AMENDMENT TO THE CUSTODIAN AGREEMENT
AMENDMENT entered into as of this 145h day of May, 1999 to the Custodian
Agreement between U.S. GLOBAL ACCOLADE FUNDS on behalf of each of the portfolios
listed on Appendix C hereto as the same may be amended from time to time (each a
"Fund" and collectively the "Funds") and XXXXX BROTHERS XXXXXXXX & CO. (the
"Custodian") dated as of November 1, 1997 (the "Agreement").
In consideration of the Custodian's offering subcustodial services to the
Fund in Russia, the Fund and the Custodian agree that the Agreement is hereby
amended as follows:
1. SECTION 4. SECURITIES ACCOUNT is amended by the addition of the
following phrase at the end of said Section:
"provided, however, that the Custodian's responsibility for
safekeeping equity securities of Russian issuers ("Russian Equities")
hereunder shall be limited to the safekeeping of relevant share
extracts from the share registration books maintained by the entities
providing share registration services to issuers of Russian Equities
(each a "Registrar") indicating an investor's ownership of such
securities (each a "Share Extract")."
2. SECTION 4.1 (b) SECURITIES REPRESENTED BY BOOK-ENTRY, is amended by the
addition of the following at the end of said Section:
"However, with respect to Russian Equities, the Custodian shall
instruct a Subcustodian to endeavor to assure that registration
thereof shall be reflected on the books of the issuer's Registrar,
subject to the following conditions, but shall in no event be liable
for losses or costs incurred as a result of delays or failures in the
registration process, including without limitation the inability to
obtain or enforce relevant Share Extracts. Such registration may be in
the name of a nominee of a Subcustodian. In the event registration is
in the name of a Fund, such Fund hereby acknowledges that only the
Custodian or Subcustodian may give instructions to the Registrar to
transfer or engage in other transactions involving the Russian
Equities so registered.
A Subcustodian may from time to time enter into contracts with
Registrars with respect to the registration of Russian Equities
("Registrar Contracts"). Such Registrar Contracts may provide for (i)
regular share confirmations by the Subcustodian, (ii) reregistrations
within set timeframes, (iii) use of a Subcustodian's nominee name,
(iv) direct access by auditors of the Subcustodian or its clients to
share registers, and (v) specification of the Registrar's
responsibilities and liabilities. It is hereby acknowledged and agreed
that the Custodian does not represent or warrant that such Registrar
Contracts are enforceable.
If the Fund instructs the Custodian to settle a purchase of a
Russian Equity, the Custodian will instruct a Subcustodian to endeavor
on a best efforts basis to reregister the Russian Equity and obtain a
Share Extract in a timely manner.
After completion of reregistration of a Russian Equity in respect
of which a Subcustodian has entered into a Registrar Contract, the
Custodian shall instruct the Subcustodian to monitor such registrar on
a best efforts basis and to notify the Custodian upon the
Subcustodian's obtaining knowledge of the occurrence of any of the
following events ("Registrar Events"): (i) a Registrar has eliminated
a shareholder from the register or has altered registration records;
(ii) a Registrar has refused to register securities in the name of a
particular purchaser and the purchaser or seller has alleged that the
registrar's refusal to so register was unlawful; (iii) a Registrar
holds for its own account shares of an issuer for which it serves as
registrar; (iv) if a Registrar Contract is in effect with a Registrar,
the Registrar notifies the Subcustodian that it will no longer be able
materially to comply with the terms of the Registrar Contract; or (v)
if a Registrar Contract is in effect with a Registrar, the Registrar
has materially breached such Contract. The Custodian shall inform the
Funds of the occurrence of a Registrar Event provided the Custodian
has in fact received actual notice thereof from the Subcustodian.
It shall be the sole responsibility of the Fund to contact the
Custodian prior to executing any transaction in a Russian Equity to
determine whether a Registrar Contract exists in respect of such
issuer.
If a Fund instructs the Custodian by Proper Instruction to settle
a purchase of a Russian Equity in respect of which the Subcustodian
has not entered into a Registrar Contract, then the Custodian shall
instruct the Subcustodian to endeavor to settle such transaction in
accordance with the Proper Instruction and with the provisions of
Section 4.2 (a) of this Agreement, notwithstanding the absence of any
such Registrar Contract and without the Custodian being required to
notify the Fund that no such Registrar Contract is then in effect, and
it being understood that neither the Custodian nor the Subcustodian
shall be required to follow the procedure set forth in the second
preceding paragraph."
3. SECTION 4.2 (a) PURCHASES, is amended by the addition of the following
at the end of said Section:
"Without limiting the generality of the foregoing, the following
provisions shall apply with respect to settlement of purchases of
securities in Russia. Unless otherwise instructed by Proper
Instructions acceptable to the Custodian, the Custodian shall only
authorize a Subcustodian to make payment for purchases of Russian
Equities upon receipt of the relevant Share Extract in respect of the
Fund's purchases. With respect to securities other than Russian
Equities, settlement of purchases shall be made in accordance with
securities processing or settlement practices which the Custodian in
its discretion determines to be market practice. The Custodian shall
only be responsible for securities purchased upon actual receipt of
such securities at the premises of its Subcustodian, provided that the
Custodian's responsibility for securities represented by Share
Extracts shall be limited to the safekeeping of the relevant Share
Extract upon actual receipt of such Share Extract at the premises of
the Subcustodian."
4. SECTION 4.2 (B) SALES, is amended by the addition of the following at
the end of said Section:
"Without limiting the generality of the foregoing, the following
provisions shall apply with respect to settlement of sales of
securities in Russia. Unless otherwise expressly instructed by Proper
Instructions acceptable to the Custodian, settlement of sales of
securities shall be made in accordance with securities processing or
settlement practices which the Custodian in its discretion determines
to be market practice. The Fund hereby expressly acknowledges that
such market practice might require delivery of securities prior to
receipt of payment and that the Fund bears the risk of payment in
instances where delivery of securities is made prior to receipt of
payment therefor in accordance with Proper Instructions received by
the Custodian or pursuant to the Custodian's determination in its
discretion that such delivery is in accordance with market practice.
The Custodian shall not be responsible for any securities delivered
from the premises of the Subcustodian from the time they leave such
premises."
5. SECTION 7 AUTHORITY TO APPOINT SUBCUSTODIANS AND AGENTS AND TO UTILIZE
SECURITIES DEPOSITORIES is amended by the addition of the following at the end
of the first paragraph of Section 7:
"With respect to Russia, the Fund hereby expressly acknowledges
that a Subcustodian for Russian securities may from time to time
delegate any of its duties and responsibilities to any securities
depository, clearing agency, share registration agent or
sub-subcustodian (collectively, "Russian Agent") in Russia, including
without limitation Rosvneshtorgbank (also called Vneshtorgbank RF)
("VTB") and Moscow Interbank Currency Exchange ("MICEX"). The Fund
acknowledges that the rights of the Subcustodian against any such
Russian Agent may consist only of a contractual claim against the
Russian Agent.
Notwithstanding any provision of this Agreement to the contrary,
neither the Custodian nor the Subcustodian shall be responsible or
liable to the Fund or its shareholders for the acts or omissions of
any such Russian Agent. In the event of a loss of securities or cash
held on behalf of the Fund through any Russian Agent, the Custodian
shall not be responsible to the Fund or its shareholders unless and to
the extent it in fact recovers from the Subcustodian."
6. SECTION 10.2 LIABILITY OF THE CUSTODIAN WITH RESPECT TO PROPER
INSTRUCTIONS; EVIDENCE OF AUTHORITY; ETC. is amended by the insertion of the
following at the end of the first paragraph of said Section:
"It is also agreed that the Fund shall be responsible for
preparation and filing of tax returns, reports and other documents on
any activities it undertakes in Russia which are to be filed with any
relevant governmental or other authority and for the payment of any
taxes, levies, duties or similar liability the Fund incurs in respect
of property held or sold in Russia or of payments or distributions
received in respect thereof in Russia. Accordingly, the Fund hereby
agrees to indemnify and hold harmless the Custodian from any loss,
cost or expense resulting from the imposition or assessment of any
such tax, duty, levy or liability or any expenses related thereto."
7. A new SECTION 15, RISK DISCLOSURE ACKNOWLEDGMENT, is added at the end of
the present Section 14.11:
"The Fund hereby acknowledges that it has received, has read and
has understood the Custodian's Risk Disclosure Statement, a copy of
which is attached hereto and is incorporated herein by reference. The
Fund further acknowledges that the Risk Disclosure Statement is not
comprehensive, and warrants and represents to the Custodian that it
has undertaken its own review of the risks associated with investment
in Russia and has concluded that such investment is appropriate for
the Fund and in no way conflicts with the Fund's constitutive
documents, investment objective, duties to its shareholders or with
any regulatory requirements applicable to the Fund."
Except as amended above, all the provisions of the Agreement as heretofore
in effect shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
U.S. GLOBAL ACCOLADE FUNDS XXXXX BROTHERS XXXXXXXX & CO.
/s/ Xxxxx X. XxXxx /s/ W. Xxxxx Xxxxxx
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Name: Xxxxx X. XxXxx Name: W. Xxxxx Xxxxxx
Title: Vice President, Secretary Title: Manager
