Fund shall have the right to
request an accounting with respect to such expenses.
6.17 USE OF AGENTS. The Custodian may at any time 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 an Agent shall not relieve the
Custodian of its administrative obligations under this Agreement.
7. CASH ACCOUNTS, DEPOSITS AND MONEY MOVEMENTS. Subject to the terms and
conditions set forth in this Section 7, the Fund hereby authorizes the Custodian
to open and maintain, with itself or with Subcustodians, cash accounts in United
States Dollars, in such other currencies as are the currencies of the countries
in which the Fund maintains Investments or in such other currencies as the Fund
shall from time to time request by Instruction.
7.1 TYPES OF CASH ACCOUNTS. Cash accounts opened on the books of the
Custodian (PRINCIPAL ACCOUNTS) shall be opened in the name of the 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 the 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 the Subcustodian, by reason of its bankruptcy, insolvency
or otherwise, fails to make repayment.
7.2 PAYMENTS AND CREDITS WITH RESPECT TO THE CASH ACCOUNTS. The Custodian
shall make payments from or deposits to any of the cash 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.
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7.3 CURRENCY AND RELATED RISKS. The Fund bears the risks of holding or
transacting in any currency, including any xxxx to market exposure associated
with a foreign exchange transaction undertaken with the Custodian. The Custodian
shall not be liable for any loss or damage arising from the applicability of any
law or regulation now or hereafter in effect, or from the occurrence of any
event, which may delay or affect the transferability, convertibility or
availability of any currency in the country (a) in which such Principal or
Agency Accounts are maintained or (b) in which such currency is issued, and in
no event shall the Custodian be obligated to make payment of a deposit
denominated in a currency during the period during which its transferability,
convertibility or availability has been affected by any such law, regulation or
event. Without limiting the generality of the foregoing, neither the Custodian
nor any Subcustodian shall be required to repay any deposit made at a foreign
branch of either the Custodian or Subcustodian if such branch cannot repay the
deposit due to a cause for which the Custodian would not be responsible in
accordance with the terms of Section 9 of this Agreement unless the Custodian or
such Subcustodian expressly agrees in writing to repay the deposit under such
circumstances. All currency transactions in any account opened pursuant to this
Agreement are subject to exchange control regulations of the United States and
of the country where such currency is the lawful currency or where the account
is maintained. Any taxes, costs, charges or fees imposed on the convertibility
of a currency held by the Fund shall be for the account of the Fund.
7.4 FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
account of the Fund with such currency brokers or banking institutions,
including Subcustodians, as the Fund may direct pursuant to Instructions. The
Custodian may act as principal in any foreign exchange transaction with the Fund
in accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 THIRD PARTY FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall
process foreign exchange transactions (including without limitation
contracts, futures, options, and options on futures), where any third
party acts as principal counterparty to the Fund on the same basis it
performs duties as agent for the Fund with respect to any other of the
Fund's Investments. Accordingly the Custodian shall only be responsible
for delivering or receiving currency on behalf of the Fund in respect of
such contracts pursuant to Instructions. The Custodian shall not be
responsible for the failure of any counterparty (including any
Subcustodian) in such agency transaction to perform its obligations
thereunder. The Custodian (a) shall transmit cash and Instructions to and
from the currency broker or banking institution with which the Fund has
executed a foreign exchange contract or option, (b) may make free outgoing
payments of cash in the form of Dollars or foreign currency without
receiving confirmation of a foreign exchange contract or option or
confirmation that the countervalue currency completing the foreign
exchange contract has been delivered or received or that the option has
been delivered or received, and (c) shall hold in safekeeping all
confirmations, certificates and other documents and agreements received by
the Custodian and evidencing or relating to such foreign exchange
transactions. The
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Fund accepts full responsibility for its use of third-party foreign
exchange dealers and for execution of the foreign exchange contracts and
options and understands that the Fund shall be responsible for any and all
costs and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to deliver
foreign exchange.
7.4.2 FOREIGN EXCHANGE WITH THE CUSTODIAN AS PRINCIPAL. The
Custodian, as principal, may undertake such foreign exchange transactions
with the Fund as the Custodian and the Fund may agree from time to time.
In this event, the foreign exchange transaction will be performed in
accordance with the particular agreement of the parties, or in the event a
principal foreign exchange transaction is initiated by Instruction in the
absence of specific agreement, the transaction will be performed in
accordance with the usual commercial terms of the Custodian. In the event
that the Fund defaults on the settlement of any such foreign exchange
transaction with the Custodian, the Fund shall be liable for contracted
currency of the transaction together with any xxxx to market exposure
associated with the replacement purchase of the contracted currency
undertaken with the Custodian.
7.5 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 the 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 been effected until the day it is in fact effected. The
Custodian shall not be liable for delays in carrying out Instructions to
transfer cash which are not due to the Custodian's own negligence or willful
misconduct.
7.6 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 the Fund (whether or not any Principal or Agency
Account shall be overdrawn either during, or at the end of, any Business Day),
the Fund hereby does:
7.6.1 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;
7.6.2 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;
7.6.3 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
11
Investments and proceeds thereof (as defined in the Uniform Commercial
Code as currently in effect in the State of New York) to the extent of any
indebtedness owed by the Fund to the Custodian under this Agreement; 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.
7.7 CUSTODIAN'S RIGHTS Neither the Custodian nor any Subcustodian shall be
obligated to make any Advance or to allow an Advance to occur to the 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 Fund 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 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.
7.8 INTEGRATED ACCOUNT. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall collectively
constitute a single and indivisible current account with respect to the 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 maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the 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)
12
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, 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, from time to time, appoint any bank
as defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act 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.
8.2 FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Unless instructed
otherwise by the Fund, the Custodian may deposit and/or maintain non-U.S.
Investments of the Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 promulgated under the 1940 Act, or any successor
rule or regulation ("Rule 17f-7") or which by order of the Securities and
Exchange Commission is exempted therefrom. Prior to the time that securities are
placed with such depository, but subject to the provisions of Section 8.2.4
below, the Custodian shall have prepared an assessment of the custody risks
associated with maintaining assets with the Securities Depository and shall have
established a system to monitor such risks on a continuing basis in accordance
with subsection 8.2.3 of this Section. Additionally, the Custodian may, from
time to time, appoint (a) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Rule 17f-5 or which by
order of the Securities and Exchange Commission is exempted therefrom, or (b)
any bank as defined in Section 2(a)(5) of the 1940 Act meeting the requirements
of a custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of the Fund as a Subcustodian for purposes of
holding Investments of the Fund outside the United States.
8.3 DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From time to time, the
Custodian may agree to perform certain reviews of Subcustodians and of
Subcustodian Contracts as the delegate of the Fund's Board. In such event, the
Custodian's duties and obligations with respect to this delegated review will be
performed in accordance with the terms of the attached 17f-5 Delegation Schedule
to this Agreement.
8.4 BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and except to the
extent that the Board has delegated to the Custodian and the Custodian has
accepted delegation of review of certain matters concerning the appointment of
Subcustodians pursuant to Subsection 8.3, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding Investments of the Fund
outside the United States, obtain written confirmation of the approval of the
Board of Trustees or Directors of the Fund with respect to (a) the identity of a
Subcustodian, and (b) the Subcustodian agreement which shall govern such
13
appointment, such approval to be signed by an Authorized Person. An Instruction
to open an account in a given country shall comprise authorization of the
Custodian to hold assets in such country in accordance with the terms of this
Agreement. The Custodian shall not be required to make independent inquiry as to
the authorization of the Fund to invest in such country.
8.5 MONITORING AND RISK ASSESSMENT OF SECURITIES DEPOSITORIES. Prior to
the placement of any assets of the Fund with a non-U.S. Securities Depository,
the Custodian: (a) shall provide to the Fund or its authorized representative an
assessment of the custody risks associated with maintaining assets within such
Securities Depository; and (b) shall have established a system to monitor the
custody risks associated with maintaining assets with such Securities Depository
on a continuing basis and to promptly notify the Fund or its Investment Adviser
of any material changes in such risk. In performing its duties under this
subsection, the Custodian shall use reasonable care and may rely on such
reasonable sources of information as may be available including but not limited
to: (i) published ratings; (ii) information supplied by a Subcustodian that is a
participant in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign Financial Regulatory
Authority. It is acknowledged that information procured through some or all of
these sources may not be independently verifiable by the Custodian and that
direct access to Securities Depositories is limited under most circumstances.
Accordingly, the Custodian shall not be responsible for errors or omissions in
its duties hereunder provided that it has performed its monitoring and
assessment duties with reasonable care. The risk assessment shall be provided to
the Fund or its Investment Advisor by such means as the Custodian shall
reasonably establish. Advices of material change in such assessment may be
provided by the Custodian in the manner established as customary between the
Fund and the Custodian for transmission of material market information.
8.6 RESPONSIBILITY FOR SUBCUSTODIANS. Except as provided in the last
sentence of this Section 8.6, the Custodian shall be liable to the Fund for any
loss or damage to the Fund caused by or resulting from the acts or omissions of
any 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. The
liability of the Custodian in respect of the countries and Subcustodians
designated by the Custodian, from time to time on the Global Custody Network
Listing shall be subject to the additional condition that the Custodian actually
recovers such loss or damage from the Subcustodian.
8.7 NEW COUNTRIES. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event, the
Custodian is unable to establish such
14
arrangements prior to the time the investment is to be acquired, the Custodian
is authorized to designate at its discretion a local safekeeping agent, and the
use of the local safekeeping agent shall be at the sole risk of the Fund, and
accordingly the Custodian shall be responsible to the Fund for the actions of
such agent if and only to the extent the Custodian shall have recovered from
such agent for any damages caused the Fund by such agent.
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 shall be liable for any
direct damage incurred by the 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 or wind 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 Country or
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 Country or 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 Country or Sovereign Risk, or (i) any other cause similarly beyond the
reasonable control of the Custodian.
9.1.2 COUNTRY RISK. COUNTRY RISK shall mean, with respect to the
acquisition, ownership, settlement or custody of Investments in a
jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for or
ownership of Investments including (a) the prevalence of crime and
corruption, (b) the inaccuracy or unreliability of business and financial
information, (c) the instability or volatility of banking and financial
systems, or the absence or inadequacy of an infrastructure to support such
systems, (d) custody and settlement infrastructure of the market in which
such Investments are transacted and
15
held, (e) the acts, omissions and operation of any Securities Depository,
(f) the risk of the bankruptcy or insolvency of banking agents,
counterparties to cash and securities transactions, registrars or transfer
agents, and (g) the existence of market conditions which prevent the
orderly execution or settlement of transactions or which affect the value
of assets.
9.1.3 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.
9.2. 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 any third party
including: (a) any issuer of Investments or Book-Entry Agent or other
agent of an issuer; (b) any counterparty with respect to any Investment,
including any issuer of exchange-traded or other futures, option,
derivative or commodities contract; (c) failure of an Investment Advisor,
foreign custody manager or other agent of the Fund; or (d) 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, 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 Fund's declaration
of trust, certificate of incorporation or by-laws or other constitutive
document, Applicable Law, or actions by the trustees, directors or
shareholders of the Fund.
9.2.4 RESTRICTED SECURITIES. The limitations inherent in the rights,
transferability or similar investment characteristics of a given
Investment of the Fund.
10. INDEMNIFICATION. The Fund hereby indemnifies 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, incurred
or assessed against any of them in connection with the performance of this
Agreement and any Instruction. If a Subcustodian or any other person indemnified
under the preceding sentence, gives written notice of claim to the Custodian,
the Custodian shall promptly give written notice to the Fund. Not more than
thirty days following the date of such notice, unless the Custodian shall be
liable under Section 8 hereof in respect of such claim, the Fund will pay the
amount of such claim or reimburse the Custodian for any payment made
16
by the Custodian in respect thereof.
11. REPORTS AND RECORDS. The Custodian shall:
11.1 create and maintain records relating to the performance of its
obligations under this Agreement;
11.2 make available to the Fund, 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 11.1 above, subject,
however, to all reasonable security requirements of the Custodian then
applicable to the records of its custody customers generally; and
11.3 make available to the Fund 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 The Fund shall examine all records, however produced or transmitted,
promptly upon receipt and notify the Custodian promptly of any discrepancy or
error. Unless the Fund delivers written notice of any such discrepancy or error
within a reasonable time after its receipt of the records, the records shall be
deemed to be true and accurate.
11.5 The Fund acknowledges that the Custodian obtains information on the
value of assets from outside sources which may be utilized in certain reports
made available to the Fund. The Custodian deems such sources to be reliable but
the Fund acknowledges and agrees that the Custodian does not verify such
information nor make any representations or warrantees as to its accuracy or
completeness and accordingly shall be without liability in selecting and using
such sources and furnishing such information.
12. MISCELLANEOUS.
12.1 POWERS OF ATTORNEY, ETC. The Fund 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; AMENDMENT. This Agreement constitutes the entire
understanding and agreement of the parties hereto and supersedes any other oral
or written agreements heretofore in effect between the Fund and the Custodian
with respect to the subject matter hereof. No provision of this Agreement may be
amended or terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is sought, provided,
however, that an Instruction shall,
17
whether or not such Instruction shall constitute a waiver, amendment or
modification for purposes hereof, be deemed to have been accepted by the
Custodian when it commences actions pursuant thereto or in accordance therewith.
In the event of a conflict between the terms of this Agreement and the terms of
a service level agreement or other operating agreement in place between the
parties from time to time, the terms of this Agreement shall control.
12.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the Custodian and the Fund and their successors
and assignees, provided that the Fund may not assign this Agreement without the
prior written consent of the Custodian. Each party agrees that only the parties
to this Agreement and/or their successors in interest shall have a right to
enforce the terms of this Agreement. Accordingly, no client of the Fund or other
third party shall have any rights under this Agreement and such rights are
explicitly disclaimed by the parties.
12.4 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. THE
PARTIES HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY. THE
FUND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY ACTION OR PROCEEDING IN ANY OF THE AFORESAID COURTS AND ANY
CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. Furthermore, each party hereto hereby irrevocably waives any right that
it may have to trial by jury in any action, proceeding or counterclaim arising
out of or relating to this Agreement or the transactions contemplated hereby.
12.5 NOTICES. Notices and other writings contemplated by this Agreement,
other than Instructions, shall be delivered (a) by hand, (b) by first class
registered or certified mail, postage prepaid, return receipt requested, (c) by
a nationally recognized overnight courier, or (d) by facsimile transmission,
provided that any notice or other writing sent by facsimile transmission shall
also be mailed, postage prepaid, to the party to whom such notice is addressed.
All such notices shall be addressed, as follows:
If to the Fund:
The Coventry Group
0000 Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: President
Telephone: ( )
Facsimile ( )
With a copy to:
18
Xxxxx Xxxxxx Asset Management Company
000 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Compliance Department
If to the Custodian:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Senior Legal Officer, Investor Services
Telephone: (000) 000-0000
Facsimile: (617) 772-
or such other address as the Fund or the Custodian may have designated in
writing to the other.
12.6 HEADINGS. Paragraph headings included herein are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
12.7 SEVERABILITY. In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall not affect the
remainder of this Agreement, which shall continue to be in force.
12.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
the Fund and the Custodian. A photocopy or telefax of the Agreement shall be
acceptable evidence of the existence of the Agreement and the Custodian shall be
protected in relying on the photocopy or telefax until the Custodian has
received the original of the Agreement.
12.9 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.
12.10 TAPE-RECORDING. The Fund on behalf of itself and its Customers
authorizes the Custodian to tape record any and all telephonic or other oral
instructions given to the Custodian by or on behalf of the Fund, including from
any Authorized Person. This authorization will remain in effect until and unless
19
revoked by the Fund in writing. The Fund further agrees to solicit valid written
or other consent from any of its employees with respect to telephone
communications to the extent such consent is required by applicable law.
12.11 COUNSEL/ CERTIFIED PUBLIC ACCOUNTANT . In fulfilling its duties
hereunder, the Custodian shall be entitled to receive and act upon the advice of
(i) counsel and/or a certified public accountant regularly retained by the
Custodian in respect of such matters, (ii) counsel and/or a certified public
accountant for the Fund or (iii) such counsel or certified public accountant as
the Fund and the Custodian may agree upon, with respect to all matters, and the
Custodian shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
12.12 CONFLICT. Nothing contained in this Agreement shall prevent the
Custodian and its associates from (i) dealing as a principal or an intermediary
in the sale, purchase or loan of the 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 whose interests may be adverse to the interest of
the Fund; or (iii) buying, holding, lending, and dealing in any way in any
assets for the benefit of its own account, or for the account of any other
client whose interests may be adverse to the Fund notwithstanding that the same
or similar assets may be held or dealt in by, or for the account of the Fund by
the Custodian. The Fund hereby voluntarily consents to, and waives any potential
conflict of interest between the Custodian and/or its associates and the Fund,
and agrees that:
(a) the Custodian's and/or its associates' engagement in any such
transaction shall not disqualify the Custodian from continuing to
perform as the custodian of the Fund under this Agreement;
(b) the Custodian and/or its associates shall not be under any duty
to disclose any information in connection with any such transaction
to the Fund;
(c) the Custodian and/or its associates shall not be liable to
account to the Fund for any profits or benefits made or derived by
or in connection with any such transaction; and
(d) the Fund shall use all reasonable efforts to disclose this
provision, among other provisions in this Agreement, to its
shareholders.
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 and shall include, without
limitation, amounts due to the Custodian as the principal counterparty to any
foreign exchange transaction with the Fund as described in Section 7.4.2 hereof,
or paid to third parties for account of the Fund or in discharge of any expense,
tax or other item payable by the Fund.
20
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 7.6.1 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
hereof.
13.4 AGENT(s) shall have the meaning set forth in the last sentence of
Section 6 hereof.
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 the Fund in accordance with Section 4.1 hereof.
13.7 BOOK-ENTRY AGENT(s) 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(s).
13.9 DELEGATION SCHEDULE shall mean any separate schedule entered into
between the Custodian and the Fund or its authorized representative with respect
to certain matters concerning the appointment and administration of
Subcustodians delegated to the Custodian pursuant to Rule 17f-5 under the 1940
Act.
13.10 ELECTRONIC AND ONLINE SERVICES SCHEDULE shall mean any separate
agreement entered into between the Custodian and the Fund 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 Fund.
13.11 ELECTRONIC REPORTS shall mean any reports prepared by the Custodian
and remitted to the Fund or its authorized representative via the internet or
electronic mail.
21
13.12 FOREIGN CUSTODY MANAGER shall mean the Fund's foreign custody
manager appointed pursuant to Rule 17f-5 of the 1940 Act.
13.13 FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given
by Section 2(a)(50) of the 0000 Xxx.
13.14 FUNDS TRANSFER SERVICES SCHEDULE shall mean any separate schedule
entered into between the Custodian and the Fund or its authorized representative
with respect to certain matters concerning the processing of payment orders from
Principal Accounts of the Fund.
13.15 GLOBAL CUSTODY NETWORK LISTING shall mean the Countries and
Subcustodians approved for Investments in non-U.S. Markets.
13.16 INSTRUCTION(s) shall have the meaning assigned in Section 4 hereof.
13.17 INVESTMENT ADVISOR shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Fund's Investments.
13.18 INVESTMENT(s) shall mean any investment asset of the Fund, including
without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets, but shall not include any Principal Account.
13.19 MARGIN ACCOUNT shall have the meaning set forth in Section 6.4
hereof.
13.20 PRINCIPAL ACCOUNT(s) shall mean deposit accounts of the Fund carried
on the books of BBH&Co. as principal in accordance with Section 7 hereof.
13.21 SAFEKEEPING ACCOUNT shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the interests
of the Fund (or clients of the Custodian or Subcustodian) from the assets of the
Custodian or any Subcustodian.
13.22 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 that, if a
foreign Securities Depository, meets the definitional requirements of Rule 17f-7
under the 1940 Act.
13.23 SUBCUSTODIAN(s) shall mean each foreign bank appointed by the
Custodian pursuant to
22
Section 8 hereof, but shall not include Securities Depositories.
13.24 TRI-PARTY AGREEMENT shall have the meaning set forth in Section 6.4
hereof.
13.25 1940 ACT shall mean the Investment Company Act of 1940.
14. COMPENSATION. The Fund agrees to pay to the Custodian (a) a fee in an amount
set forth in the fee letter between the Fund and the Custodian in effect on the
date hereof or as amended from time to time, and (b) all out-of-pocket expenses
incurred by the Custodian, including the fees and expenses of all Subcustodians
and other amounts paid by the Custodian to a third party for account or benefit
of the Fund, and payable from time to time. Amounts payable by the Fund 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
three (3) years from the date hereof. Thereafter, this Agreement shall
automatically renew for successive one (1) year periods unless either 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 party at its address set forth in Section 12.5 hereof.
Notwithstanding the foregoing provisions, either party may terminate this
Agreement at any time (a) for cause, which is a material breach of the Agreement
not cured within 60 days, in which case termination shall be effective upon
written receipt of notice by the non-terminating party, or (b) upon thirty (30)
days written notice to the other party in the event that either party is
adjudged bankrupt or insolvent, or there shall be commenced against such party a
case under any applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect.
15.2 NOTICE AND SUCCESSION. In the event a termination notice is given by
a party hereto, all reasonable costs and expenses associated with any required
systems, facilities, procedures, personnel, and other resourced modifications as
well as the movement of records and materials and the conversion thereof shall
be paid by the company for which Services shall cease to be performed hereunder.
Furthermore, to the extent that it appears impracticable given the circumstances
to effect an orderly delivery of the necessary and appropriate records of BBH to
a successor within the time specified in the notice of termination as aforesaid,
BBH and the Fund agree that this Agreement shall remain in full force and effect
for such reasonable period as may be required to complete necessary arrangements
with a successor.
23
15.3 SUCCESSOR CUSTODIAN. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the 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 Fund 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.
15.4 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 Fund either (a) deliver the Investments of the Fund held hereunder to the
Fund 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 $2,000,000 USD 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 the Fund
remain in the custody of the Custodian or its Subcustodians after the date of
termination owing to the failure of the Fund 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 Fund 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 Fund with information about
our compliance program as mutually agreed.
24
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO. THE COVENTRY GROUP
By: ________________________ By: ______________________________
Name: Name:
Title: Title:
Date: Date:
25
FUNDS TRANSFER SERVICES SCHEDULE TO CUSTODIAN AGREEMENT
1. Execution of Payment Orders. Xxxxx Brothers Xxxxxxxx & Co. (the CUSTODIAN) is
hereby instructed by The Coventry Group (the FUND) to execute each payment
order, whether denominated in United States dollars or other applicable
currencies, received by the Custodian in the Fund's name as sender and
authorized and confirmed by an Authorized Person as defined in a Custodian
Agreement dated as of ______________, 2005 by and between the Custodian and the
Fund, as amended or restated from 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 Fund as set forth in this Funds Transfer Services Schedule
or any amendment hereafter; (iii) is authorized by the Fund 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 the 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. The Fund 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 Fund agrees and acknowledges in connection with (i) the size,
type and frequency of payment orders normally issued or expected to be issued by
the Fund to the Custodian, (ii) all of the security procedures offered to the
Fund 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 Fund hereby elects (PLEASE CHOOSE
ONE) the following Security Procedure as described below:
[ ] 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 Fund
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 Fund notifies the Custodian
that its password is not secure.
[ ] SWIFT. The Custodian and the Fund 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 Fund have agreed to use.
[ ] Computer Transmission. The Custodian is able to accept
transmissions sent from the Fund's 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 between the Custodian
and the Fund.
[ ] Telefax Instructions. A payment order transmitted to the Custodian
by telefax transmission shall transmitted by the Fund to a telephone
number specified from time to time by the Custodian for such
purposes. If it detects no discrepancies, the Custodian will follow
one of the procedures below.
1. If the telefax requests a repetitive payment order, the
Custodian may call the Fund at its last known telephone
number, request to speak to the Fund or
26
Authorized Person, and confirm the authorization and the
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, company 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 Fund chooses a procedure which is not a Security Procedure as
described above, the Fund 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 Fund.
3. Rejection of Payment Orders. The Custodian shall give the Fund 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 Fund notice of the Custodian's
non-execution, the Custodian shall be liable only for the 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 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 the Fund pursuant to this Funds Transfer Services Schedule, such
compensation will be payable as specified in UCC 4A.
4. Cancellation of Payment Orders. The Fund 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
Fund error contained in any payment order sent by the Fund to the Custodian. In
the event that the Fund'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, 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 Fund so notifies the Custodian within thirty (30) business days
following the Fund's receipt of notice that such payment order had been
processed. If a payment order in the name of the Fund
27
and accepted by the Custodian was not authorized by the Fund, 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
Fund 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 Fund.
7. Miscellaneous. All accounts opened by the Fund 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 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 FUND AGREES TO INDEMNIFY THE
CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR ALL LOSSES THEREFROM.
OPTIONAL: The Custodian will perform a Callback if instructions are
sent by telefax or telephonic means as provided in Paragraph 2 above. THE
FUND 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 INITIALLING
HERE:____
The undersigned acknowledges that (I/we) have received a copy of this document
Accepted and agreed:
XXXXX BROTHERS XXXXXXXX & CO. THE COVENTRY GROUP
By: _________________________ By: ________________________________
Name: Name:
Title: Title:
Date: Date:
28
ELECTRONIC AND ON-LINE SERVICES
SCHEDULE
This Electronic and On-Line Services Schedule (this SCHEDULE) to a Custodian
Agreement dated as of _____________________(as amended from time to time
hereafter, the AGREEMENT) by and between Xxxxx Brothers Xxxxxxxx & Co. (WE, US
OUR) and The Coventry Group (YOU, YOUR), 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
you to use to access our products) and via a direct dial-up connection between
your computer and our computers, as of ________________, _____, 2005 (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 negligent) to maintain
29
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 you will be responsible 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 sub-program, 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). 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 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
gross negligence. The provisions of this paragraph shall survive the
termination of this Schedule and the Related Agreements.
30
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 five (5) 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 ten (10) 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 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 shall be litigated exclusively in the federal and
state courts located within New York City, New York.
31
The undersigned acknowledges that (I/we) have received a copy of this document
THE COVENTRY GROUP
BY: ___________________________________
TITLE: ________________________________
DATE: _________________________________
32
17f-5 DELEGATION SCHEDULE
By its execution of this Delegation Schedule dated as of _____________,
2005, THE COVENTRY GROUP on behalf of PathMaster Domestic Equity Fund, a
management investment company registered with the Securities and Exchange
Commission (the COMMISSION) under the Investment Company Act of 1940, as amended
(the 1940 ACT), acting through its Board of Directors/Trustees or its duly
appointed representative (the FUND), hereby appoints XXXXX BROTHERS XXXXXXXX &
CO., a New York limited partnership with an office in Boston, Massachusetts (the
DELEGATE) as its delegate to perform certain functions with respect to the
custody of Fund's Assets outside the United States.
1. Maintenance of Fund's Assets Abroad. The Fund, acting through its Board or
its duly authorized representative, hereby instructs the Delegate pursuant to
the terms of the Custodian Agreement dated as of the date hereof executed by and
between the Fund and the Delegate (the CUSTODIAN AGREEMENT) to place and
maintain the Fund's Assets in countries outside the United States in accordance
with Instructions received from the Fund's Investment Advisor. Such instruction
shall constitute an Instruction under the terms of the Custodian Agreement. The
Fund acknowledges that (a) the Delegate shall perform services hereunder only
with respect to the countries where it accepts delegation as Foreign Custody
Manager as indicated on the Delegate's Global Custody Network Listing; (b)
depending on conditions in the particular country, advance notice may be
required before the Delegate shall be able to perform its duties hereunder in or
with respect to such country (such advance notice to be reasonable in light of
the specific facts and circumstances attendant to performance of duties in such
country); and (c) nothing in this Delegation Schedule shall require the Delegate
to provide delegated or custodial services in any country, and there may from
time to time be countries as to which the Delegate determines it will not
provide delegation services.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the 1940 Act as
amended, the Board hereby delegates to the Delegate, and the Delegate hereby
accepts such delegation and agrees to perform only those duties set forth in
this Delegation Schedule concerning the safekeeping of the Fund's Assets in each
of the countries as to which it acts as the Board's delegate. The Delegate is
hereby authorized to take such actions on behalf of or in the name of the Fund
as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause the Fund's Assets to be placed
with a particular Eligible Foreign Custodian in accordance herewith. The Fund
confirms to the Delegate that the Fund or its Investment Adviser has considered
the Sovereign Risk and prevailing Country Risk as part of its continuing
investment decision process, including such factors as may be reasonably related
to the systemic risk of maintaining the Fund's Assets in a particular country,
33
including, but not limited to, financial infrastructure, prevailing custody and
settlement systems and practices (including the use of any Securities Depository
in the context of information provided by the Custodian in the performance of
its duties as required under Rule 17f-7 and the terms of the Custodian Agreement
governing such duties), and the laws relating to the safekeeping and recovery of
the Fund's Assets held in custody pursuant to the terms of the Custodian
Agreement.
3. Selection of Eligible Foreign Custodian and Contract Administration. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
the Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and
maintain the Fund's Assets with an Eligible Foreign Custodian, provided that the
Delegate shall have determined that the Fund's Assets will be subject to
reasonable care based on the standards applicable to custodians in the relevant
market after considering factors relevant to the safekeeping of such assets
including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical protections
available for certificated securities (if applicable), the controls and
procedures for dealing with any Securities Depository, the method of
keeping custodial records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Fund's Assets;
(iii) The Eligible Foreign Custodian's general reputation and
standing; and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by
virtue of the existence of any offices of such Eligible Foreign Custodian
in the United States or such Eligible Foreign Custodian's appointment of
an agent for service of process in the United States or consent to
jurisdiction in the United States.
The Delegate shall be required to make the foregoing determination to the best
of its knowledge and belief based only on information reasonably available to
it.
(b) Contract Administration. The Delegate shall cause that the foreign
custody arrangements with an Eligible Foreign Custodian shall be governed by a
written contract that the Delegate has determined will provide reasonable care
for Fund assets based on the standards applicable to custodians in the relevant
market. Each such contract shall, except as set forth in the last paragraph of
this subsection (b), include provisions that provide:
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(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with such
contract;
(ii) That the Fund's Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors except a claim of payment for
their safe custody or administration or, in the case of cash deposits,
liens or rights in favor of creditors of such Custodian arising under
bankruptcy, insolvency or similar laws;
(iii) That beneficial ownership of the Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) That adequate records will be maintained identifying the Fund's
Assets as belonging to the Fund or as being held by a third party for the
benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the
contents of such records; and
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of the Fund's Assets, including,
but not limited to, notification of any transfer to or from the Fund's
account or a third party account containing the Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3(b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of
care and protection for the Fund's Assets as the specified provisions, in
their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Delegation Schedule to the contrary, the duties under this Section 3 shall apply
only to Eligible Foreign Custodians selected by the Delegate and shall not apply
to Securities Depositories or to any Eligible Foreign Custodian that the
Delegate is directed to use pursuant to Section 7 of this Delegation Schedule.
4. Monitoring. The Delegate shall establish a system to monitor at reasonable
intervals (but at least annually) the appropriateness of maintaining the Fund's
Assets with each Eligible Foreign Custodian that has been selected by the
Delegate pursuant to Section 3 of this Delegation Schedule. The Delegate shall
monitor the continuing appropriateness of placement of the Fund's Assets in
accordance with the criteria established under Section 3(a) of this Delegation
Schedule. The Delegate shall monitor the continuing appropriateness of the
contract governing the Fund's arrangements in accordance with the criteria
established under Section 3(b) of this Delegation Schedule.
5. Reporting. At least annually and more frequently as mutually agreed between
the
35
parties, the Delegate shall provide to the Board written reports specifying
placement of the Fund's Assets with each Eligible Foreign Custodian selected by
the Delegate pursuant to Section 3 of this Delegation Schedule and shall
promptly report on any material changes to such foreign custody arrangements.
Delegate will prepare such a report with respect to any Eligible Foreign
Custodian that the Delegate has been instructed to use pursuant to Section 7 of
this Delegation Schedule only to the extent specifically agreed with respect to
the particular situation.
6. Withdrawal of Fund's Assets. If the Delegate determines that an arrangement
with a specific Eligible Foreign Custodian selected by the Delegate under
Section 3 of this Delegation Schedule no longer meets the requirements of said
Section, Delegate shall withdraw the Fund's Assets from the non-complying
arrangement as soon as reasonably practicable; provided, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to provide information regarding the particular circumstances and
to act only in accordance with Instructions of the Fund or its Investment
Advisor with respect to such liquidation or other withdrawal.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this Delegation
Schedule, the Fund, acting through its Board, its Investment Advisor or its
other Authorized Representative, may direct the Delegate to place and maintain
the Fund's Assets with a particular Eligible Foreign Custodian, including
without limitation with respect to investment in countries as to which the
Custodian will not provide delegation services. In such event, the Delegate
shall be entitled to rely on any such instruction as an Instruction under the
terms of the Custodian Agreement and shall have no duties under this Delegation
Schedule with respect to such arrangement save those that it may undertake
specifically in writing with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this Delegation Schedule,
the Delegate agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping the Fund's Assets would exercise.
9. Representations. The Delegate hereby represents and warrants that it is a
U.S. Bank and that this Delegation Schedule has been duly authorized, executed
and delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
The Fund hereby represents and warrants that its Board of Directors has
determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation Schedule
has been duly authorized, executed and delivered by the Fund and is a legal,
valid and
36
binding agreement of the Fund.
10. Effectiveness; termination. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Delegate, as indicated by the date set forth below the Delegate's signature.
This Delegation Schedule may be terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party. Such
termination shall be effective on the 30th calendar day following the date on
which the non-terminating party shall receive the foregoing notice. The
foregoing to the contrary notwithstanding, this Delegation Schedule shall be
deemed to have been terminated concurrently with the termination of the
Custodian Agreement.
11. Notices. Notices and other communications under this Delegation Schedule are
to be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
Delegation Schedule and executed by both parties.
12. Definitions. Capitalized terms not otherwise defined in this Delegation
Schedule have the following meanings:
a. Country Risk - shall have the meaning set forth in Section [ ] of the
Custodian Agreement.
b. Eligible Foreign Custodian - shall have the meaning set forth in Rule
17f-5(a)(1) of the 1940 Act and shall also include a U.S. Bank.
c. Fund's Assets - shall mean any of the Fund's investments (including
foreign currencies) for which the primary market is outside the United
States, and such cash and cash equivalents as are reasonably necessary to
effect the Fund's transactions in such investments.
d. Instructions - shall have the meaning set forth in the Custodian
Agreement.
e. Securities Depository - shall have the meaning set forth in Rule 17f-7
of the 1940 Act.
f. Sovereign Risk - shall have the meaning set forth in Section [6.3] of
the Custodian Agreement.
g . U.S. Bank - shall mean a bank which qualifies to serve as a custodian
of assets of investment companies under Section 17(f) of the 1940 Act.
37
13. Governing Law and Jurisdiction. This Delegation Schedule shall be construed
in accordance with the laws of the State of New York. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of New
York or the Commonwealth of Massachusetts or of the state courts of either such
State or such Commonwealth.
14. Fees. Delegate shall perform its functions under this Delegation Schedule
for the compensation determined under the Custodian Agreement.
15. Integration. This Delegation Schedule sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. The terms of the Custodian Agreement
shall apply generally as to matters not expressly covered in this Delegation
Schedule, including dealings with the Eligible Foreign Custodians in the course
of discharge of the Delegate's obligations under the Custodian Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO. THE COVENTRY GROUP
By: _________________________ By: ______________________________
Name: Name:
Title: Title:
Date: Date:
38
