EXHIBIT (g)
CUSTODY AGREEMENT
AGREEMENT, dated as of September 26, 2003 by and between THE WATCHDOG
Fund (the "Fund"), a business trust organized and existing under the laws of the
State of Delaware and an open-end management investment company registered under
the Investment Company Act of 1940, and CUSTODIAL TRUST COMPANY, a bank
organized and existing under the laws of the State of New Jersey (the
"Custodian").
WHEREAS, the Fund desires that its securities, funds and other assets
be held and administered by Custodian pursuant to this Agreement;
WHEREAS, Custodian represents that it is a bank having the
qualifications prescribed in the Investment Company Act of 1940 to act as
custodian for management investment companies registered under such Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Fund and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall mean:
1.1 "Authorized Person" means any person authorized by resolution of
the Board of Trustees to give Oral Instructions and Written Instructions on
behalf of the Fund and identified, by name or by office, in Exhibit B hereto or
any person designated to do so by an investment adviser of the Fund who is named
by the Fund in Exhibit C hereto.
1.2 "Board of Trustees" means the Board of Trustees of the Fund or,
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a
Federal Reserve Bank for securities of the United States government or of
agencies or instrumentalities thereof (including government-sponsored
enterprises).
1.4 "Business Day" means any day on which banks in the State of New
Jersey and New York are open for business.
1.5 "Custody Account" means the account in the name of the Fund, which
is provided for in Section 3.2 below.
1.6 "Domestic Securities Depository" means The Depository Trust Company
and any other clearing agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "Eligible Domestic Bank" means a bank as defined in the 1940 Act.
-1-
1.8 "Eligible Foreign Custodian" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under the 1940 Act to act as a custodian for
securities and other assets of the Fund held outside the United States.
1.9 "Eligible Foreign Securities Depository" means an Eligible
Securities Depository as defined in Rule 17f-7 under the 0000 Xxx.
1.10 "Foreign Assets" has the same meaning as in Rule 17f-5 under the
1940 Act.
1.11 "Foreign Custody Manager" has the same meaning as in Rule 17f-5
under the 1940 Act.
1.12 "Master Repurchase Agreement" means the Master Repurchase
Agreement of even date herewith between the Fund and Bear, Xxxxxxx & Co. Inc.
("Bear Xxxxxxx") as it may from time to time be amended.
1.13 "Master Securities Loan Agreement" means the Master Securities
Loan Agreement of even date herewith between the Fund and Bear, Xxxxxxx
Securities Corp. ("BS Securities") as it may from time to time be amended.
1.14 "1940 Act" means the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
1.15 "Oral Instructions" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by any two Authorized Persons, (b) recorded and kept among the
records of Custodian made in the ordinary course of business, and (c) completed
in accordance with Custodian's requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Fund.
1.16 "Proper Instructions" means Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by the Fund and Custodian.
1.17 "Securities Depository" means any Domestic Securities Depository
or Eligible Foreign Securities Depository.
1.18 "Shares" means the beneficial interests issued by the Fund.
1.19 "Written Instructions" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by any two Authorized Persons, (b) sent or transmitted by letter,
facsimile, central processing unit connection, on-line terminal or magnetic
tape, and (c) completed in accordance with Custodian's requirements from time to
time as to content of instructions and their manner and timeliness of delivery
by the Fund.
-2-
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Fund hereby appoints Custodian as custodian of all
such securities, funds and other assets of the Fund as may be acceptable to
Custodian and from time to time delivered to it by the Fund or others for the
account of the Fund.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 Segregation. All securities and non-cash property of the Fund in
the possession of Custodian (other than securities maintained by Custodian with
a sub-custodian appointed pursuant to this Agreement or in a Securities
Depository or Book-Entry System) shall be physically segregated from other such
securities and non-cash property in the possession of Custodian. All cash,
securities and other non-cash property of the Fund shall be identified as
belonging it.
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all securities,
funds and other assets of the Fund which are delivered to Custodian and accepted
by it.
(b) If Custodian at any time fails to receive any of the documents
referred to in Section 3.10(a) below, then, until such time as it receives such
document, it shall not be obligated to receive any securities into the Custody
Account and shall be entitled to return to the Fund any securities that it is
holding in the Custody Account.
3.3 Securities in Physical Form. Custodian may, but shall not be
obligated to, hold securities that may be held only in physical form.
3.4 Disclosure to Issuers of Securities. Custodian is authorized to
disclose the Fund's name and address, and the securities positions in the
Custody Account, to the issuers of such securities when requested by them to do
so.
3.5 Employment of Domestic Sub-Custodians. At any time and from time to
time, Custodian in its discretion may appoint and employ, and may also cease to
employ, any Eligible Domestic Bank as sub-custodian to hold securities and other
assets of the Fund that are maintained in the United States and to carry out
such other provisions of this Agreement as it may determine, provided, however,
that the employment of any such sub-custodian has been approved by the Fund. The
employment of any such sub-custodian shall be at Custodian's expense and shall
not relieve Custodian of any of its obligations or liabilities under this
Agreement.
3.6 Employment of Foreign Sub-Custodians. (a) Unless otherwise
instructed in Written Instructions, Custodian is authorized to hold any Foreign
Asset of the Fund in any country in which all or a portion of the primary market
for such Foreign Asset is situated.
(b) At any time and from time to time, Custodian in its discretion may
appoint and employ in accordance with the 1940 Act, and may also cease to
employ, (i) any overseas branch of any Eligible Domestic Bank, or (ii) any
Eligible Foreign Custodian selected by the Foreign Custody Manager, in each case
as a foreign sub-custodian for Foreign Assets of the Fund, provided, however,
that the employment of any such overseas branch has been approved by the Fund
and, provided further, that, in the case of any such Eligible Foreign Custodian,
the Foreign Custody Manager has approved the agreement pursuant to which
Custodian employs such Eligible Foreign Custodian.
-3-
(c) Set forth on Exhibit D hereto are the foreign sub-custodians that
Custodian may employ pursuant to Section 3.6(b) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or deleted.
(d) If the Fund proposes to make an investment which is to be held in a
country in which Custodian does not have appropriate arrangements in place with
either an overseas branch of an Eligible Domestic Bank or an Eligible Foreign
Custodian selected by the Foreign Custody Manager, then the Fund shall inform
Custodian sufficiently in advance of such investment to allow Custodian to make
such arrangements.
(e) Notwithstanding anything to the contrary in Section 8.1 below,
Custodian shall have no greater liability to the Fund for the actions or
omissions of any foreign sub-custodian appointed pursuant to this Agreement than
any such foreign sub-custodian has to Custodian, and Custodian shall not be
required to discharge any such liability which may be imposed on it unless and
until such foreign sub-custodian has effectively indemnified Custodian against
it or has otherwise discharged its liability to Custodian in full.
(f) Upon the request of the Foreign Custody Manager, Custodian shall
furnish to the Foreign Custody Manager information concerning all foreign
sub-custodians employed pursuant to this Agreement which shall be similar in
kind and scope to any such information that may have been furnished to the
Foreign Custody Manager in connection with the initial approval by the Foreign
Custody Manager of the agreements pursuant to which Custodian employs such
foreign sub-custodians or as otherwise required by the 1940 Act.
3.7 Employment of Other Agents. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear Xxxxxxx or BS
Securities, both of which are securities broker-dealers, provided, however, that
Custodian shall not employ (a) Bear Xxxxxxx to hold any securities purchased
from Bear Xxxxxxx under the Master Repurchase Agreement or any other repurchase
agreement between the Fund and Bear Xxxxxxx, whether now or hereafter in effect,
or (b) BS Securities to hold any collateral pledged by BS Securities under the
Master Securities Loan Agreement or any other securities loan agreement between
the Fund and BS Securities, whether now or hereafter in effect. The appointment
of any agent pursuant to this Section 3.7 shall not relieve Custodian of any of
its obligations or liabilities under this Agreement.
3.8 Bank Accounts. In its discretion and from time to time Custodian
may open and maintain one or more demand deposit accounts with any Eligible
Domestic Bank (any such accounts to be in the name of Custodian and subject only
to its draft or order), provided, however, that the opening and maintenance of
any such account shall be at Custodian's expense and shall not relieve Custodian
of any of its obligations or liabilities under this Agreement.
3.9 Delivery of Assets to Custodian. Provided they are acceptable to
Custodian, the Fund shall deliver to Custodian the securities, funds and other
assets of the Fund, including (a) payments of income, payments of principal and
capital distributions received by the Fund with respect to securities, funds or
other assets owned by the Fund at any time during the term of this Agreement,
and (b) funds received by the Fund for the issuance, at any time during such
term, of Shares of the Fund. Custodian shall not be under any duty or obligation
to require the Fund to deliver to it any securities or other assets owned by the
Fund and shall have no responsibility or liability for or on account of
securities or other assets not so delivered.
-4-
3.10 Domestic Securities Depositories and Book-Entry Systems. Custodian
and any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of the Fund in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of the Fund in any Domestic
Securities Depository or Book-Entry System, the Fund shall deliver to Custodian
a resolution of the Board of Trustees, certified by an officer of the Fund,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities Depository or Book-Entry System all securities eligible for deposit
therein and to make use of such Domestic Securities Depository or Book-Entry
System to the extent possible and practical in connection with the performance
of its obligations hereunder (or under the applicable sub-custody agreement in
the case of such sub-custodian), including, without limitation, in connection
with settlements of purchases and sales of securities, loans of securities, and
deliveries and returns of collateral consisting of securities.
(b) Securities of the Fund kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers.
(c) The records of Custodian with respect to securities of the Fund
that are maintained in a Book-Entry System or Domestic Securities Depository
shall at all times identify such securities as belonging to the Fund.
(d) If securities purchased by the Fund are to be held in a Book-Entry
System or Domestic Securities Depository, Custodian (or any sub-custodian
appointed pursuant to Section 3.5 above) shall pay for such securities upon (i)
receipt of advice from the Book-Entry System or Domestic Securities Depository
that such securities have been transferred to the Depository Account, and (ii)
the making of an entry on the records of Custodian (or of such sub-custodian) to
reflect such payment and transfer for the account of the Fund. If securities
sold by the Fund are held in a Book-Entry System or Domestic Securities
Depository, Custodian (or such sub-custodian) shall transfer such securities
upon (A) receipt of advice from the Book-Entry System or Domestic Securities
Depository that payment for such securities has been transferred to the
Depository Account, and (B) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such transfer and payment for the account
of the Fund.
(e) Custodian shall provide the Fund with copies of any report obtained
by Custodian (or by any sub-custodian appointed pursuant to Section 3.5 above)
from a Book-Entry System or Domestic Securities Depository, in which securities
of the Fund are kept, on the internal accounting controls and procedures for
safeguarding securities deposited in such Book-Entry System or Domestic
Securities Depository.
(f) At its election, the Fund shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to the Fund arising from
the use of such Book-Entry System or Domestic Securities Depository, if and to
the extent that the Fund has not been made whole for any such loss or damage.
-5-
3.11 Foreign Securities Depositories. (a) Unless otherwise instructed
in Written Instructions, Custodian may place and maintain Foreign Assets of the
Fund with an Eligible Foreign Securities Depository, provided that it has
delivered to the Fund an analysis of the custody risks associated with
maintaining assets with such Eligible Securities Depository. Custodian shall
monitor such custody risks on a continuing basis and promptly notify the Fund of
any material change in such risks.
(b) In performing its obligations under Section 3.11(a) above,
Custodian shall exercise reasonable care, prudence and diligence. In the
exercise of such care, prudence and diligence, Custodian may rely upon
assessments, determinations and monitoring made and performed with respect to an
Eligible Foreign Securities Depository by Citibank, N.A. or such other operator
of a global custody system as from time to time may be employed by Custodian and
approved by the Fund.
3.12 Relationship With Securities Depositories. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.13 Payments from Custody Account. Upon receipt of Proper Instructions
but subject to its right to foreclose upon and liquidate collateral pledged to
it pursuant to Section 9.3 below, Custodian shall make payments from the Custody
Account, but only in the following cases, provided, first, that there are
sufficient Funds in the Custody Account, whether belonging to the Fund or
advanced to it by Custodian in its sole and absolute discretion as set forth in
Section 3.19 below, for Custodian to make such payments, and, second, that after
the making of such payments, the Fund would not be in violation of any margin or
other requirements agreed upon pursuant to Section 3.19 below.
(a) For the purchase of securities for the Fund but only (i) in the
case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.21 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (ii) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or such
sub-custodian) of evidence of title thereto in favor of the Fund, the Custodian,
any such sub-custodian, or any nominee referred to in Section 3.21 below;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.14(f) below, of securities owned by the Fund;
(c) For transfer in accordance with the provisions of any agreement
among the Fund, Custodian and a securities broker-dealer, relating to compliance
with rules of The Options Clearing Corporation and of any registered national
securities exchange (or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions of the Fund;
-6-
(d) For transfer in accordance with the provisions of any agreement
among the Fund, Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of the Fund;
(e) For the funding of any time deposit (whether certificated or not)
or other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Fund and such banking or other financial institution with
respect to the purchase of such loan participations and provided that Custodian
shall receive and retain such participation certificate or other evidence of
participation (if any) as such banking or other financial institution may
deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of the Fund pursuant to contracts between the Fund and any banking or
other financial institution (including Custodian, any sub-custodian appointed
pursuant to this Agreement and any affiliate of Custodian);
(h) For transfer to a securities broker-dealer as margin for a short
sale of securities for the Fund, or as payment in lieu of dividends paid on
securities sold short for the Fund;
(i) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of the
Fund;
(j) For the payment as provided in Article IV below of the redemption
price of the Shares of the Fund;
(k) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, and administration, investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal fees, and other operating expenses
of the Fund; in all cases, whether or not such expenses are to be in whole or in
part capitalized or treated as deferred expenses; and
(l) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of the Fund, and naming the person or persons to
whom such payment is to be made.
3.14 Deliveries from Custody Account. Upon receipt of Proper
Instructions with respect to the Fund but subject to its right to foreclose upon
and liquidate collateral pledged to it pursuant to Section 9.3 below, Custodian
shall release and deliver securities and other assets from the Custody Account,
but only in the following cases, provided, first, that there are sufficient
amounts and types of securities or other assets in the Custody Account for
Custodian to make such deliveries, and, second, that after the making of such
deliveries, the Fund would not be in violation of any margin or other
requirements agreed upon pursuant to Section 3.19 below:
-7-
(a) Upon the sale of securities for the account of the Fund but,
subject to Section 3.15 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of the Fund; provided that, in any such case, the
funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different
number of certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new securities
are to be delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
the Fund, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new securities and
funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the
issuer of such warrants, rights or similar securities, or its agent, upon the
exercise thereof, provided that, in any such case, the new securities and funds,
if any, are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any loans
of securities for the Fund pursuant to any securities loan agreement entered
into by the Fund, but only against receipt by Custodian of such collateral as is
required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from
such lender by the Fund that require a pledge of assets of the Fund, but only
against receipt by Custodian of the amounts borrowed;
(j) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(k) For delivery in accordance with the provisions of any agreement
among the Fund, Custodian and a securities broker-dealer, relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of the
Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Fund, Custodian, and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of the Fund;
-8-
(m) For delivery to a securities broker-dealer as margin for a short
sale of securities for the Fund;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
to its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or to its agent,
against a written receipt therefor adequately describing such ADRs, provided
that such ADRs are delivered together with instructions to deliver the
securities underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such securities or other assets is to be made.
3.15 Delivery Prior to Final Payment. When instructed by the Fund to
deliver securities of the Fund against payment, Custodian shall be entitled, but
only if in accordance with generally accepted market practice, to deliver such
securities prior to actual receipt of final payment therefor and, exclusively in
the case of securities in physical form, prior to receipt of payment therefor.
In any such case, the Fund shall bear the risk that final payment for such
securities may not be made or that such securities may be returned or otherwise
held or disposed of by or through the person to whom they were delivered, and
Custodian shall have no liability for any of the foregoing.
3.16 Credit Prior to Final Payment. In its sole discretion and from
time to time, Custodian may credit the Custody Account, prior to actual receipt
of final payment thereof, with (a) proceeds from the sale of securities of the
Fund which it has been instructed to deliver against payment, (b) proceeds from
the redemption of securities or other assets in the Custody Account, and (c)
income from securities, funds or other assets in the Custody Account. Any such
credit shall be conditional upon actual receipt by Custodian of final payment
and may be reversed if final payment is not actually received in full. Custodian
may, in its sole discretion and from time to time, permit the Fund to use funds
so credited to its Custody Account in anticipation of actual receipt of final
payment. Any funds so used shall constitute an advance subject to Section 3.19
below.
3.17 Definition of Final Payment. For purposes of this Agreement,
"final payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, xxxx, xxxx or other encumbrance.
3.18 Payments and Deliveries Outside the United States. Notwithstanding
anything to the contrary that may be required by Section 3.13 or Section 3.14
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this Agreement may receive and deliver such securities or other assets, and may
make such payments, in accordance with the laws, regulations, customs,
procedures and practices applicable in the relevant local market outside the
United States.
-9-
3.19 Clearing Credit. Custodian may, in its sole discretion and from
time to time, advance funds to the Fund to facilitate the settlement of the
Fund's transactions in the Custody Account. Any such advance (a) shall be
repayable immediately upon demand made by Custodian, (b) shall be fully secured
as provided in Section 9.3 below, and (c) shall bear interest at such rate, and
be subject to such other terms and conditions, as Custodian and the Fund may
agree.
3.20 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Fund, Custodian shall with respect to all securities and other
assets held for the Fund:
(a) Subject to Section 8.4 below, receive into the Custody Account of
the Fund any funds or other property, including payments of principal, interest
and dividends, due and payable on or on account of such securities and other
assets;
(b) Deliver securities of the Fund to the issuers of such securities or
their agents for the transfer thereof into the name of the Fund, of Custodian or
of any of the nominees referred to in Section 3.21 below;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws of the United States, or the laws
or regulations of any other taxing authority, in connection with the transfer of
such securities or other assets or the receipt of income or other payments with
respect thereto;
(f) Receive and hold for the Fund all rights and similar securities
issued with respect to securities or other assets of the Fund;
(g) As may be required in the execution of Proper Instructions,
transfer funds from the Custody Account of the Fund to any demand deposit
account maintained by Custodian pursuant to Section 3.8 above; and
(h) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase and transfer of, and other
dealings in, such securities and other assets.
3.21 Registration and Transfer of Securities. All securities held for
the Fund that are issuable only in bearer form shall be held by Custodian in
that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for the Fund may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Fund shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.21 provided, any securities or other assets delivered to Custodian which are
registered in the name of the Fund.
-10-
3.22 Records. (a) Custodian shall maintain complete and accurate
records with respect to securities, funds and other assets held for the Fund,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of securities and all
receipts and disbursements of funds; (ii) ledgers (or other records) reflecting
(A) securities in transfer, if any, (B) securities in physical possession, (C)
monies and securities borrowed and monies and securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall keep such other books and records with respect to securities, funds and
other assets of the Fund which are held hereunder as the Fund may reasonably
request.
(b) All such books and records maintained by Custodian for the Fund
shall (i) be maintained in a form acceptable to the Fund and in compliance with
rules and regulations of the Securities and Exchange Commission, (ii) be the
property of the Fund and at all times during the regular business hours of
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Fund and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained under
the 1940 Act, be preserved for the periods prescribed therein.
3.23 Account Reports by Custodian. Custodian shall furnish the Fund
with a daily activity statement, including a summary of all transfers to or from
the Custody Account (in the case of securities and other assets maintained in
the United States, on the day following such transfers). At least monthly and
from time to time, Custodian shall furnish the Fund with a detailed statement of
the securities, funds and other assets held for the Fund under this Agreement.
3.24 Other Reports by Custodian. Custodian shall provide the Fund with
such reports as the Fund may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.25 Proxies and Other Materials. (a) Unless otherwise instructed by
the Fund, Custodian shall promptly deliver to the Fund all notices of meetings,
proxy materials (other than proxies) and other announcements, which it receives
regarding securities held by it in the Custody Account. Whenever Custodian or
any of its agents receives a proxy with respect to securities in the Custody
Account, Custodian shall promptly request instructions from the Fund on how such
securities are to be voted, and shall give such proxy, or cause it to be given,
in accordance with such instructions. If the Fund timely informs Custodian that
the Fund wishes to vote any such securities in person, Custodian shall promptly
seek to have a legal proxy covering such securities issued to the Fund. Unless
otherwise instructed by the Fund, neither Custodian nor any of its agents shall
exercise any voting rights with respect to securities held hereunder.
(b) Unless otherwise instructed by the Fund, Custodian shall promptly
transmit to the Fund all other written information received by Custodian from
issuers of securities held in the Custody Account. With respect to tender or
exchange offers for such securities or with respect to other corporate
transactions involving such securities, Custodian shall promptly transmit to the
Fund all written information received by Custodian from the issuers of such
securities or from any party (or its agents) making any such tender or exchange
offer or participating in such other corporate transaction. If the Fund, with
respect to such tender or exchange offer or other corporate transaction, desires
to take any action that may be taken by it pursuant to the terms of such offer
or other transaction, the Fund shall notify Custodian (i) in the case of
securities maintained outside the United States, such number of Business Days
prior to the date on which Custodian is to take such action as will allow
Custodian to take such action in the relevant local market for such securities
in a timely fashion, and (ii) in the case of all other securities, at least five
Business Days prior to the date on which Custodian is to take such action.
-11-
3.26 Co-operation. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Fund to keep the books of
account of the Fund and/or to compute the value of the assets of the Fund.
-12-
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 Transfer of Funds. From such funds as may be available for the
purpose in the Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of the Fund or to pay
dividends or other distributions to holders of Shares of the Fund, Custodian
shall transfer each amount specified in such Proper Instructions to such account
of the Fund or of an agent thereof (other than Custodian), at such bank, as the
Fund may designate therein with respect to such amount.
4.2 Sole Duty of Custodian. Custodian's sole obligation with respect to
the redemption of Shares of the Fund and the payment of dividends and other
distributions thereon shall be its obligation set forth in Section 4.1 above,
and Custodian shall not be required to make any payments to the various holders
from time to time of Shares of the Fund nor shall Custodian be responsible for
the payment or distribution by the Fund, or any agent designated in Proper
Instructions given pursuant to Section 4.1 above, of any amount paid by
Custodian to an account of the Fund or such agent in accordance with such Proper
Instructions.
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish
and maintain a segregated account or accounts for and on behalf of the Fund,
into which account or accounts may be transferred funds and/or securities,
including securities maintained in a Securities Depository:
(a) in accordance with the provisions of any agreement among the Fund,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of the Fund,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered management
investment companies in connection with reverse repurchase agreements,
when-issued, delayed delivery and firm commitment transactions, and short sales
of securities, and
-13-
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of the Fund.
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 Transactions. If and to the extent that the necessary funds and
securities of the Fund have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of the Fund, shall from
time to time (and unless the Fund gives it Proper Instructions to do otherwise)
make from the Custody Account of the Fund the transfers of funds and deliveries
of securities which the Fund is required to make pursuant to the Master
Repurchase Agreement and shall receive for the Custody Account of the Fund the
transfers of funds and deliveries of securities which the seller under the
Master Repurchase Agreement is required to make pursuant thereto. Custodian
shall make and receive all such transfers and deliveries pursuant to, and
subject to the terms and conditions of, the Master Repurchase Agreement.
6.2 Collateral. Custodian shall daily xxxx to market the securities
purchased under the Master Repurchase Agreement and credited to the Custody
Account of the Fund, and shall give to the seller thereunder any such notice as
may be required thereby in connection with such xxxx-to-market.
6.3 Events of Default. Custodian shall promptly notify the Fund of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
6.4 Master Repurchase Agreement. Custodian hereby acknowledges its
receipt from the Fund of a copy of the Master Repurchase Agreement. The Fund
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 Transactions. If and to the extent that the necessary funds and
securities of the Fund have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of the Fund, shall from
time to time (and unless the Fund gives it Proper Instructions to do otherwise)
make from the Custody Account of the Fund the transfers of funds and deliveries
of securities which the Fund is required to make pursuant to the Master
Securities Loan Agreement and shall receive for the Custody Account the
transfers of funds and deliveries of securities which the borrower under the
Master Securities Loan Agreement is required to make pursuant thereto. Custodian
shall make and receive all such transfers and deliveries pursuant to, and
subject to the terms and conditions of, the Master Securities Loan Agreement.
7.2 Collateral. Custodian shall daily xxxx to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
-14-
7.3 Defaults. Custodian shall promptly notify the Fund of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 Master Securities Loan Agreement. Custodian hereby acknowledges its
receipt from the Fund of a copy of the Master Securities Loan Agreement. The
Fund shall provide Custodian, prior to the effectiveness thereof, with a copy of
any amendment to the Master Securities Loan Agreement.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 Standard of Care. Custodian shall be without liability to the Fund
for any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim which does not arise from willful
misfeasance, bad faith or gross negligence on the part of Custodian. Custodian
shall be entitled to rely on and may act upon advice of counsel in all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. In no event shall Custodian be liable for special,
incidental or consequential damages, even if Custodian has been advised of the
possibility of such damages, or be liable in any manner whatsoever for any
action taken or omitted upon instructions from the Fund or any agent of the
Fund.
8.2 Actual Collection Required. Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until Custodian or its agents actually receive such funds or collect on such
instrument.
8.3 No Responsibility for Title, etc. Subject to Section 8.1 above,
Custodian shall not be responsible for the title, validity or genuineness of any
assets or evidence of title thereto received or delivered by it or its agents.
8.4 Limitation on Duty to Collect. Custodian shall promptly notify the
Fund whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for the Fund is not timely received by
it. Custodian shall not, however, be required to enforce collection, by legal
means or otherwise, of any such money or other property not paid when due, but
shall receive the proceeds of such collections as may be effected by it or its
agents in the ordinary course of Custodian's custody and safekeeping business or
of the custody and safekeeping business of such agents.
8.5 Express Duties Only. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund. In particular, Custodian shall not be under any
obligation at any time to monitor or to take any other action with respect to
compliance by the Fund with the 1940 Act, the provisions of the Fund's trust
instrument or by-laws, or the Fund's investment objectives, policies and
limitations as in effect from time to time.
-15-
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification. The Fund shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any federal, state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that securities or other assets in the Custody Account are registered in the
name of any such nominee, or (b) from any action or inaction by Custodian or
such sub-custodian or nominee (i) at the request or direction of or in reliance
on the advice of the Fund or any of its agents, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement, provided that Custodian, any such sub-custodian or any nominee
of any of them shall not be indemnified and held harmless from and against any
such loss, damage, cost, expense, liability or claim arising from willful
misfeasance, bad faith or gross negligence on the part of Custodian or any such
sub-custodian or nominee.
9.2 Indemnity to be Provided. If the Fund requests Custodian to take
any action with respect to securities or other assets of the Fund, which may, in
the opinion of Custodian, result in Custodian or its nominee becoming liable for
the payment of money or incurring liability of some other form, Custodian shall
not be required to take such action until the Fund shall have provided indemnity
therefor to Custodian in an amount and form satisfactory to Custodian.
9.3 Security. As security for the payment of any present or future
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, or which
the Fund may otherwise have to Custodian, the Fund hereby pledges to Custodian
all securities, funds and other assets of every kind which are in the Custody
Account or otherwise held for the Fund pursuant to this Agreement, and hereby
grants to Custodian a lien, right of set-off and continuing security interest in
such securities, funds and other assets.
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance
of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; terrorism; civil or
military disturbances; sabotage; strikes; epidemics; riots; power failures;
computer failure and any such circumstances beyond its reasonable control as may
cause interruption, loss or malfunction of utility, transportation, computer
(hardware or software) or telephone communication services; accidents; labor
disputes; acts of civil or military authority; actions by any governmental
authority, de jure or de facto; or inability to obtain labor, material,
equipment or transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 Representations of the Fund. The Fund represents and warrants that
(a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of the Fund, enforceable against it in accordance with its
terms.
-16-
11.2 Representations of Custodian. Custodian represents and warrants
that (a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
The Fund shall pay Custodian such fees and charges as are set forth in
Exhibit A hereto, as such Exhibit A may from time to time be revised by
Custodian upon 14 days' prior written notice to the Fund. Any annual fee or
other charges payable by the Fund shall be paid monthly by automatic deduction
from funds available therefor in the Custody Account, or, if there are no such
Funds, upon presentation of an invoice therefor. Out-of-pocket expenses incurred
by Custodian in the performance of its services hereunder for the Fund and all
other proper charges and disbursements of the Custody Account shall be charged
to the Custody Account by Custodian and paid in the same manner as the annual
fee and other charges referred to in this Article XII.
ARTICLE XIII
TAXES
13.1 Taxes Payable by the Fund. Any and all taxes, including any
interest and penalties with respect thereto, which may be levied or assessed
under present or future laws or in respect of the Custody Account or any income
thereof shall be charged to the Custody Account by Custodian and paid in the
same manner as the annual fee and other charges referred to in Article XII
above.
13.2 Tax Reclaims. Upon the written request of the Fund, Custodian
shall exercise, on behalf of the Fund, any tax reclaim rights of the Fund which
arise in connection with foreign securities in the Custody Account.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 Authorized Persons. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication which is
reasonably believed by Custodian to have been given or signed on behalf of the
Fund by any two of the Authorized Persons designated by the Fund in Exhibit B
hereto, as it may from time to time be revised. The Fund may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance with
Section 14.4 below, but no revision of Exhibit B hereto shall be effective until
Custodian actually receives such notice.
-17-
14.2 Investment Advisers. Custodian may also rely upon and act in
accordance with any Written or Oral Instructions given with respect to the Fund
which are reasonably believed by Custodian to have been given or signed by any
two of the persons designated from time to time by any of the investment
advisers of the Fund who are specified in Exhibit C hereto (if any) as it may
from time to time be revised. The Fund may revise Exhibit C hereto at any time
by notice in writing to Custodian given in accordance with Section 14.4 below,
and each investment adviser specified in Exhibit C hereto (if any) may at any
time by like notice designate an Authorized Person or remove an Authorized
Person previously designated by it, but no revision of Exhibit C hereto (if any)
and no designation or removal by such investment adviser shall be effective
until Custodian actually receives such notice.
14.3 Oral Instructions. Custodian may rely upon and act in accordance
with Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by any two Authorized Persons to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions. To the extent such Oral Instructions vary from any confirming
Written Instructions, Custodian shall advise the Fund of such variance, but
unless confirming Written Instructions are timely received, such Oral
Instructions shall govern.
14.4 Addresses for Notices. Unless otherwise specified herein, all
demands, notices, instructions, and other communications to be given hereunder
shall be sent, delivered or given to the recipient at the address, or the
relevant telephone number, set forth after its name herein below:
If to the Fund:
THE WATCHDOG FUND
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxx
Telephone: (000)000-0000
Facsimile: (212)___-____
If to Custodian:
CUSTODIAL TRUST COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Vice President - Trust Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-18-
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5 Remote Clearance. With the prior consent in writing of Custodian,
the Fund may give Remote Clearance Instructions (as defined hereinbelow) and
Bulk Input Instructions (as defined hereinbelow) for the receipt, delivery or
transfer of securities, provided that such Instructions are given in accordance
with the procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by the Fund. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been given by two Authorized Persons, and
Custodian is hereby irrevocably authorized to act in accordance therewith. For
purposes of this Agreement, "Remote Clearance Instructions" means instructions
that are input directly via a remote terminal which is located on the premises
of the Fund, or of an investment adviser named in Exhibit C hereto, and linked
to Custodian; and "Bulk Input Instructions" means instructions that are input by
bulk input computer tape delivered to Custodian by messenger or transmitted to
it via such transmission mechanism as the Fund and Custodian shall from time to
time agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all securities (other than securities held in a Book-Entry System or
Securities Depository) and other assets then owned by the Fund and held by
Custodian as custodian, and (b) transfer any securities held in a Book-Entry
System or Securities Depository to an account of or for the benefit of the Fund,
provided that the Fund shall have paid to Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be entitled.
ARTICLE XVI
LIMITATION OF LIABILITIES
To the extent that the trustees of the Fund are regarded as entering
into this Agreement, they do so only as trustees of the Fund and not
individually. The obligations under this Agreement of the Fund shall not be
binding upon any trustee, officer or employee of the Fund individually, or upon
any holder of Shares individually, but shall be binding only upon the assets and
property of the Fund. Such trustees, officers, employees and holders, when
acting in such capacities, shall not be personally liable under this Agreement,
and Custodian shall look solely to the assets and property of the Fund for the
performance of this Agreement and the payment of any claim against the Fund
under this Agreement.
-19-
ARTICLE XVII
MISCELLANEOUS
17.1 Business Days. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
17.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3 References to Custodian. The Fund shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
17.4 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5 Amendments. This Agreement cannot be changed orally and, except as
otherwise provided herein with respect to the Exhibits attached hereto, no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
17.6 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
17.7 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
17.8 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9 Jurisdiction. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise. Each of the parties hereto hereby
irrevocably waives its right to trial by jury in any suit, action or proceeding
with respect to this Agreement.
17.10 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
-20-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
THE WATCHDOG FUND
By:
------------------------
Name:
Title:
CUSTODIAL TRUST COMPANY
By: ------------------------
Name:
Title:
-21-
EXHIBIT A
CUSTODY FEES AND TRANSACTION CHARGES
Domestic Fees. The Fund shall pay Custodian the following fees for
assets maintained in the United States ("Domestic Assets") and charges for
transactions in the United States, all such fees and charges to be payable
monthly:
(1) an annual fee of the greater of (a) $5,000 and (b) the sum of (i)
0.03% (three basis points) per annum of the first $20,000,000 in market value of
Domestic Assets credited to the Custody Account and (ii) 0.02% (two basis
points) of the next $20,000,000 in such market value and (iii) 0.01% (one basis
point) of such market value in excess of $40,000,000, all such percentages to be
based upon the total market value of such Domestic Assets as determined on the
last Business Day of the month for which such fee is charged, and provided,
however, that if such sum for the first fiscal year of the Fund is less than
$5,000, then only such sum shall be due for that year;
(2) a transaction charge of $9 for each receive or deliver, against
payment, of book-entry securities into or from the Custody Account (but not for
any such receive or deliver of book-entry securities loaned by the Fund or
constituting collateral for a loan of securities, or any such receive or deliver
in a repurchase transaction representing (a) a cash sweep investment for the
Fund's account or (b) the investment by the Fund of cash collateral for a loan
of securities);
(3) a transaction charge of $40 for each receive or deliver, whether
"free" or against payment, of securities in physical form into or from the
Custody Account;
(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Fund's account,
computed on the basis of a 360-day year and for the actual number of days such
repurchase transaction is outstanding at a rate of 0.10% (ten basis points) per
annum on the amount of the purchase price paid by the Fund in such repurchase
transaction;
(5) a charge of $10 for each "free" transfer of funds out of the
Custody Account;
(6) a service charge for each holding of securities or other assets of
the Fund that are sold by way of private placement or in such other manner as to
require services by Custodian which in its reasonable judgment are materially in
excess of those ordinarily required for the holding of publicly traded
securities in the United States.
International Fees. A transaction charge of $__ shall be charged for
each receive or deliver into or from the Custody Account of securities in
Euroclear or Clearstream. In addition, the Fund shall pay Custodian fees for
assets maintained by the Fund outside the United States ("Foreign Assets") and
charges for other transactions by the Fund outside the United States (including,
without limitation, charges for Funds transfers and tax reclaims) in accordance
with such schedule of fees and charges for each country in which Foreign Assets
of the Fund are held as Custodian shall from time to time provide to the Fund.
Any asset-based fee shall be based upon the total market value of the applicable
Foreign Assets as determined on the last Business Day of the month for which
such fee is charged.
-22-
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Fund to administer the Custody Account.
Name Signature
---- ---------
------------------------------- ---------------------------------
------------------------------- ---------------------------------
------------------------------- ---------------------------------
-23-
EXHIBIT C
INVESTMENT ADVISERS
-24-
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
Foreign Sub-custodian Country(ies) Securities Depositories
--------------------- ------------ -----------------------
-25-
