Exhibit G(4)
AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT, dated May 21st, 2001 to the August 12th 1991 custody agreement
(Agreement) between THE ADVISORS' INNER CIRCLE FUND (Fund), a Massachusetts
business trust and First Union National Bank, a National Bank (First Union,
formerly, Corestates Bank N.A).
WHEREAS, the Fund desires to appoint First Union to provide custodial
services related to maintaining the Fund's assets outside of the United States
("Foreign Assets") on the terms and conditions contained herein to the
Portfolios listed on Exhibit A, as may be amended from time to time;
WHEREAS, First Union desires to provide custodian service related to the
Fund's assets outside of the United States, "Foreign Assets", and perform the
duties set forth herein on the terms and conditions contained herein.
NOW THEREFORE, in consideration of the mutual promises hereinafter
contained in this Agreement, the Fund and First Union hereby agree as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended by adding a new Section 18 as follows:
COMPLIANCE WITH SEC RULE 17F-5.
a. APPOINTMENT. The Fund hereby appoints First Union as Foreign Custody Manager
to perform the responsibilities set forth in this Section 18 with respect to
Foreign Assets, and First Union hereby accepts such appointment as a Foreign
Custody Manager of the Fund. First Union agrees to fulfill its duties and
perform its responsibilities hereunder in accordance with SEC Rule 17f-5.
b. STANDARD OF CARE. First Union shall use the reasonable care, prudence, and
diligence a person having responsibility for the safekeeping of the assets of an
investment company registered under the 1940 Act would exercise in performing
the responsibilities set forth in this Section 18.
c. SCOPE OF RESPONSIBILITIES AS FOREIGN CUSTODY MANAGER.
(i) SELECTION. Subject to the provisions of this section 18 First Union
shall place and maintain Foreign Assets in the care of one or more Eligible
Foreign Custodians. In performing its
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responsibilities to place and maintain Foreign Assets with an Eligible Foreign
Custodian, First Union shall determine that the Eligible Foreign Custodian will
hold Foreign Assets in the exercise of reasonable care, based on the standards
applicable to custodians in the jurisdiction or market in which the Foreign
Assets will be held by that Eligible Foreign Custodian, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation:
(A) the Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections
available for certificated securities (if applicable), its methods
of keeping custodial records, its security and data protection
practices, settlement practices, and precautions;
(B) whether the Eligible Foreign Custodian has the financial strength to
provide reasonable care for Foreign Assets and to protect Foreign
Assets against the Eligible Foreign Custodian's insolvency;
(C) the Eligible Foreign Custodian's general reputation and standing;
and
(D) whether the Fund will have jurisdiction over, and be able to enforce
judgments against, the Eligible Foreign Custodian in the United
States.
(ii) CONTRACTS. First Union shall ensure that the Fund's foreign custody
arrangements with each Eligible Foreign Custodian are governed by a written
contract with such Eligible Foreign Custodian. First Union shall determine that
the written contract governing the foreign custody arrangements with each
Eligible Foreign Custodian First Union selects will provide reasonable care for
Foreign Assets held by that Eligible Foreign Custodian. Each written contract
will include terms that provide:
(A) for indemnification and/or insurance arrangements such that the Fund
will be adequately protected against the risk of loss of the Foreign
Assets held in accordance with such contract;
(B) that the Foreign 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 for the
Eligible Foreign Custodian's services under the contract or, in the
case of cash deposits, liens or rights in favor of creditors of such
Eligible Foreign Custodian arising under bankruptcy, insolvency or
similar laws;
(C) that beneficial ownership of the Foreign Assets will be freely
transferable without the payment of money or value, other than
payments for the Eligible Foreign Custodian's services under the
contract;
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(D) that the Eligible Foreign Custodian will maintain adequate records
identifying the Foreign Assets held under the contract as belonging
to a Portfolio or as being held by a third party for the benefit of
a Portfolio;
(E) that the Fund's independent public accountants will be given access
to those records or confirmation of the contents of those records;
and
(F) that the Fund will receive periodic reports with respect to the
safekeeping of the Foreign Assets, including, but not limited to,
notification of any transfer of the Foreign Assets to or from the
account of a Portfolio or a third party account containing the
Foreign Assets held for the benefit of a Portfolio.
or, in lieu of any or all of the terms set forth in (A) through (F) above, such
other terms that First Union determines will provide, in their entirety, the
same or greater level of care and protection for the Foreign Assets as the
provisions set forth in (A) through (F) above in their entirety.
(iii) MONITORING. First Union will establish and maintain a system to
monitor: (i) the appropriateness of maintaining assets with each Eligible
Foreign Custodian; (ii) each Eligible Foreign Custodian's continuing compliance
with the standards set forth in Rule 17f-5 and this Amendment; and (iii)
Material Changes to the Fund's foreign custody arrangements, as defined in
paragraph (d) below (the Monitoring System).
(iv) WITHDRAWING FUND ASSETS. In the event that a foreign custody
arrangement no longer meets the terms and conditions set forth in SEC Rule 17f-5
or this Agreement, First Union is authorized to withdraw Foreign Assets and
place such foreign assets with another eligible foreign custodian, First Union
will promptly notify the Fund as described in Section 18. c.v.
(v) REPORTING REQUIREMENTS. First Union shall report the placement of
Foreign Assets with an Eligible Foreign Custodian and non-Material Changes by
providing a written report to the Board at the end of each calendar quarter.
With respect to Material Changes, First Union shall provide the Board with a
written report promptly after the occurrence of the Material Change. Material
Changes include: a decision to remove all Foreign Assets from a particular
sub-custodian; any event that may adversely and materially affect an Eligible
Foreign Custodian's financial or operational strength; First Union's inability
to perform its duties in accordance with a standard of care under this
Amendment; a change in control of an Eligible Foreign Custodian; the failure of
an Eligible Foreign Custodian to comply with the standards in the Guidelines,
the terms of Rule 17f-5, its contract governing the Fund's foreign custody
arrangements or the established practices or procedures of a Securities
Depository; any material change in any contract governing the Fund's foreign
custody arrangements; any material change in the established practices or
procedures of a Securities Depository; the failure of First
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Union or a foreign custody arrangement to meet the standards in Rule 17f-5 or
this Amendment; any event that may adversely affect First Union's ability to
comply with Rule 17f-5 or this Amendment; and a material change in any
information provided to the Board regarding First Union's expertise in foreign
custody issues and risks, First Union's use of third party experts to perform
its foreign custody responsibilities, the Board's ability to monitor First
Union's performance, First Union's financial strength or its ability to
indemnify the Fund.
(vi) PROVISION OF INFORMATION. First Union shall provide to the Fund (or
its investment manager) such information as is specified in Appendix 1-B hereto,
as may be amended from time to time by the parties. The Fund hereby acknowledges
that such information is solely designed to inform the Fund(or its investment
manager) of market conditions and procedures, but is not intended to influence
the Fund's investment decisions. First Union must use reasonable care in
gathering such information. First Union agrees to promptly notify the Fund's
investment adviser at the time that First Union becomes aware of a material
change to the information provided or if First Union learns that any information
previously provided is incomplete or inaccurate. At least annually, First Union
will provide to the Fund a written statement as may reasonably be required to
document its compliance with the terms of this Agreement, as well as information
regarding the following factors: (i) First Union's expertise in foreign custody
issues and risks; (ii) First Union's use of third party experts to perform its
foreign custody responsibilities; (iii) the Board's ability to monitor First
Union's performance; and (iv) First Union's financial strength and its ability
to indemnify the Fund if necessary. With respect to each Eligible Foreign
Custodian employed by the Fund under this Section 18.(c)(vi), First Union agrees
to provide to the Fund or its investment adviser any information it possesses
regarding Country Risk or the risks associated with placing or maintaining
Foreign Assets with the Eligible Foreign Custodian.
d. REPRESENTATIONS. The Fund hereby represents to First Union that (i) this
Agreement has been duly authorized, executed and delivered by the Fund,
constitutes a valid and legally binding obligation of the Fund enforceable in
accordance with its terms, and no statute, regulation, rule, order, judgment or
contract binding on the Fund prohibits the Fund's execution or performance under
this Agreement. First Union hereby represents to the Fund that (i) it is a U.S.
Bank with the full power to carry on its businesses as now conducted, and to
enter into this Agreement and to perform its obligations hereunder; (ii) this
Agreement has been duly authorized, executed and delivered by First Union,
constitutes a valid and legally binding obligation of First Union enforceable in
accordance with its terms, and no statute, regulation, rule, order, judgment or
contract binding on First Union prohibits First Union's execution or performance
of this Agreement; and (iii) First Union has established, and agrees to maintain
during the term of this Agreement, the Monitoring System.
In addition to any express or implied warranties made in the Agreement, First
Union hereby represents and warrants that each and every commercial and
noncommercial hardware, software, firmware, mechanical, or electrical product
(Product(s)) utilized, created, assembled, manufactured, developed, or modified
in connection with any goods or services offered or provided under this
Amendment shall, at no additional costs to the Fund, be able to store and
process accurately any and all data reflected in the
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currency unit of the European Monetary Union, the Euro, and related to the Euro
(including, but not limited to, calculating, comparing, storing, processing,
recording, valuing, recognizing, validating, presenting, and sequencing). The
Fund may, at no additional cost, require First Union to demonstrate compliance
and/or compliance techniques and test procedures it intends to follow, or
evidence of compliance by First Union and relevant third party vendors,
consistent with the Euro-related representations, warranties, and obligations
contained herein. These representations and warranties shall be in effect so
long as the service(s) or Product(s) provided under this agreement are used by
First Union or provided by First Union for the benefit of the Fund.
e. CONDITION PRECEDENT. As a condition precedent to First Union's performance
under this Amendment, the Fund shall deliver to First Union a certificate from
the Fund's secretary containing the resolution of the Board regarding the
Board's determination that it is reasonable to rely on First Union to perform
the delegated responsibilities provided for herein.
f. COUNTRY RISK. First Union's responsibilities under this Section 18 shall not
include, or be deemed to include, any evaluation of Country Risks associated
with investment in a particular country.
g. BEST CUSTOMER. If at any time First Union is or becomes a party to an
agreement to serve as Foreign Custody Manager to an investment company that
provides for either: (a) a standard of care with respect to the selection of
Eligible Foreign Custodians in any jurisdiction higher than that set forth in
Section 18.c (i) or (ii) a standard of care with respect to exercise of First
Union's duties other than that set forth in Section 18.b, First Union agrees to
notify the Fund of this fact and to raise the applicable standard of care
hereunder to the standard specified in such other agreement.
h. DIRECTION OF ELIGIBLE FOREIGN CUSTODIANS. The Fund may direct First Union to
place and maintain Foreign Assets with a particular Eligible Foreign Custodian.
In such event, First Union will have no duties under this Section 18 with
respect to such arrangement, except those included under Section 18.c (vi) and
those that it may undertake specifically in writing.
i. TAX SERVICES.
(i) First Union shall apply for a reduction of withholding tax and any
refund of any tax paid or tax credits that apply in each market in respect of
income payments on Assets for the benefit of the Fund which First Union believes
may be available to the Fund. If the Fund is eligible, pursuant to applicable
law or to the provisions of any tax treaty, for a reduced rate of, or exemption
from, any tax which is otherwise required to be withheld or paid on behalf of
the Fund under any applicable law, First Union shall, or shall instruct the
applicable Eligible Foreign Custodian or withholding agent to, either withhold
or pay such tax at such reduced rate or refrain from withholding or paying such
tax, as appropriate. In the event that a reduced rate of, or exemption from, any
tax is obtainable only by means of an application for refund, First Union shall,
or shall instruct the applicable Eligible Foreign Custodian or withholding agent
to, apply for such refund. The provision of tax services is conditional upon the
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Fund's provision to First Union of all documentary evidence as First Union shall
reasonably require in connection with taxation, and the Fund warrants that when
given, this information shall be true and correct in every material respect. The
Fund undertakes to notify First Union immediately if any such information
requires updating or amendment.
(ii) First Union and the applicable Eligible Foreign Custodian shall have
no responsibility for the accuracy or validity of any forms or documentation the
Fund provides to First Union hereunder, and the Fund hereby indemnifies and
agrees to hold harmless First Union and each Eligible Foreign Custodian in
respect of any liability arising from any underwithholding or underpayment of
any tax which results from the inaccuracy or invalidity of any such forms or
other documentation.
(iii) First Union and the applicable Eligible Foreign Custodian shall not
be liable to the Fund or any third party for any taxes, fines or penalties
payable by the Fund or First Union, and shall be indemnified accordingly,
whether these result form the Fund's or any third party's inaccurate completion
of documents, or as a result of the Fund's or any third party's provision of
inaccurate or misleading information or the withholding of material information,
or as a result of any delay of any revenue authority or any other event beyond
the control of First Union or any Eligible Foreign Custodian.
(iv) First Union shall perform tax reclaim services only for taxation
levied by the revenue authorities of the countries notified to First Union from
time to time, and First Union may, after notifying the Fund in writing,
supplement or amend the markets in which it offers tax reclaim services. Other
than as expressly provided in this clause (iv), First Union shall have no
responsibility for the Fund's tax position or status in any jurisdiction.
(v) First Union is authorized to deduct from any Property in the form of
cash any taxes or levies required by any revenue or governmental authority under
applicable law in respect of the Account.
j. DEFINITIONS.
Board means the board of trustees or board of directors, as applicable, of the
Fund.
Country Risk means the systemic risks arising from holding assets in a
particular country, including those arising from a country's financial
infrastructure, prevailing custody and settlement practices; expropriation,
nationalization or other governmental actions; and laws applicable to the
safekeeping and recovery of assets held in custody in such country.
Eligible Foreign Custodian means an Eligible Foreign Custodian as defined in SEC
Rule 17f-5(a)(1) and any other entity that the SEC qualifies as such by
exemptive order, no-action relief, rule or other appropriate SEC action.
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Foreign Assets means any Portfolio'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 Portfolio's transactions
in such investments.
Foreign Custody Manager means a Foreign Custody Manager as defined in SEC Rule
17f-5(a)(3).
Portfolio means each separate series of shares offered by the Fund representing
interests in a separate portfolio of securities and other assets.
SEC means the U.S. Securities and Exchange Commission.
Eligible Securities Depository means any securities depository or clearing
agency within the meaning of SEC Rule 17f-7(b)(1).
U.S. Bank means a U.S. bank as defined in SEC Rule 17f-5(a)(7).
1940 Act means the Investment Company Act of 1940.
k. AUTHORIZATION. Subject to the terms and conditions herein, First Union is
hereby authorized to: (i) place and maintain Foreign Assets on behalf of the
Fund with Eligible Foreign Custodians pursuant to a written contract determined
appropriate by First Union in accordance with the terms and conditions herein
and (ii) withdraw Foreign Assets from Eligible Foreign Custodians in accordance
with the terms and conditions herein.
l. CONCERNING FIRST UNION
(i) For its services hereunder, the Fund agrees to pay to First Union such
compensation and out-of-pocket expenses as shall be mutually agreed.
(ii) First Union shall have only such duties as are expressly set forth
herein. In no event shall First Union be liable for any Country Risks associated
with investments in a particular country.
m. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall
together, constitute only one instrument.
COMPLIANCE WITH RULE 17F-7. First Union shall provide an analysis of the custody
risks associated with maintaining the Fund's Foreign Assets with each Eligible
Securities Depository used by Custodian prior to the intitial placement of the
Fund's Foreign Assets at such Depository and at which any Foreign Assets of
Principal are held or are expected to be held. First Union shall monitor the
custody risks associated with maintaining the Fund's Foreign Assets at each such
Eligible Securities Depository on a
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continuing basis and shall promptly notify the Fund or its advisor of any
material changes in such risks. First Union shall exercise reasonable care
prudence and diligence in performing the requirements set forth in this
Paragraph. Based on the information available to it in the exercise of
diligence, First Union shall determine the eligibility under Rule 17f-7 of each
depository before including it on Appendix 1-A hereto and shall promptly advise
the Fund if any Eligible Securities Depository ceases to be eligible.
IN WITNESS WHEREOF, the Fund and First Union have caused this Amendment to
be executed by their respective officers, thereunto duly authorized, as of the
date first above written.
ADVISORS' INNER CIRCLE FUND
By: /s/ Xxxxxxx X. Xxxxxxx
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By: Xxxxxxx X. Xxxxxxx
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Title: Vice President
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FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxx
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By: Xxxxx X. Xxxxxx
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Title: Vice President
---------------------------------
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EXHIBIT A
PORTFOLIOS
FMC SELECT FUND 07559-24-L
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APPENDIX 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid the Fund or its delegate in its consideration of Country Risks, First
Union shall furnish the Fund annually and prior to the initial placing of
Foreign Assets into a country, the following information:
a. Opinions of local counsel, both internal and concerning whether
applicable foreign law would restrict the: (i) access afforded the Fund's
independent public accountants to books and records kept by an Eligible Foreign
Custodian located in that country; (ii) Fund's ability to recover its Foreign
Assets in the event of the bankruptcy of an Eligible Foreign Custodian in that
country; or (iii) Fund's ability to recover Foreign Assets that are lost while
under the control of an Eligible Foreign Custodian located in that country.
b. Written information concerning: (i) the likelihood of expropriation,
nationalization, freezes, or confiscation of the Fund's Foreign Assets and (ii)
whether difficulties in converting the Fund's cash and cash equivalents to U.S.
dollars are reasonably foreseeable.
c. A market report with respect to the following topics: (i) securities
regulatory environment; (ii) foreign ownership restrictions; (iii) foreign
exchange; (iv) securities settlement and registration; (v) taxation; and (vi)
compulsory depositories.
2. To aid the Fund in monitoring Country Risk, First Union shall furnish the
Fund with the following information: Market flashes, including with respect to
changes in the information contained in the above market reports.
3. First Union shall furnish additional information customarily provided to
other investment companies registered under the Investment Company Act of 1940
for which First Union provides foreign custody services.
4. First Union shall furnish additional information regarding Country Risks as
the Fund may reasonably request from time to time.
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