MUTUAL FUND
CUSTODY AGREEMENT
THIS AGREEMENT is made as of this 28th day of June, 1991 by and
between Xxxxx & Steers Realty Shares Inc. (the "Company"), and UNITED STATES
TRUST COMPANY OF NEW YORK, a New York corporation ("U.S. Trust").
RECITAL
WHEREAS, the Company is registered as an open-end non-diversified,
management investment company under the Investment Company Act of 1940, as
amended ("xxx 0000 Xxx"); and
WHEREAS, the Company desires to retain U.S. Trust to serve as the
Company's custodian and U.S. Trust is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints U.S. Trust to act as
custodian of the portfolio securities, cash and other property of each Fund of
the Company and any future Funds for the period and pursuant to the terms set
forth in this Agreement. U.S. Trust accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Paragraph 21 of this Agreement.
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2. Delivery of Documents. The Company has furnished U.S. Trust with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors
authorizing the appointment of U.S. Trust as Custodian of the portfolio
securities, cash and other property of each Fund of the Company and approving
this Agreement;
(b) Incumbency and signature certificates identifying and
containing the signatures of the Company's officers and/or the persons
authorized to sign Written Instructions, as hereinafter defined, on behalf of
the Company;
(c) The Company's Articles of Incorporation filed with the
State Department of Assessments & Taxation of the State of Maryland on April 26,
1991 and all amendments thereto (such Articles of Incorporation, as currently in
effect and as they shall from time to time be amended, are herein called the
"Charter");
(d) The Company's By-Laws and all amendments thereto (such
By-Laws, as currently in effect and as they shall from time to time be amended,
are herein called the "By-Laws");
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(e) Resolutions of the Company's Board of Directors appointing
the investment advisor to the portfolio of the Company (herein "the Fund") and
resolutions of the Company's Board of Directors and Initial Shareholders
approving the proposed Investment Advisory Agreement between Xxxxx & Steers
Capital Management Inc., the company's Investment Adviser (the "Adviser"), dated
as of June ___, 1991.
(f) Resolutions of the Company's Board of Directors appointing
United States Trust Co. of New York as the administrator for the Company and
approving a proposed Fund Accounting and Administration Agreement between U.S.
Trust Company of New York and the Company dated as of June __, 1991 (the
"Administration Agreement");
(g) The Advisory Agreement and the Administration Agreement;
(h) The Company's Notification of Registration filed pursuant
to Section 8(a) of the 1940 Act on Form N-8A with the Securities and Exchange
Commission ("SEC") on April 29, 1991;
(i) The Company's Registration Statement on Form N-1A under
the 1940 Act and the Securities Act of 1933, as amended ("xxx 0000 Xxx") and any
amendments thereto as filed with the SEC; and
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(j) The Company's most recent prospectus and statement of
additional information and information (such prospectus, as currently in
effect, all amendments and supplements thereto are herein called the
"Prospectus").
The Company will furnish U.S. Trust from time to time with copies of
all amendments of or supplements to the foregoing, if any, and with comparable
documents with respect to any Fund of the Company organized after the date of
this Agreement. The Company will also furnish U.S. Trust with the opinion of
counsel for the Company with respect to the validity of the Shares and the
status of such Shares under the Securities Act of 1933, filed with the S.E.C.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means the Company's President, Treasurer and any other
person, whether or not any such person is an officer or employee of the Company,
duly authorized by the Board of Directors of the Company to give Written
Instructions on behalf of the Company and listed on Attachment A which may be
amended from time to time.
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees.
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(c) "Property". The term "Property," as used in this
Agreement, means:
(i) any and all securities and other property of any
Fund which the Company may from time to time deposit, or cause to be
deposited, with U.S. Trust or which U.S. Trust may from time to time hold
for any Fund;
(ii) all income in respect of any of such securities or
other property;
(iii) all proceeds of the sale of any of such securities
or other property; and
(iv) all proceeds of the sale of securities issued by
the Company, which are received by U.S. Trust from time to time from or on
behalf of the Company.
(d) "Securities Depository". As used in this Agreement, the
term "Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Company's Board of Directors approving deposits by U.S. Trust
therein.
(e) "Written Instructions". Means instructions
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(i) instructions delivered by mail, tested telegram,
cable, telex, facsimile sending device, and received by U.S. Trust, signed
by two Authorized Persons or by persons reasonably believed by U.S. Trust
to be Authorized Persons; or
(ii) transmitted electronically through the U.S. Trust
Asset Management System or any similar electronic instruction system
acceptable to U.S. Trust.
4. Delivery and Registration of the Property. The Company will
deliver or cause to be delivered to U.S. Trust all securities and all moneys
owned by it, including cash received for the issuance of its Shares, at any time
during the period of this Agreement, except for securities and moneys to be
delivered to any subcustodian appointed pursuant to Paragraph 7 hereof. U.S.
Trust will not be responsible for such securities and such moneys until actually
received by it. All securities delivered to U.S. Trust or to any such
subcustodian (other than in bearer form) shall be registered in the name of the
Company or in the name of a nominee of the Company or in the name of U.S. Trust
or any nominee of U.S. Trust (with or without indication of fiduciary status) or
in the name of any subcustodian or any nominee of such subcustodian appointed
pursuant to Paragraph 7 hereof or shall be properly endorsed and in form for
transfer satisfactory to U.S. Trust.
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5. Voting Rights. With respect to all securities, however
registered, it is understood that the voting and other rights and powers shall
be exercised by the Company. U.S. Trust's only duty shall be to mail to the
Company any documents received, including proxy statements and offering
circulars, with any proxies for securities registered in a nominee name executed
by such nominee. Where warrants, options, tenders or other securities have fixed
expiration dates, the Company understands that in order for U.S. Trust to act,
U.S. Trust must receive the Company's instructions at its offices in New York,
addressed as U.S. Trust may from time to time request, by no later than noon
(N.Y. City time) at least one business day prior to the last scheduled date to
act with respect thereto (or such earlier date or time as U.S. Trust may notify
the Company). Absent U.S. Trust's timely receipt of such instructions, such
instruments will expire without liability to U.S. Trust. Corporate reports need
not be forwarded to the Company.
6. Receipt and Disbursement of Money.
(a) U.S. Trust shall open and maintain a separate custody
account or accounts for each Fund in the name of such Fund, subject only to
draft or order by U.S. Trust acting pursuant to the terms of this Agreement, and
shall hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the
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account of each Fund of the Company. U.S. Trust shall make payments of cash to,
or for the account of, the Company from such cash only (i) for the purchase of
securities for each of the Funds as provided in Paragraph 12 hereof; (ii) for
the redemption on Shares of each class as provided in subparagraph (b) of
Paragraph 10 hereof; (iii) upon receipt of Written Instructions, for the payment
of dividends or other distributions of Shares of each class, or for the payment
of interest, taxes, administration or advisory fees or expenses which are to be
borne by the Company or by any Fund under the terms of this Agreement, the
Advisory Agreement, the Administration Agreement; (iv) upon receipt of Written
Instructions for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Company for the Fund and
held by or to be delivered to U.S. Trust; (v) to a subcustodian pursuant to
Paragraph 7 hereof; or (vi) upon receipt of Written Instructions for other
corporate purposes.
(b) U.S. Trust is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the account of the Fund of the Company.
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7. Receipt of Securities.
(a) Except as provided by Paragraph 8 hereof, U.S. Trust shall
hold all securities and non-cash property received by it for the account of the
Fund of the Company. All such securities and non-cash property are to be held or
disposed of by U.S. Trust for the Fund of the Company pursuant to the terms of
this Agreement. In the absence of Written Instructions accompanied by a
certified resolution authorizing the specific transaction by the Company's
Board, U.S. Trust shall have no power or authority to withdraw, deliver, assign,
hypothecate, pledge or otherwise dispose of any such securities and investments,
except in accordance with the express terms provided for in this Agreement. In
no case may any director, officer, employee or agent of the Company withdraw any
securities. In connection with its duties under this Paragraph 7, U.S. Trust
may, at its own expense, enter into subcustodian agreements with other banks or
trust companies for the receipt of certain securities and cash to be held by
U.S. Trust for the account of the Fund of the Company pursuant to this
Agreement; provided that each such bank or trust company has an aggregate
capital, surplus and undivided profits, as shown by its last published report,
of not less than twenty million dollars ($20,000,000) and that such bank or
trust company agrees with U.S. Trust to comply with all relevant provisions of
the 1940 Act and applicable rules and
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regulations thereunder. U.S. Trust Co. of New York will be liable for acts or
omissions of any such Custodian.
(b) Promptly after the close of business on each day U.S.
Trust shall furnish the Company with confirmations and a summary of all
transfers to or from the account of each Fund of the Company during said day.
Where securities are transferred to an account of any Fund of the Company
established pursuant to Paragraph 8 hereof, U.S. Trust shall also by book-entry
or otherwise identify as belonging to such Fund of the Company the quantity of
securities in a fungible bulk of securities registered in the name of U.S. Trust
(or its nominee) or shown in U.S. Trust's account on the books of a Securities
Depository of the Book-Entry System. At least monthly and from time to time,
U.S. Trust shall furnish the Company with a detailed statement of the Property
held for each Fund of the Company under this Agreement.
8. Use of Securities Depository of the Book-Entry System. The
Company shall deliver to U.S. Trust a certified resolution of the Board of
Directors of the Company approving, authorizing and instructing U.S. Trust on a
continuous and ongoing basis until instructed to the contrary by Written
Instructions actually received by U.S. Trust (i) to deposit in a Securities
Depository or the Book-Entry System all securities of each Fund of the Company
eligible for deposit therein and (ii) to utilize a
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Securities Depository or the Book-Entry System to the extent possible in
connection with the performance of its duties hereunder, including without
limitation settlements of purchases and sales of securities by each Fund of the
Company, and deliveries and returns of securities collateral in connection with
borrowings. Without limiting the generality of such use, it is agreed that the
following provisions shall apply thereto:
(a) Securities and any cash of each Fund of the Company
deposited in a Securities Depository or the Book-Entry System will at all times
be segregated from any assets and cash controlled by U.S. Trust in other than a
fiduciary or custodian capacity but may be commingled with other assets held in
such capacities. U.S. Trust will effect payment for securities and receive and
deliver securities in accordance with accepted industry practices in the place
where the transaction is settled, unless Company has given U.S. Trust Written
Instructions to the contrary.
(b) All books and records maintained by U.S. Trust which
relate to each Fund of the Company's participation in a Securities Depository or
the Book-Entry System will at all times during U.S. Trust's regular business
hours be open to the inspection of the Company's duly authorized employees or
agents, and the Company will be furnished with all information in respect of the
services rendered to it as it may require.
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9. Instructions Consistent with Charter, etc. Unless otherwise
provided in this Agreement, U.S. Trust shall act only upon Written Instructions.
U.S. Trust may assume that any Written Instructions received hereunder are not
in any way inconsistent with any provision of such Charter or By-Laws or any
vote or resolution of the Company's Board of Directors, or of any committee
thereof. U.S. Trust shall be entitled to rely upon any Written Instructions
actually received by U.S. Trust pursuant to this Agreement. The Company agrees
that U.S. Trust shall incur no liability to the Company in acting upon Written
Instructions given to U.S. Trust. In accord with instructions from the Customer,
as required by accepted industry practice or as U.S. Trust may elect in
effecting the execution of Customer instructions, advances of cash or other
Property made by U.S. Trust, arising from the purchase, sale, redemption,
transfer or other disposition of Property of the Customer, or in connection with
the disbursement of funds to any party, or in payment of fees, expenses, claims
or liabilities owed to U.S. Trust by the Customer, or to any other party which
has secured judgment in a Court of Law against the Customer which creates an
overdraft in the Accounts or overdelivery of Property shall be deemed a loan by
U.S. Trust to the Customer, payable on demand, bearing interest at such rate
customarily charged by U.S. Trust for similar loans.
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The Company agrees that test arrangements, authentication methods or
other security devices to be used with respect to instructions which the Company
may give by telephone, telex, TWX, facsimile transmission, bank wire or other
teleprocess, or through an electronic instruction system, shall be processed in
accordance with terms and conditions for the use of such arrangements, methods
or devices as U.S. Trust may put into effect and modify from time to time. The
Company shall safeguard any test keys, identification codes or other security
devices which U.S. Trust makes available to the Company and agrees that the
Company shall be responsible for any loss, liability or damage incurred by U.S.
Trust or by the Company as a result of U.S. Trust's acting in accordance with
instructions from any unauthorized person using the proper security device,
provided that such person did not obtain such security device solely as a result
of U.S. Trust's negligence or willful misconduct. U.S. Trust may electronically
record, but shall not be obligated to so record, any instructions given by
telephone and any other telephone discussions with respect to the Account. In
the event that the Company uses U.S. Trust's Asset Management System or any
successor electronic communications or information system, the Company agrees
that U.S. Trust is not responsible for the consequences of the failure of that
system to perform for any reason, beyond the reasonable control of U.S. Trust,
or
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for the failure to perform for any reason, beyond the reasonable control of U.S.
Trust, of any communications carrier, utility, communications network or the
failure to perform for any reason, beyond the reasonable control of U.S. Trust,
of communications or computer equipment. In the event that system is inoperable,
the Company agrees to notify U.S. Trust immediately, and U.S. Trust agrees that
it will accept the communication of transaction instructions by telephone,
facsimile transmission on equipment compatible to U.S. Trust's facsimile
receiving equipment or by letter, at no additional charge to the Company.
10. Transactions Not Requiring Instructions. U.S. Trust is
authorized to take the following action without Written Instructions:
(a) Collection of Income and Other Payments. U.S. Trust shall:
(i) collect and receive for the account of each Fund of
the Company, all income and other payments and distributions, including
(without limitation) stock dividends, rights, warrants and similar items,
included or to be included in the Property of such Fund, and promptly
advise the Company of such receipt and shall credit such income, as
collected, to the Company's account for such Fund. From time to time, U.S.
Trust may elect to credit, but shall not be so obligated, the Accounts
with interest, dividends or
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principal payments on payable or contractual settlement date, in
anticipation of receiving same from a payor, central depository, broker or
other agent employed by the Customer or U.S. Trust. Any such crediting and
posting shall be at the Customer's sole risk, and U.S. Trust shall be
authorized to reverse any such advance posting in the event it does not
receive good funds from any such payor, central depository, broker or
agent of the Customer.
(ii) with respect to securities of foreign issue, effect
collection of dividends, interest and other income, and to notify the
Company of any call for redemption, offer of exchange, right of
subscription, reorganization, or other proceedings affecting such
securities, or any default in payments due thereon. It is understood,
however, that U.S. Trust shall be under no responsibility for any failure
or delay in effecting such collections or giving such notice with respect
to securities of foreign issue, regardless of whether or not the relevant
information is published in any financial service available to it unless
such failure or delay is due to its negligence; however, this sentence
shall not be construed as creating any such responsibility with respect to
securities of non-foreign issue, other than such responsibility as may be
part of the general respon-
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sibility of U.S. Trust. Collections of income in foreign currency are, to
the extent possible, to be converted into United States dollars unless
otherwise instructed in writing, and in effecting such conversion U.S.
Trust may use such methods or agencies as it may see fit, including the
facilities of its own foreign division at customary rates. All risk and
expenses incident to such collection and conversion is for the account of
the Company and U.S. Trust shall have no responsibility for fluctuations
in exchange rates affecting any such conversion.
(iii) endorse and deposit for collection in the name of
the Company, checks, drafts, or other orders for the payment of money on
the same day as received;
(iv) receive and hold for the account of each Fund of
the Company all securities received by the Fund as a result of a stock
dividend, share split-up or reorganization, recapitalization, readjustment
or other rearrangement or distribution of rights or similar securities
issued with respect to any portfolio securities of such Fund of the
Company held by U.S. Trust hereunder;
(v) present for payment and collect the amount payable
upon all securities which may mature or be called, redeemed or retired, or
otherwise become
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payable on the date such securities become payable;
(vi) take any action which may be necessary and proper
in connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts and other
negotiable instruments;
(vii) with respect to domestic securities, to exchange
securities in temporary form for securities in definitive form, to effect
an exchange of the shares where the par value of stock is changed, and to
surrender securities at maturity or when advised of earlier call for
redemption, against payment therefore in accordance with accepted industry
practice. The Company understands that U.S. Trust subscribes to one or
more nationally recognized services that provide information with respect
to calls for redemption of bonds or other corporate actions. U.S. Trust
shall not be liable for failure to redeem any called bond or take other
action if notice of such call or action was not provided by any service to
which it subscribes. U.S. Trust shall have no duty to notify the Company
of any rights, duties, limitations, conditions or other information set
forth in any security (including mandatory or optional put, call and
similar provisions), but U.S. Trust shall forward to the Company or the
Adviser any notices or other documents
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subsequently received in regard to any such security. When fractional
shares of stock of a declaring corporation are received as a stock
distribution, U.S. Trust is authorized to sell the fraction received and
credit the Company's account. Unless specifically instructed to the
contrary in writing, U.S. Trust is authorized to exchange securities in
bearer form for securities in registered form. If any Property registered
in the name of a nominee of U.S. Trust or in the nominee of any entity
employed by U.S. Trust is called for partial redemption by the issuer of
such Property, U.S. Trust is authorized to allot the called portion to the
respective beneficial holders of the Property in such manner deemed to be
fair and equitable by U.S. Trust in its sole discretion.
(b) Miscellaneous Transactions. U.S. Trust is authorized to
deliver or cause to be delivered Property against payment or other consideration
or written receipt therefor in the following cases:
(i) for examination by a broker selling for the account
of any Fund of the Company in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary
securities for definitive securities;
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(iii) for transfer of securities into the name of the
Company or U.S. Trust or a nominee of either, or for exchange of
securities for a different number of bonds, certificates, or other
evidence, representing the same aggregate face amount or number of units
bearing the same interest rate, maturity date and call provisions, if any;
provided that, in any such case, the new securities are to be delivered to
U.S. Trust.
11. Transactions Requiring Instructions. Upon receipt of Written
Instructions and not otherwise, U.S. Trust, directly or through the use of a
Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated
in such Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Company as owner of any securities may
be exercised;
(b) Deliver any securities held for the Company against
receipt of other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) Deliver any securities held for the Company to any
protective committee, reorganization com-
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mittee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
against receipt of such certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the
Company and take such other steps as shall be stated in said instructions to be
for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Company;
(e) Release securities belonging to the Company to any bank or
trust company for the purpose of pledge or hypothecation to secure any loan
incurred by the Company; provided, however, that securities shall be released
only upon payment to U.S. Trust of the monies borrowed, except that in cases
where additional collateral is required to secure a borrowing already made,
subject to proper prior authorization, further securities may be released for
that purpose; and pay such loan upon redelivery to it of the securities pledged
or hypothecated therefor and upon surrender of the note or notes evidencing the
loan.
12. Purchase of Securities. Promptly after each purchase of
securities by the Adviser, the Company shall deliver to U.S. Trust (as
Custodian) Written Instructions
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specifying with respect to each such purchase: (a) the name of the issuer and
the title of the securities, (b) the number of shares or the principal amount
purchased and accrued interest, if any, (c) the dates of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, (f) the name of the person from whom or the broker through whom
the purchase was made and (g) the Fund of the Company for which the purchase was
made. U.S. Trust shall upon receipt of securities purchased by or for a Fund of
the Company pay out of the moneys held for the account of such Fund of the
Company the total amount payable to the person from whom or the broker through
whom the purchase was made, provided that the same conforms to the total amount
payable as set forth in such Written Instructions.
13. Sales of Securities. Promptly after each sale of securities by
the Adviser, the Company shall deliver to U.S. Trust (as Custodian) Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Company upon such sale, (f)
the name of the broker through whom or the person to whom the sale was made and
(g) the Fund of the Company for which the sale was made. U.S. Trust shall
deliver the securities
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upon receipt of the total amount payable to the Company upon such sale, provided
that the same conforms to the total amount payable as set forth in such Written
Instructions. Subject to the foregoing, U.S. Trust may accept payment in such
form as shall be satisfactory to it, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in securities.
14. Authorized Shares.
The Company has a fixed number of shares of each class of its
securities.
15. Records.
The books and records pertaining to the Company which are in the
possession of U.S. Trust shall be the property of the Company. Such books and
records shall be prepared and maintained as required by the 1940 Act, as
amended, and other applicable securities laws and rules and regulations. The
Company, or the Company's authorized representatives, shall have access to such
books and records at all times during U.S. Trust's normal business hours, and
such books and records shall be surrendered to the Company promptly upon
request. Upon the reasonable request of the Company, copies of any such books
and records shall be provided by U.S. Trust to the Company or the Company's
authorized representative at the Company's expense.
16. Cooperation with Accountants. U.S. Trust shall cooperate with
the Company's independent certified public accountants and shall take all
reasonable action in
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the performance of its obligations under this Agreement to assure that the
necessary information is made available to such accountants for the expression
of their unqualified opinion, including but not limited to the opinion included
in the Company's semi-annual report on Form N-SAR.
17. Confidentiality. U.S. Trust agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Company all records and other information relative to the Company and its prior,
present or potential Shareholders and relative to the advisors and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company, which
approval shall not be unreasonably withheld and may not be withheld where U.S.
Trust may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Company. Nothing contained herein,
however, shall prohibit U.S. Trust from advertising or soliciting the public
generally with respect to other products or services, regardless of whether such
advertisement or solicitation may include prior, present or potential
Shareholders of the Company.
18. Equipment Failures. In the event of equipment failures beyond
U.S. Trust's control, U.S. Trust shall,
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at no additional expense to the Company, take reasonable steps to minimize
service interruptions but shall have no liability with respect thereto. U.S.
Trust shall enter into and shall maintain in effect with appropriate parties one
or more agreements making reasonable provision for emergency use of electronic
data processing equipment to the extent appropriate equipment is available.
19. Right to Receive Advice.
(a) Advice of Company. If U.S. Trust shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall receive, from
the Company directions or advice.
(b) Advice of Counsel. If U.S. Trust shall be in doubt as to
any question of law involved in any action to be taken or omitted by U.S. Trust,
it may request advice at its own cost from counsel of its own choosing (who may
be counsel for the Company or U.S. Trust, at the option of U.S. Trust).
(c) Conflicting Advice. In case of conflict between directions
or advice received by U.S. Trust pursuant to subparagraph (a) of this paragraph
and advice received by U.S. Trust pursuant to subparagraph (b) of this
paragraph, U.S. Trust shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
(d) Protection of U.S. Trust. U.S. Trust shall be protected in
any action or inaction which it takes
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or omits to take in reliance on any directions or advice received pursuant to
subparagraphs (a) or (b) of this paragraph which U.S. Trust, after receipt of
any such directions or advice, in good faith believes to be consistent with such
directions or advice. However, nothing in this paragraph shall be construed as
imposing upon U.S. Trust any obligation (i) to seek such directions or advice,
or (ii) to act in accordance with such directions or advice when received,
unless, under the terms of another provision of this Agreement, the same is a
condition to U.S. Trust's properly taking or omitting to take such action.
Nothing in this subparagraph shall excuse U.S. Trust when an action or omission
on the part of U.S. Trust constitutes willful misfeasance, bad faith, negligence
or reckless disregard by U.S. Trust of its duties under this Agreement.
20. Compliance with Governmental Rules and Regulations. The Company
assumes full responsibility for insuring that the contents of each Prospectus of
the Company complies with all applicable requirements of the 1933 Act, the 1940
Act, and any laws, rules and regulations of governmental authorities having
jurisdiction.
21. Compensation. As compensation for the services rendered by U.S.
Trust during the term of this Agreement, the Company will pay to U.S. Trust, in
addition to reimbursement of its out-of-pocket expenses, monthly fees as
outlined in Attachment B.
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22. Indemnification. The Company, as sole owner of the Property,
agrees to indemnify and hold harmless U.S. Trust and its nominees from all
taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the 1933 Act, the Securities
Exchange Act of 1934, the 1940 Act, and any state and foreign securities and
blue sky laws, all as or to be amended from time to time) and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly (a) from the fact that securities included in the
Property are registered in the name of any such nominee or (b) without limiting
the generality of the foregoing clause (a) from any action or thing which U.S.
Trust takes or does or omits to take or do (i) at the request or on the
direction of or in reliance on the advice of the Company, or (ii) upon Written
Instructions, provided, that neither U.S. Trust nor any of its nominees shall be
indemnified against any liability to the Company or to its Shareholders (or any
expenses incident to such liability) arising out of (x) U.S. Trust's or such
nominee's own willful misfeasance, bad faith, gross negligence or reckless
disregard of its duties under this Agreement or (y) U.S. Trust's own negligent
failure to perform its duties under this Agreement. In the event of any advance
of cash for any purpose made by U.S. Trust resulting from orders or Written
Instructions of the Company, or in the event that U.S. Trust
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or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's own negligent
action, negligent failure to act, willful misconduct, or reckless disregard.
23. Responsibility of U.S. Trust. U.S. Trust shall be under no duty
to take any action on behalf of the Company except as specifically set forth
herein or as may be specifically agreed to by U.S. Trust in writing. In the
performance of its duties hereunder, U.S. Trust shall be obligated to exercise
care and diligence and to act in good faith and to use its best efforts within
reasonable limits to insure the accuracy of all services performed under this
Agreement. U.S. Trust shall be responsible for its own negligent failure to
perform its duties under this Agreement but to the extent that duties,
obligations and responsibilities are not expressly set forth in this Agreement,
U.S. Trust shall not be liable for any act or omission which does not constitute
willful misfeasance, bad faith or negligence on the part of U.S. Trust or
reckless disregard of such duties, obligations and responsibilities. Without
limiting the generality of the foregoing or of any other provision of this
Agreement, U.S. Trust in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall not be liable for
or in
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respect of (a) the validity or invalidity or authority or lack thereof of any
advice, direction, notice or other instrument which conforms to the applicable
requirements of this Agreement, if any, and which U.S. Trust believes to be
genuine, (b) the validity of the issue of any securities purchased or sold by
any Fund of the Company, the legality of the purchase or sale thereof or the
propriety of the amount paid or received therefor, (c) the legality of the issue
or sale of any Shares, or the sufficiency of the amount to be received therefor,
(d) the legality of the redemption of any Shares, or the propriety of the amount
to be paid therefor, (e) the legality of the declaration or payment of any
dividend or distribution on Shares, or (f) delays or errors or loss of data
occurring by reason of circumstances beyond U.S. Trust's control, including acts
of civil or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown (except as provided in Paragraph 18), flood or catastrophe,
acts of God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
24. Collections. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by U.S. Trust) shall be at the sole risk of the Company. In
any case in which U.S. Trust does not receive any payment due the Company within
a reasonable time after U.S. Trust
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has made proper demands for the same, it shall so notify the Company in writing,
including copies of all demand letters, any written responses thereto, and
memoranda of all oral responses thereto and to telephonic demands, and await
instructions from the Company. U.S. Trust shall not be obliged to take legal
action for collection unless and until reasonably indemnified to its
satisfaction. U.S. Trust shall also notify the Company as soon as reasonably
practicable whenever income due on securities is not collected in due course.
25. Duration and Termination. This Agreement shall be effective as
of the date hereof and shall continue until termination by the Company or by
U.S. Trust on 60 day's written notice. Upon any termination of this Agreement,
pending appointment of a successor to U.S. Trust or a vote of the Shareholders
of the Company to dissolve or to function without a custodian of its cash,
securities or other property, U.S. Trust shall not deliver cash, securities or
other property of the Company to the Company, but may deliver them to a bank or
trust company of its own selection, having an aggregate capital, surplus and
undivided profits, as shown by its last published report of not less that twenty
million dollars ($20,000,000) as a custodian for the Company to be held under
terms similar to those of this Agreement, provided, however, that U.S. Trust
shall not be required to make any such delivery or payment
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until full payment shall have been made by the Company of all liabilities
constituting a charge on or against the properties then held by U.S. Trust or on
or against U.S. Trust and until full payment shall have been made to U.S. Trust
of all of its fees, compensation, costs and expenses, subject to the provisions
of Paragraph 21 of this Agreement.
26. Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall be in
writing or by confirming telegram, cable, telex or facsimile sending device.
Notices shall be addressed (a) if to U.S. Trust, at U.S. Trust's address, 00
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; (b) if to the Company, at the address of
the Company; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication. If the location of the sender of a Notice and the address of the
addressee thereof are, at the time of sending, more than 100 miles apart, the
Notice may be sent by first-class mail, in which case it shall be deemed to have
been given three days after it is sent, or if sent by confirming telegram,
cable, telex or facsimile sending device, it shall be deemed to have been given
immediately, and, if the location of the sender of a Notice and the address of
the addressee thereof are, at the time of sending, not more than 100 miles
apart, the Notice may be sent by first-class mail, in which case it shall be
deemed
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to have been given two days after it is sent, or if sent by messenger, it shall
be deemed to have been given on the day it is delivered, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately. All postage, cable, telegram, telex and
facsimile sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
27. Further Actions. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
28. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
29. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. Appendix A hereto is
incorporated into and constitutes an integral part of this Agreement. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a contract made in
New York and governed by New York law. If any provision of this Agreement shall
be
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held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
above written.
[SEAL]
Attest: By
--------------------------- -------------------------------------
[SEAL] UNITED STATES TRUST COMPANY
OF NEW YORK
Attest: By
--------------------------- -------------------------------------
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