Contract
(FOREIGN
AND DOMESTIC SECURITIES)
This
Custodian Agreement is made by and between The
Xxxxxx Managed Equity Trust and The Xxxxxx Managed Income Trust
(collectively “Trusts” or “Principal”) management investment companies
registered under the Act with separate portfolios listed in Appendix A (each a
“Fund”) each acting on its own behalf separately from all other Funds and not
jointly or jointly and severally with any other Fund, and UNION BANK, N.A.
(“Custodian”). Principal desires that Custodian hold and administer on behalf of
Principal certain Securities (as herein defined) with respect to each
Fund. Custodian is willing to do so on the terms and conditions set
forth in this Agreement. Accordingly, Principal and Custodian agree as
follows:
1. Definitions. Certain terms used in this
Agreement are defined as follows:
1.1 “Account”
means, collectively, each account maintained by Custodian pursuant to Paragraph
3 of this Agreement.
1.2 “Act”
means the Investment Company Act of 1940, as amended, and the rules and
regulations adopted by the U.S. Securities and Exchange Commission (“SEC”)
thereunder, including §270.17f-4, §270.17f-5 and §270.17f-7, all as may be
amended from time to time.
1.3 “Board”
means the Board of Trustees or the Board of Directors of Principal.
1.4 “Depository”
means both any “securities depository” within the meaning of §270.17f-4 of the
Act and any Eligible Securities Depository
1.5 “Eligible
Foreign Custodian” means an entity that is incorporated or organized under the
laws of a country other than the United States and that is a Qualified Foreign
Bank, as defined in §270.17f-5(a)(5) of the Act.
1.6 “Eligible
Securities Depository”, (“Depository”, or collectively “Depositories”) means a
system for the central handling of securities as defined in §270.17f-7(b)(1) of
the Act.
1.7 “Emerging
Market” means each market so identified on Appendix B attached
hereto.
1.8 “Foreign
Assets” has the meaning provided in §270.17f-5(a)(2) of the Act.
1.9 “Foreign
Market” means each market so identified on Appendix B attached
hereto.
1.10 “Investment
Manager” means an investment advisor or sub-advisor for a Fund identified by
Principal in a written notice to Custodian as having the authority to direct
Custodian regarding the management, acquisition, or disposition of
Securities.
1.11 “Monitoring
System” means the policies and procedures established by Custodian to fulfill
its duties to monitor the custody risks associated with maintaining
Securities
with a
Sub-Custodian or Depository on a continuing basis, pursuant to this
Agreement.
1.12 “Securities”
means both securities as defined in §2(a)(36) of the Act and Foreign Assets that
are financial assets for purposes of §8-102(9) of the Uniform Commercial Code
(the “UCC”), as amended, as in effect in the State of New York, together with
cash or any currency or other property of Principal and all income and proceeds
of sale of such securities or other property of Principal that are held by
Custodian in the Account.
1.13 “Sub-Custodian”
means an entity, including an Eligible Foreign Custodian, that Custodian retains
to hold Securities.
2. Representations and Certain
Agreements.
2.1 Principal
represents that, with respect to the Account, Principal is authorized to enter
into this Agreement and to retain Custodian on the terms and conditions and for
the purposes described herein.
2.2 Custodian
represents that it (i)
is organized under the laws of the United States and has its principal
place of business in the United States; (ii) is a bank within the
meaning of §202(a)(2) of the Investment Advisers Act of 1940, as amended, and
§2(a)(5) of the Act; and (iii)
has equity capital in excess of $1 million.
2.3 Principal
and Custodian agree that the Account is a “securities account” within the
meaning of UCC §8-501 and Custodian is a “securities intermediary” within the
meaning of UCC §8-102 with respect to the Account.
2.4 Custodian
represents that it is eligible to serve as a custodian for a management
investment company registered under the Act.
2.5 Principal
and Custodian agree that references in this Agreement to Principal shall mean
Principal acting individually and separately on behalf of each Fund. Except as
otherwise agreed, each reference herein to accounts and to Securities and cash
shall mean the accounts, Securities and cash maintained, received, delivered and
held separately for a Fund and not on an omnibus basis or aggregate basis for
all of the Funds. Principal and the Custodian agree that Principal
shall be the primary obligor with respect to any obligations of Principal or any
Fund specified in this Agreement; provided, however, the obligations of
Principal with respect to a Fund shall be limited to the extent such obligations
relate to the accounts or transactions of that Fund. Custodian may seek to
enforce the obligations of Principal in respect to a Fund’s accounts and
transactions effected under this Agreement directly against the accounts and the
Securities and cash held hereunder for the Fund but only to the extent such
obligations relate to the transactions of that Fund and only to the extent that
Principal has not otherwise met such obligations. Upon request, Principal shall
reasonably identify how any obligation of Principal provided under this
Agreement should be allocated to a Fund or to any accounts maintained hereunder
for such Fund. Principal and Custodian agree that no Fund shall be liable under
this agreement for the obligations of any other Fund. Principal and Custodian
agree that neither the shareholders of a Fund nor the trustees of the Principal
shall be personally liable hereunder.
3. Establishment
of Account.
Principal hereby establishes the Account with Custodian in
Principal’s
name. The Account shall consist of Securities delivered on behalf of
any Fund to and receipted for by Custodian or by any Sub-Custodian. Custodian,
in its sole discretion, may reasonably refuse to accept any property now or
hereafter delivered to it for inclusion in the Account. Principal shall be
notified promptly of such refusal and any such property shall be immediately
returned to Principal.
4. Custody. Subject to the terms of this
Agreement, Custodian shall be responsible for the safekeeping and custody of the
Securities. Custodian may (i)
maintain possession of all or any portion of the Securities, including
possession in a foreign branch or other office of Custodian; or (ii) retain, in accordance
with this Paragraph 4 and Paragraph 5 of this Agreement, one or more
Sub-Custodians to hold all or any portion of the Securities. Custodian and any
Sub-Custodian may, in accordance with this Paragraph 4 and Paragraph 5 of this
Agreement, deposit definitive or book-entry Securities with one or more
Depositories.
4.1 If
Custodian maintains possession of Securities, Custodian shall ensure the
Securities are at all times properly identified as being held for the Account.
Custodian shall segregate physically the Securities from other securities or
property held by Custodian. Custodian shall not be required to segregate
physically the Securities from other securities or property held by Custodian
for third parties as Custodian, but Custodian shall maintain adequate records
showing each Fund’s ownership of the Securities.
4.2 If
Custodian deposits Securities with a Sub-Custodian, Custodian shall maintain
adequate records showing the identity and location of the Sub-Custodian and the
Securities held by the Sub-Custodian and identifying the Securities as being
held for the Account and for the relevant Fund.
4.3 If
Custodian or any Sub-Custodian deposits Securities with a Depository, Custodian
shall maintain, or shall cause the Sub-Custodian to maintain, adequate records
showing the identity and location of the Depository and the Securities held by
the Depository and identifying the Securities as being held for the Account.
Custodian shall also maintain adequate records identifying the Securities as
being held for the Account and for the relevant Fund. With respect to Securities
that are held for Custodian or any Sub-Custodian at a securities depository, as
defined in of §270.17f-4 of the Act, Custodian shall satisfy or cause the
Sub-Custodian to satisfy the requirements of §270.17f-4 of the Act.
4.4 If
Principal directs Custodian to deliver certificates or other physical evidence
of ownership of Securities to any broker or other party, other than a Depository
or Sub-Custodian employed by Custodian for purposes of maintaining the Account,
Custodian’s sole responsibility shall be to exercise reasonable care and
diligence in effecting the delivery as instructed by Principal consistent with
the level of care and diligence of mutual fund custodians. Upon completion of
the delivery, Custodian shall be discharged completely of any further liability
or responsibility with respect to the safekeeping and custody of Securities so
delivered.
4.5 Custodian
shall ensure that (i)
the Securities will not be subject to any right, charge, security
interest, lien, or claim of any kind in favor of Custodian or any Sub-Custodian
or any person claiming through any of them except for (a) Custodian’s expenses
relating to the Securities’ safe custody or administration; (b) as provided in
Subparagraph 11.2 of this Agreement, (c) in the case of cash deposits at an
Eligible Foreign Custodian, liens or rights in favor of the creditors of the
Eligible Foreign Custodian arising under bankruptcy, insolvency, or similar
laws, or (d) Custodian’s right of setoff with respect to obligations owed by
Principal or any Fund under any credit facility established by Custodian and
(ii) the beneficial ownership of
the
Securities will be freely transferable without the payment of money or value
other than for safe custody or administration.
4.6 Principal
or its designee, shall have reasonable access upon reasonable notice during
regular business hours to the books and records at Principal’s option, or shall
be given confirmation of the contents of the books and records, maintained by
Custodian or any Sub-Custodian holding Securities hereunder to verify the
accuracy of such books and records. Custodian shall notify Principal promptly of
any applicable law or regulation in any country where Securities are held that
would restrict such access or confirmation.
5. Eligible
Foreign Custodians, Eligible Securities Depositories and Foreign Custody
Manager; Selection and Monitoring. Upon written notice to
Principal, as provided in Subparagraph 5.4 of this Agreement, Custodian may from
time to time select one or more Eligible Foreign Custodians and, subject to the
provisions of Subparagraph 5.7, one or more Eligible Securities Depositories, to
hold Securities hereunder. Custodian agrees to serve as Principal’s “Foreign
Custody Manager” as defined in Rule §270.17f-5(a)(3) of the Act, in respect of
Principal’s Foreign Assets held from time to time by the Custodian with any
Sub-Custodian that is an Eligible Foreign Custodian or with any Eligible
Securities Depository.
5.1 Any
relationship Custodian establishes with an Eligible Foreign Custodian with
respect to Securities shall be governed by a written contract providing for the
reasonable care of Securities based on the standards specified in section
§270.17(f)-5(c)(1) of the Act, and including the provisions set forth in
sections §270.17(f)-5(c)(2)(i)(A) through (F) of the Act, or provisions which
Custodian determines provide the same or greater protection of Principal’s
Securities.
5.2 In
selecting an Eligible Foreign Custodian, Custodian shall exercise reasonable
care, prudence and diligence and shall consider whether the Securities will be
subject to reasonable care, based on the standards applicable to custodians in
the relevant market, including (i) the Eligible Foreign
Custodian’s practices, procedures, and internal controls, including, but not
limited to, the physical protections available for certificated securities (if
applicable), the method of keeping custodial records, and the security and data
protection practices; (ii)
the Eligible Foreign Custodian’s financial strength, general reputation
and standing in the country in which it is located, its ability to provide
efficiently the custodial services required, and the relative cost of such
services; and, (iii)
whether the Eligible Foreign Custodian has branch offices in the United
States, or consents to service of process in the United States, in order to
facilitate jurisdiction over and enforcement of judgments against
it.
5.3 In
selecting an Eligible Securities Depository, Custodian shall exercise reasonable
care, prudence, and diligence in evaluating the custody risks associated with
maintaining Securities with the Eligible Securities Depository under Custodian's
custody arrangements with any relevant Eligible Foreign Custodian and the
Eligible Securities Depository.
5.4 Custodian
shall give 30 days’ written notice to Principal of its intention to deposit
Securities with an Eligible Foreign Custodian or, directly or through an
Eligible Foreign Sub-Custodian, with an Eligible Securities Depository. The
notice shall identify the proposed Eligible Foreign Custodian or Eligible
Securities Depository and shall include reasonably available information relied
on by Custodian in making the selection.
5.5 Principal
hereby acknowledges receiving appropriate notice of Custodian’s selection and
use of those Eligible Foreign Custodians and Eligible Securities Depositories
that are
identified in Appendix C of this Agreement.
5.6 Custodian
shall monitor under its Monitoring System the appropriateness of the continued
custody or maintenance of Principal’s Securities with each Eligible Foreign
Custodian or Eligible Securities Depository.
5.6.1 Custodian
shall evaluate and determine at least annually the continued eligibility of each
Eligible Foreign Custodian and Eligible Securities Depository approved by
Principal to act as such hereunder. In discharging this responsibility,
Custodian shall (i)
monitor on a continuing basis the day to day services and reports
provided by each Eligible Foreign Custodian or Eligible Securities Depository;
(ii) at least annually,
obtain and review the annual financial report published by each Eligible Foreign
Custodian, and to the extent such reports are publicly available, each Eligible
Securities Depository, and other reports on each Eligible Foreign Custodian or
Eligible Securities Depository which Custodian may obtain from a reputable
independent analyst; and, (iii) periodically as deemed
appropriate, physically inspect the operations of each Eligible Foreign
Custodian or Eligible Securities Depository.
5.6.2 Custodian
shall provide to the Board quarterly and at such other times as the Board may
reasonably request based on the circumstances of the Principal’s foreign custody
arrangements, written reports notifying the Board of the placement of Securities
of the Principal with a particular foreign Eligible Foreign Custodian within a
Foreign Market or an Emerging Market and of any material change in the
arrangements (including any material changes in any contracts governing such
arrangements or any material changes in the established practices or procedures
of Depositories) with respect to Securities of the Principal held by the
Eligible Foreign Custodian.
5.6.3 If
Custodian determines that (i)
any Eligible Foreign Custodian or Eligible Securities Depository no
longer satisfies the applicable requirements described in Subparagraph 1.5 of
this Agreement (in the case of an Eligible Foreign Custodian) or Subparagraph
1.6 of this Agreement (in the case of an Eligible Securities Depository); or,
(ii) any Eligible
Foreign Custodian or Eligible Securities Depository is otherwise no longer
capable or qualified to perform the functions contemplated herein; or, (iii) any change in a
contract with a Eligible Foreign Custodian or any change in established Eligible
Securities Depository or market practices or procedures shall cause a custody
arrangement to no longer meet the requirements of the Act, Custodian shall
promptly give written notice thereof to Principal. The notice shall, in
addition, either indicate Custodian’s intention to transfer Securities held by
the removed Eligible Foreign Custodian or Eligible Securities Depository to
another Eligible Foreign Custodian or Eligible Securities Depository previously
identified to Principal, or include a notice pursuant to Subparagraph 5.4 of
this Agreement of Custodian’s intention to deposit Securities with a new
Eligible Foreign Custodian or Eligible Securities Depository, in either instance
such transfer of Securities to be effected as soon as reasonably
practical.
5.7 Notwithstanding
the foregoing sub-sections of this Paragraph 5, Custodian shall have no
responsibility for the selection or monitoring of any Eligible Securities
Depository or Eligible Securities Depository’s agent (“Compulsory Depository”)
(i) the use of which is
mandated by law or regulation; (ii) because securities
cannot be withdrawn from the depository; or (iii) because maintaining
securities outside the securities depository is not consistent with prevailing
market practices in the relevant market; provided however, that Custodian shall
notify Principal if Principal has directed a trade in a market containing a
Compulsory Depository, so Principal and the Investment Manager shall have an
opportunity to determine the appropriateness of investing in such
market.
5.8 Principal
and Custodian agree that, for purposes of this Paragraph 5, Custodian’s
determination of appropriateness shall only include custody risk, and shall not
include any evaluation of “country risk” or systemic risk associated with the
investment or holding of assets in a particular country or market, including,
but not limited to (i)
the use of Compulsory Depositories, (ii) the country’s or
market’s financial infrastructure, (iii) the country’s or
market’s prevailing custody and settlement practices, (iv) risk of nationalization,
expropriation or other governmental actions, (v) regulation of the banking
or securities industries, (vi)
currency controls, restrictions, devaluation or fluctuation, and (vii) country or market
conditions which may affect the orderly execution of securities transactions or
affect the value of the transactions. Principal and Custodian further agree that
the evaluation of any such country and systemic risks shall be solely the
responsibility of Principal and the Investment Manager.
6. Registration. Subject to any specific
instructions from Principal, Custodian shall hold or cause to be held all
Securities in the name of (i)
Principal, or (ii)
Custodian, or any Sub-Custodian or Depository, or in the name of a
nominee of any of them, as Custodian shall determine to be appropriate under the
circumstances.
7. Transactions. Principal or any Investment
Manager from time to time may instruct Custodian (which in turn shall be
responsible for giving appropriate instructions to any Sub-Custodian or
Depository) regarding the purchase or sale of Securities in accordance with this
Paragraph 7:
7.1 Custodian
shall effect and account for each Securities and currency sale on the date the
transaction settles. Principal may, from time to time, direct Custodian to
change the accounting method employed by Custodian in a written notice delivered
to Custodian at least thirty (30) days prior to the date the change in
accounting method shall become effective.
7.2 Custodian
shall effect purchases by charging the Account and the relevant Fund with the
amount necessary to make the purchase and paying the seller or broker for the
purchased Security and the Custodian shall have no liability of any kind to any
person, including Principal, except in the case of negligent or intentional
tortuous acts, or willful misconduct, if the Custodian effects payment on behalf
of Principal and the seller or broker fails to deliver the purchased Security.
Custodian shall exercise such ordinary care and diligence as would be employed
by a reasonably prudent custodian in examining and verifying the certificates or
other indicia of ownership of purchased Securities before accepting
them.
7.3 Custodian
shall effect sales by delivering certificates or other indicia of ownership of
Securities from the Account and the relevant Fund, and, as instructed, receiving
cash for such sales. Custodian shall have no liability of any kind to any
person, including Principal, except in the case of negligent or intentional
tortuous acts, or willful misconduct, if Custodian delivers such certificates or
indicia of ownership and the purchaser or broker fails to effect
payment.
7.4 If
a purchase or sale is effected through a Depository, Custodian shall exercise
such ordinary care and diligence as would be employed by a reasonably prudent
custodian in verifying proper consummation of the transaction by the
Depository.
7.5 Principal
or, where applicable, Investment Manager, is responsible for ensuring that
Custodian receives timely instructions and funds to enable Custodian to effect
settlement of any purchase or sale of Securities or foreign currency exchange.
If Custodian does not receive
such
timely instructions or funds, Custodian shall have no liability of any kind to
any person, including Principal, for failing to effect
settlement. However, Custodian shall use reasonable efforts to effect
settlement as soon as possible after receipt of appropriate
instructions. Principal shall be liable for interest compensation
and, if applicable, principal amounts for failure to deliver instructions or
funds in a timely manner to Custodian or its counterparty to effect settlements
of any foreign currency exchange transaction
7.6 At
the direction of Principal or the Investment Manager, as the case may be,
Custodian shall convert currency in the Account to other currencies through
customary channels including, without limitation, Custodian or any of its
affiliates, as shall be necessary to effect any transaction directed by
Principal or the Investment Manager. Principal or the Investment Manager, as the
case may be, acknowledges that (i) the foreign currency
exchange department is a part of Custodian or one of its affiliates or
subsidiaries; (ii) the
Account is not obligated to effect foreign currency exchange transactions with
Custodian; (iii)
Custodian will receive benefits for such foreign currency transactions
which are in addition to the compensation which Custodian receives for
administering the Account; and (iv) Custodian will make
available the relevant data so that Principal or the Investment Manager, as the
case may be, can determine that the terms of foreign currency exchange
transactions are as favorable to the Account as terms generally available in
arm’s length transactions between unrelated parties. Foreign currency exchange
transactions will be performed in accordance with the Union Bank Foreign
Exchange Agreement in the form of Exhibit "“C"” hereto and incorporated herein
by reference and Principal hereby agrees and acknowledges all of the terms and
conditions thereof. If the Principal or Investment Manager elects to give
standing instructions to Custodian to execute foreign currency exchange
transactions on their behalf, or in the event a foreign currency exchange
transaction is initiated in the absence of the specific Foreign Exchange
Agreement, such transaction will be performed at the Custodian’s prevailing rate
and in accordance with the Custodian’s usual commercial terms.
Principal
acknowledges and agrees that all foreign exchange transactions executed by Union
Bank as counterparty on behalf of Account are subject to the lien provisions of
Section 11.2 of this Agreement.
7.7 Custodian
shall have no responsibility to manage or recommend investments of the Account
or to initiate any purchase, sale, or other investment transaction in the
absence of instructions from Principal or, when applicable, an Investment
Manager.
7.8 The
Custodian shall upon receipt of instructions from Principal or an Investment
Manager establish and maintain a segregated account or accounts on behalf of a
Fund, into which account or accounts Securities may be transferred (i) in
accordance with the provisions of any agreement among the Principal on behalf of
the Fund, the Custodian and a broker-dealer registered under the Securities and
Exchange Act of 1934, as amended, or any futures commission merchant registered
under the Commodity Exchange Act, as amended, relating to compliance with the
rules of The Options Clearing Corporation and of any registered national
securities exchange or of the Commodity Futures Trading Commission or any
registered contract market, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release of the SEC,
or interpretative opinion of the staff of the SEC, relating to the maintenance
of segregated accounts by registered management investment companies, and (d)
for any other purpose in accordance with the instructions.
8. Market
Transactions; Settlement Dates. Custodian has identified
certain Foreign Markets and certain Emerging Markets in Appendix B of this
Agreement, which Custodian may amend from time to time by written notice to
Principal.
8.1 Principal
agrees that all settlements of Securities transactions shall be effected in
accordance with the Act, local laws, customs, market practices and procedures to
which Sub-Custodians and Depositories are subject in the market in which the
transactions occur, including in any Foreign Market or Emerging
Market.
8.2 Notwithstanding
the foregoing Paragraph 7, Principal understands and agrees that settlement of
Securities transactions is available only on an actual settlement date
basis.
8.2.1 For
Emerging Markets with actual settlement dates, cash of any currency deposited or
delivered to the Account shall be available for use by Principal or Investment
Manager only on the business day on which funds of good value are available to
Sub-Custodian in the Account.
8.2.2 For
Emerging Markets with actual settlement dates, Securities deposited or delivered
to the Account shall be available for use by Principal or Investment Manager
only on the business day on which such Securities are held in the nominee name
or are otherwise subject to the control of, and in a form for good delivery by,
the Sub-Custodian.
9. Capital Changes;
Income.
9.1 Custodian
may, without further instructions from Principal or any Investment Manager,
exchange temporary certificates and may surrender and exchange Securities for
other securities in connection with any reorganization, recapitalization, or
similar transaction in which the owner of the Securities is not given an option.
Custodian has no responsibility to effect any such exchange unless it has
received notice of the event permitting or requiring such exchange at its office
designated in Paragraph 17 of this Agreement or at the office of Custodian’s
designated agents.
9.2 Custodian,
or any designated agent, is authorized, as Principal’s agent, to,
and
shall on
a timely basis, surrender against payment maturing obligations and obligations
called for redemption, and to collect and receive payments of interest and
principal, dividends, warrants, and other items of value in connection with
Securities. Except as otherwise provided in Subparagraph 18.4 of this Agreement,
Custodian or its designated agents shall not be obligated to enforce collection
of any item by legal process or other means.
9.3 Custodian
or its designated agents are authorized to sign for Principal all declarations,
affidavits, certificates, or other documents that may be required to collect or
receive payments or distributions with respect to Securities. Custodian or its
designated agents are authorized to disclose, without further consent of
Principal, Principal’s identity to issuers of Securities, or the agents of such
issuers, who may request such disclosure.
10. Credits
to Account.
Custodian may as a matter of bookkeeping convenience or by separate
agreement with the Principal, credit the Account with the proceeds from the
sale, redemption or other disposition of Securities or interest or dividends or
other distributions payable on Securities prior to its actual receipt of final
payment; therefore, all such credits shall be conditional until the Custodian’s
actual receipt of final payment and may be reversed by Custodian to the extent
that final payment is not received. Payment with respect to a
transaction will not be final until Custodian receives immediately available
funds under which applicable local law; rule and/or practice are irreversible
and not subject to any security interest, levy or other encumbrance, and which
are specifically applicable to such transaction. Principal acknowledges and
agrees that any currency risk associated with any such credits will be borne by
the Fund that receives the credit.
11. Overdraft and
Indebtedness.
11.1
Advances to Funds. If Custodian advances funds to or for the
benefit of Account in connection with the settlement of securities or currency
transactions or other activity in the Account including overdrafts incurred in
connection with the settlement of securities transactions, maturity or income
payments or funds transfers, Principal agrees that any Fund receiving the
benefit of an advance will reimburse Custodian on demand the amount of the
advance or overdraft and, provided such advances or overdrafts are not related
to Custodian errors or omissions, all related fees as established in Custodian’s
published fee schedule. Each Fund will bear the risk from any currency valuation
differences associated with Principal’s reimbursement obligations to Custodian
incurred on the Fund’s behalf.
11.2 Repayment.
To the extent permitted under the Act, and subject to the separate character of
each Fund’s obligations hereunder, in order to secure repayment of the Account's
obligations to Custodian hereunder for advances and overdrafts, Principal hereby
pledges and grants to Custodian a continuing lien and security interest in, and
right of set-off against, Principal’s right, title and interest in and to the
Securities, money and other property now or hereafter held in the Account
(including proceeds thereof) for any Fund in respect of which or for whose
benefit the advance or overdraft is made. In this regard, Custodian shall be
entitled to all the rights and remedies of a pledgee and secured creditor under
applicable laws, rules or regulations as then in effect.
12. Notices
re: Securities.
Custodian shall notify Principal or the Investment Manager, of any
reorganization, recapitalization, or similar transaction not covered by
Paragraph 9, and any subscription rights, proxies, and other shareholder
information pertaining to the Securities notice of which is received by
Custodian at its office designated in Paragraph 17 of this Agreement or at the
offices of its designated agents. Custodian’s sole responsibility in this regard
shall be to
give such
notices to Principal or the Investment Manager, as the case may be, within a
reasonable time after Custodian receives them, and Custodian shall not otherwise
be responsible for the timeliness of such notices. Custodian has no
responsibility to respond or otherwise act with respect to any such notice
unless and until Custodian has received appropriate instructions from Principal
or the Investment Manager.
13. Taxes. Custodian shall pay or cause
to be paid from the Account with respect to each Fund all taxes and levies in
the nature of taxes imposed on the Account or the Securities thereof by any
country with respect to the Fund’s investments. Custodian will
use its best efforts to give the Investment Manager advance written notice of
the imposition of such taxes. However, Custodian shall use reasonable efforts to
obtain on a timely basis refunds of taxes withheld on Securities or the income
thereof that are available under applicable tax laws, treaties, and
regulations.
14. Cash. Principal may from time to
time, direct Custodian to hold Account cash in The HighMarkSM
Group of mutual funds or in any investment company for which Custodian or its
affiliates or subsidiaries, acts as investment advisor or custodian, or provides
other services. Principal shall designate the particular HighMark fund or such
other above-mentioned fund that Principal deems appropriate for the Account.
Principal or an Investment Manager, where applicable, acknowledges that
Custodian will receive fees for such services which will be in addition to those
fees charged by Custodian as agent for the Account.
15. Reports. Custodian shall give to
Principal or its designee on-line access to reports showing for each Fund (i) each transaction
involving Securities effected by or reported to Custodian; (ii) the identity and
location of Securities held by Custodian as of the date of the report; (iii) any transfer of
location of Securities not otherwise reported; (iv) all cash and currency
transactions and balances; and (v) such other information as
shall be agreed upon by Principal and Custodian. Unless otherwise agreed upon by
Principal and Custodian, Custodian shall provide written reports of the
information described in this Paragraph 15 on a monthly basis.
16. Instructions from
Principal.
16.1 Principal
shall certify or cause to be certified to Custodian in writing the names and
specimen signatures of all persons authorized to give instructions, notices, or
other communications on behalf of Principal or any Investment Manager
(“Authorized Persons”). Such certification shall remain effective
until Custodian receives notice to the contrary.
16.2 Authorized
Persons may give instructions, notices, or other communications called for by
this Agreement to Custodian in writing, or by facsimile, or other form of
electronic communication acceptable to Custodian. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until
canceled or superseded. Authorized Persons may give and Custodian may
accept oral instructions on an exception basis; provided, however, that the
Authorized Persons shall promptly confirm any oral communications in writing or
by facsimile or other means permitted hereunder. Principal will hold Custodian
harmless for the failure of Authorized Persons to send confirmation in writing
or the failure of such confirmation to conform to the telephone instructions
previously received. Custodian may electronically record any instruction given
by telephone, and any other telephone discussions with respect to the Custody
Account.
16.3 All
such communications shall be deemed effective upon receipt by Custodian at
its
address specified in Paragraph 17 of this Agreement, as amended from time to
time. Custodian without liability may rely upon and act in accordance with any
instruction that Custodian using ordinary care believes has been given by
Authorized Persons.
16.4 Custodian
may at any time request instructions from Principal and may await such
instructions without incurring liability. Custodian has no obligation to act in
the absence of such requested instructions, but may, however, without liability
take such action as it deems appropriate to carry out the purposes of this
Agreement.
17. Addresses. Until further notice from
either party, all communications called for under this Agreement shall be in
writing and addressed as follows:
If to
Principal:
Name: Xxxxxx Investors’
Service
Street
Address: 000 Xxxxxxxx Xxxx
Xx
Xxxx,
Xxxxx,
Xxx: Xxxxxxx, XX
00000
Attn: Xxxxxx
Xxxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to
Custodian:
UNION
BANK, NATIONAL ASSOCIATION
Union
Bank Global Custody
Attn: Xx.
Xxxx Xxxx Xxx, Senior Vice President
000
Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
18. Custodian’s Responsibilities
and Liabilities.
18.1 Custodian’s
duties and responsibilities shall be limited to those expressly set forth in
this Agreement, or as otherwise agreed by Custodian in writing. In carrying out
its responsibilities, Custodian shall exercise the reasonable care, prudence and
diligence of a professional custodian for hire.
18.2 Custodian
(i) shall not be
required to maintain any special insurance for the benefit of Principal, and
(ii) shall not be
liable or responsible for any loss, damage, expense, failure to perform or delay
caused by accidents, strikes, fire, flood, war, riot, electrical or mechanical
or communication line or facility failures, acts of third parties (including
without limitation any messenger, telephone or delivery service), acts of God,
war, government action, civil commotion, fire, earthquake, or other casualty or
disaster or any other cause or causes
which are
beyond Custodian’s reasonable control. However, Custodian shall use reasonable
efforts to replace Securities lost or damaged due to such causes with securities
of the same class and issue with all rights and privileges pertaining thereto.
Custodian shall be liable to Principal for any loss which shall occur as the
result of the failure of a Sub-Custodian to exercise reasonable care with
respect to the safekeeping of assets to the same extent that Custodian would be
liable to Principal if Custodian were holding such securities and cash in its
own premises. In all cases, Custodian’s liability for any act or failure to act
under this Agreement shall be limited to the resulting direct loss, if any, of
Principal. Under no circumstances shall Custodian be liable for any
consequential, indirect, punitive, or special damage which Principal may incur
or suffer in connection with this Agreement.
18.3 The
parties intend that Custodian shall not be considered a fiduciary of the
Account. Accordingly, Custodian shall have no power to make decisions regarding
any policy, interpretation, practice, or procedure with respect to the Account,
but shall perform the ministerial and administrative functions described in this
Agreement as provided herein and within the framework of policies,
interpretations, rules, practices, and procedures made by Principal or an
Investment Manager, where applicable, as the same shall be reflected in
instructions to Custodian from Principal or any Investment Manager.
18.4 Custodian
shall not be required to appear in or defend any legal proceedings with respect
to the Account or the Securities unless Custodian has been indemnified to its
reasonable satisfaction against loss and expense (including reasonable
attorneys'’ fees).
18.5 With
respect to legal proceedings referred to in Subparagraph 18.4 of this agreement,
Custodian may consult with counsel acceptable to it after written notification
to Principal concerning its duties and responsibilities under this Agreement,
and shall not be liable for any action taken or not taken in good faith on the
advice of such counsel.
18.6 To
the extent permissible by law or regulation and upon Principal’s request, the
Principal and any relevant Fund shall be subrogated to the rights of the
Custodian with respect to any claim for any loss, damage or claim suffered by
Principal or any Fund, in each case to the extent that the Custodian fails to
pursue any such claim or Principal or the relevant Fund is not made whole in
respect of such loss, damage or claim.
19. Indemnities.
19.1 Principal
hereby agrees to indemnify Custodian against all liability, claims, demands,
damages, losses, and costs, including reasonable attorneys'’ fees and expenses
of legal proceedings, resulting from Custodian’s compliance with instructions
from Principal or any Investment Manager and the terms of this Agreement, except
where Custodian has acted with negligence or willful misconduct.
19.2 Custodian’s
right to indemnity under Subparagraph 19.1 of this Agreement shall survive the
termination of this Agreement.
20. Compensation;
Expenses.
Principal shall reimburse Custodian for all reasonable out-of-pocket
expenses and processing costs incurred by Custodian in the administration of the
Account and the Custodian shall provide to the Principal a reasonable accounting
of all such expenses and costs. Principal also shall pay Custodian reasonable
compensation for its services hereunder as specified in Appendix D. To the
extent permitted under the Act and
subject
to the separate character of each Fund’s obligations hereunder, Custodian shall
be entitled to withdraw such expenses or compensation from the Account if
Principal fails to pay the same to Custodian within 45 days after Custodian has
sent an appropriate billing to Principal; provided, however, that Custodian will
give Principal twenty (20) days prior written notice before withdrawing such
funds.
21. Amendment;
Termination. This
Agreement may be amended at any time by a written instrument signed by the
parties. Either party may terminate this Agreement and the Account upon 90 days’
written notice to the other unless the parties agree on a different time period.
Upon such termination, Custodian shall deliver or cause to be delivered the
Securities, less any amounts due and owing to Custodian under this Agreement, to
a successor custodian designated by Principal or, if a successor custodian has
not accepted an appointment by the effective date of termination of the Account,
to Principal. Upon completion of such delivery Custodian shall be discharged of
any further liability or responsibility with respect to the Securities so
delivered.
22. Successors. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their successors
in interest. Without consent of the parties, this agreement cannot be assigned
to any third party.
23. Severability. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect pursuant to the terms hereof.
24. Governing
Law. The
validity, construction, and administration of this Agreement shall be governed
by the applicable laws of the United States from time to time in force and
effect and, to the extent not preempted by such laws of the United States, by
the laws of the State of New York from time to time in force and effect. Any
action or proceeding to enforce, interpret or adjudicate the rights and
responsibilities of the parties hereunder shall be commenced in the State or
Federal courts located in the State of New York.
25. Confidentiality.
Both parties hereto agree that any non-public information obtained
hereunder concerning the other party is confidential and may not be disclosed to
any other person without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly agree that each of them is entitled, in addition
to all other remedies at law or in equity and without bond or other security, to
an injunction or injunctions to prevent breaches of this provision.
26. Effective
Date. This
Agreement shall be effective as of the date appearing below, and shall supersede
any prior or existing agreements between the parties pertaining to the subject
matter hereof.
Date:
January 4,
2010
| By: The Xxxxxx Managed Equity Trust | By: Union Bank N.A., “Custodian” |
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxxx Xxxx |
| Authorized Signature | Authorized Signature |
| Xxxxxx Xxxxxxxx, Vice President | Xxxxxxxx Xxxx, Vice President |
| Name & Title | Name & Title |
| 12/28/09 | 12/29/09 |
| Date | Date |
| By: The Xxxxxx Managed Income Trust | |
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxx X. Xxxxx |
| Authorized Signature | Authorized Signature |
| Xxxxxx Xxxxxxxx, Vice President | Xxxxxxx X. Xxxxx, VP |
| Name & Title | Name & Title |
| 12/28/09 | 12/29/09 |
| Date | Date |
APPENDIX
A
Separate
Portfolios
(FOREIGN
AND DOMESTIC SECURITIES)
The
Xxxxxx Managed Equity Trust and The Xxxxxx Managed Income Trust
(Collectively
“Trusts”)
and Union Bank, N.A.
Effective
Date 11/01/09
Funds:
Xxxxxx
Selected Blue Chip Equities Fund
Xxxxxx
Major Blue Chip Equities Fund
Xxxxxx
International Blue Chip Equities Fund
Xxxxxx
Total Return Bond Fund
Xxxxxx
Current Income Fund
| By: The Xxxxxx Managed Equity Trust | By: Union Bank N.A., “Custodian” | |
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxxx Xxxx | |
| Authorized Signature | Authorized Signature | |
| Xxxxxx Xxxxxxxx, Vice President | Xxxxxxxx Xxxx, Vice President | |
| Name & Title | Name & Title | |
| 12/28/09 | 12/29/09 | |
| Date | Date | |
| By: The Xxxxxx Managed Income Trust | ||
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxx X. Xxxxx | |
| Authorized Signature | Authorized Signature | |
| Xxxxxx Xxxxxxxx, Vice President | Xxxxxxx X. Xxxxx, VP | |
| Name & Title | Name & Title | |
| 12/28/09 | 12/29/09 | |
| Date | Date |
