AMENDMENT TO CUSTODY AGREEMENT
AMENDMENT, dated as of , 2005, to the Custody Agreement
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dated , ("Agreement"), by and between UMB Bank, n. a.
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("Custodian"), having a place of business at 000 Xxxxx Xxxx., 0xx Xxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000 and each of the registered investment companies (on behalf
of any series thereof, if applicable) listed on Appendix B to the Agreement,
together with such additional companies as shall be made parties to the
Agreement by the execution of a revised Appendix B to the Agreement (such
companies, and any series thereof, are referred to individually as a "Fund" and,
collectively, as the "Funds").
WHEREAS, each Fund and the Custodian have previously entered into the
Agreement pursuant to which the Custodian provides custody and related services
to each Fund, including the use of foreign subcustodians and depositories,
subject to the terms and conditions set forth therein;
WHEREAS, the U.S. Securities and Exchange Commission ("SEC") adopted Rule
17f-7 under the Investment Company Act of 1940, as amended (the "1940 Act")
concerning arrangements for foreign securities depositories;
WHEREAS, pursuant to the provisions of Rule 17f-7(a)(1), the Custodian has
agreed to assume, subject to the terms and conditions set forth herein, certain
analysis and monitoring functions related to foreign securities depositories;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, each Fund and the Custodian agree as follows. Capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Agreement. All references hereunder to the 1940 Act and to the rules and
regulations thereunder shall be deemed to be a reference to such Act and its
rules and regulations as they may be amended from time to time.
1. The Agreement is amended by deleting the first paragraph under the heading
"Section 5. "SUBCUSTODIANS" and inserting the following amended paragraph in its
place:
From time to time, in accordance with the relevant provisions of this
Agreement, (i) the Custodian may appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians or Interim
Subcustodians (each as hereinafter defined) to act on behalf of any one or
more Funds; and (ii) the Custodian may be directed, pursuant to an
agreement between a Fund and the Custodian ("Delegation Agreement"), to
appoint a Domestic Subcustodian to perform the duties of the Foreign
Custody Manager (as such term is defined in Rule 17f-5 under the 1940 Act)
("Approved Foreign Custody Manager") for such Fund so long as such Domestic
Subcustodian is so eligible under the 1940 Act. Such Delegation Agreement
shall provide that the appointment of any Domestic Subcustodian as the
Approved Foreign Custody Manager must be governed by a written agreement
between the Custodian and the Domestic Subcustodian, which provides for
compliance with Rule 17f-5. The Approved Foreign Custody Manager may
appoint a Foreign Subcustodian or Interim Subcustodian in accordance with
this Section 5. For purposes of this Agreement, all Domestic
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Subcustodians, Special Subcustodians, Foreign Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians."
2. The Agreement is further amended by deleting the last sentence of Subsection
5(a) in its entirety and inserting the following revised sentence in its place:
Each such duly approved Domestic Subcustodian and the countries where
Foreign Subcustodians through which they may hold securities and other
Assets of a Fund shall be as agreed upon by the parties hereto in writing,
from time to time, and shall be reflected on Appendix A hereto.
3. The Agreement is further amended by deleting the paragraphs in Subsections
5(b) and 5(c) in their entirety and inserting the following amended Subsection
5(b) in their place:
(b) Foreign Subcustodians
(1) Foreign Subcustodians. The Approved Foreign Custody Manager may appoint
any entity meeting the requirements of an Eligible Foreign Custodian, as
such term is defined in Rule 17f-5(a)(1) under the 1940 Act, and which term
shall also include a bank that qualifies to serve as a custodian of assets
of investment companies under Section 17(f) of the 1940 Act or by SEC order
is exempt therefrom (each a "Foreign Subcustodian" in the context of either
a subcustodian or a sub-subcustodian), provided that the Approved Foreign
Custody Manager's appointments of such Foreign Subcustodians shall at all
times be governed by an agreement that complies with Rule 17f-5.
(2) Interim Subcustodians. Notwithstanding the foregoing, in the event that
a Fund shall invest in a security or other Asset to be held in a country in
which the Approved Foreign Custody Manager has not appointed a Foreign
Subcustodian or for which the Fund has otherwise directed that a specific
Foreign Subcustodian be used, the Custodian shall, or shall cause the
Approved Foreign Custody Manager to, promptly notify the Fund in writing by
facsimile transmission or in such other manner as the Fund and Custodian
shall agree in writing of the unavailability of an approved Foreign
Subcustodian in such country; and upon the receipt of Special Instructions,
the Custodian shall, or shall cause the Approved Foreign Custody Manager
to, appoint or approve any Person (as hereinafter defined) designated by
the Fund in such Special Instructions, to hold such security or other
Asset. The subcustodian agreement between the Custodian and the Interim
Subcustodian shall comply with the provisions of the 1940 Act and the rules
and regulations thereunder (including Rule 17f-5, if applicable) and the
terms and provisions of this Agreement. The Custodian shall comply with
Section 5(b)(1) hereof with respect to the appointment of an Interim
Subcustodian. (Any Person appointed or approved as either a subcustodian or
sub-subcustodian pursuant to this Section 5(b)(2) is herein referred to as
an "Interim Subcustodian.")
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(3) In the event that the Approved Foreign Custody Manager or its delegate
reasonably determines that such Person will not provide delegation services
(i) in a country in which a Fund has directed that the Fund shall invest in
a security or other Asset or (ii) with respect to a specific Foreign
Subcustodian which the Fund has directed be used, the Approved Foreign
Custody Manager or the Custodian (or the Domestic Subcustodian), as
applicable, shall be entitled to rely on any such instruction provided
pursuant to Section 5(b)(2) as a Special Instruction and shall have no
duties or liabilities under this Agreement with respect to such arrangement
save those that it may undertake specifically in writing with respect to
each particular instance; provided that the Delegation Agreement and this
Agreement shall not constitute the Approved Foreign Custody Manager or the
Custodian (or the Domestic Subcustodian), as the exclusive delegate of the
Fund for purposes of Rule 17f-5 and, particularly where such Person does
not agree to provide fully the services under this Agreement and the
Delegation Agreement to the Fund with respect to a particular country or
specific Foreign Subcustodian, the Fund may delegate such services to
another delegate pursuant to Rule 17f-5.
4. The Agreement is further amended by renumbering Subsections 5(d) and 5(e) as
5(c) and 5(d), respectively.
5. The Agreement is further amended by deleting the paragraph in Subsection
5(f), renumbering the Subsection as Subsection 5(e) and inserting the following
amended paragraph in its place:
(e) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver, or cause any Approved
Foreign Custody Manager to deliver, to the Fund a certificate stating: (i)
the identity of each Foreign Subcustodian then acting on behalf of the
Custodian; (ii) the countries in which the Eligible Securities Depositories
(as defined in Section 5(f)) through which each Foreign Subcustodian is
then holding cash, securities and other Assets of the Fund; and (iii) such
other information as may be requested by the Fund to ensure compliance with
rules and regulations under the 1940 Act.
6. The Agreement is further amended by inserting the following new Subsection
5(f) after the new renumbered Subsection 5(e):
(f) Securities Depositories.
(1) The Custodian (or the Domestic Subcustodian) may place and maintain a
Fund's Foreign Assets (as defined in Rule 17f-5 under the 0000 Xxx) with an
Eligible Securities Depository (as defined in Rule 17f-7, which term shall
include any other securities depository for which the SEC by exemptive
order has permitted registered investment companies to maintain their
assets).
(2) The Custodian (or the Domestic Subcustodian) shall, for evaluation by
the Fund or its adviser, provide an analysis of the custody risks
associated with maintaining the Fund's Foreign Assets with each Eligible
Securities Depository utilized directly or indirectly by the Custodian as
of the date hereof (or, in the case
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of an Eligible Securities Depository not so utilized as of the date hereof,
prior to the initial placement of the Fund's Foreign Assets at such
depository) and at which any Foreign Assets of the Fund are held or are
expected to be held. The Custodian (or the Domestic Subcustodian) shall
monitor the custody risks associated with maintaining the Fund's Foreign
Assets at each such Eligible Securities Depository on a continuing basis
and shall promptly notify the Fund or its adviser of any material changes
in such risks.
(3) Based on the information available to it in the exercise of diligence,
the Custodian (or the Domestic Subcustodian) shall determine the
eligibility under Rule 17f-7 of each foreign securities depository before
maintaining the Fund's Foreign Assets therewith and shall promptly advise
the Fund if any Eligible Securities Depository ceases to be so eligible.
Notwithstanding Subsection 16(c) hereof, Eligible Securities Depositories
may, subject to Rule 17f-7, be added or deleted from time to time.
(4) Withdrawal of Assets. If an arrangement with an Eligible Securities
Depository no longer meets the requirements of Rule 17f-7, the Custodian
(or the Domestic Subcustodian) will withdraw the Fund's Foreign Assets from
such depository as soon as reasonably practicable.
(5) Standard of Care. In fulfilling its responsibilities under this Section
5(f), the Custodian will exercise reasonable care, prudence and diligence.
7. The Agreement is further amended by inserting the following new Subsection
5(g) after the new Section 5(f):
(g) Limitations on Placement of Foreign Assets.
A Fund shall not place or maintain any of the Fund's Foreign Assets in any
country, and shall as promptly as practicable withdraw the Fund's Foreign
Assets from any country, that is identified in the Global Custody Network
Listing provided by the Custodian (or the Domestic Subcustodian) as a
country where the liability or responsibility of the Approved Foreign
Custody Manager or the Custodian (or the Domestic Subcustodian) is
conditioned or predicated on the ability of the Approved Foreign Custody
Manager or the Custodian (or the Domestic Subcustodian) to recover damages
from the Foreign Subcustodian in such country.
8. The Agreement is further amended by deleting Subsection 6(b) in its entirety
and inserting the following amended Subsection 6(b) in its place:
(b) Actions Prohibited by Applicable Law, Etc.
In no event shall the Custodian incur liability hereunder if the Custodian
or any Subcustodian or Securities System, or any Subcustodian, Eligible
Securities Depository utilized by any such Subcustodian, or any nominee of
the Custodian or any Subcustodian (individually, a "Person") is prevented,
forbidden or delayed
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from performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed, by reason of: (i)
any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or of any foreign country,
or political subdivision thereof or of any court of competent jurisdiction
(and the Custodian nor any other Person shall not be obligated to take any
action contrary thereto); or (ii) any "Force Majeure," which for purposes
of this Agreement, 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, unless in each case, such delay or
nonperformance is caused by the negligence, misfeasance or misconduct of
the Custodian. Such Force Majeure events may include any event caused by,
arising out of or involving (a) an act of God, (b) accident, fire, water
damage or explosion, (c) any computer, system or other equipment failure or
malfunction caused by any computer virus or the malfunction or failure of
any communications medium, (d) any interruption of the power supply or
other utility service, (e) any strike or other work stoppage, whether
partial or total, (f) any delay or disruption resulting from or reflecting
the occurrence of any Sovereign Risk (as defined below), (g) any disruption
of, or suspension of trading in, the securities, commodities or foreign
exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not resulting
from or reflecting the occurrence of any Sovereign Risk, or (i) any other
cause similarly beyond the reasonable control of the Custodian.
Subject to the Custodian's general standard of care set forth in Subsection
6(a) hereof and the requirements of Section 17(f) of the 1940 Act and Rules
17f-5 and 17f-7 thereunder, the Custodian shall not incur liability
hereunder if any Person is prevented, forbidden or delayed from performing,
or omits to perform, any act or thing which this Agreement provides shall
be performed or omitted to be performed by reason of any (i) "Sovereign
Risk," which for the purpose of this Agreement shall mean, in respect of
any jurisdiction, including the United States of America, where investments
are acquired or held under this 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 that is not directly related to the
economic or financial conditions of the Eligible Foreign Custodian, except
as otherwise provided in this Agreement or the Delegation Agreement, or
(ii) "Country Risk," which for the purpose of this Agreement shall mean,
with respect to the acquisition, ownership, settlement or custody of
investments in a
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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 except
for crime or corruption by the Eligible Foreign Custodian, or its
employees, directors or officers for which the liability of the Custodian
(or the Domestic Subcustodian) or the Approved Foreign Custody Manager is
not predicated upon recovery of such damages from the Subcustodian as set
forth in the Global Custody Network Listing, (b) the inaccuracy or
unreliability of business and financial information (unrelated to the
Approved Foreign Custody Manager's duties imposed by Rule 17f-5(c) under
the 1940 Act or to the duties imposed on the Custodian by Rule 17f-7 under
the 1940 Act), (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 held, (e) the acts, omissions and
operation of any Eligible Securities Depository, it being understood that
this provision shall not excuse the Custodian's performance under the
express terms of this Agreement and its liability therefor, (f) the risk of
the bankruptcy or insolvency of banking agents, counterparties to cash and
securities transactions, registrars or transfer agents, (g) the existence
of market conditions which prevent the orderly execution or settlement of
transactions or which affect the value of assets, and (h) the laws relating
to the safekeeping and recovery of a Fund's Foreign Assets held in custody
pursuant to the terms of this Agreement; provided, however, that, in
compliance with Rule 17f-5, neither Sovereign Risk nor Country Risk shall
include the custody risk of a particular Eligible Foreign Custodian of a
Fund's Foreign Assets.
9. The Agreement is further amended by deleting Subsection 16(i) in its entirety
and inserting the following amended Subsection 16(i) in its place:
(i) Entire Agreement. This Agreement and the Delegation Agreement, as
amended from time to time, constitute the entire understanding and
agreement of the parties thereto with respect to the subject matter therein
and accordingly, supercedes as of the effective date of this Agreement any
custodian agreement heretofore in effect between the Funds and the
Custodian.
10. All references throughout the Agreement to "Securities Depository or
Clearing Agency" are hereby changed to "Eligible Securities Depository." In
Subsection 16(g) relating to defined terms, the reference to Section 5(b)(ii)
for the definition of "Securities Depositories and Clearing Agencies" (which has
been changed to "Eligible Securities Depository" is changed to Section 5(f). In
addition, the list of defined terms is amended to include "Approved Foreign
Custody Manager" with a reference to Section 5, "Force Majeure" with a reference
to Section 6(b), "Country Risk" with a reference to Section 6(b), and "Foreign
Assets" with a reference to Section 5(f).
11. Except as modified hereby, the Agreement is confirmed in all respects.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
UMB Bank, n.a.
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By By
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Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President Title: Senior Vice President
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APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
Citibank (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
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Euroclear
THE OBERWEIS FUNDS UMB BANK, N.A.
By: By:
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Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President Title: Senior Vice President
Date: Date:
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APPENDIX B
CUSTODY AGREEMENT
The following open-end management investment companies ("Funds") are hereby
made parties to the Custody Agreement dated January 17, 2001, with UMB Bank,
n.a. ("Custodian") and The Oberweis Funds, and agree to be bound by all the
terms and conditions contained in said Agreement:
Oberweis Emerging Growth Fund
Oberweis Micro-Cap Fund
Oberweis Mid-Cap Fund
Oberweis China Opportunities Fund
THE OBERWEIS FUNDS
Attest: By:
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Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
Date:
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UMB BANK, N.A.
Attest: By:
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Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
Date:
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