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EXHIBIT 2(j)
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT, dated as of June 14, 1995 ("Custodian
Agreement"), is by and between SOUTHEAST INTERACTIVE TECHNOLOGY FUND I, LLC, a
North Carolina limited liability company ("Depositor"); and FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association, as Custodian
hereunder ("Custodian").
BACKGROUND
A. Depositor, a closed-end private venture capital fund, desires
to engage Custodian to serve as the custodian of its securities and other
investment assets in accordance with the Investment Company Act of 1940 (the
"Investment Company Act").
B. Custodian has agreed to accept, hold, and disburse the
securities and funds deposited with it and the earnings thereon in accordance
with the terms of this Custodian Agreement.
C. In order to establish the custodianship of securities and
investment assets in accordance with the Investment Company Act, the parties
hereto have entered into this Custodian Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
for themselves, their successors and assigns, hereby agree as follows:
1. Definitions. The following terms shall have the
following meanings when used herein:
"Cash Manager" shall mean Sovereign Capital Management, Inc.
d/b/a Sovereign Advisers, Inc., or other financial advisor designated as such
by the Depositor.
"Custody Period" shall mean the period commencing on the date
hereof and ending on the Termination Date as defined herein.
"Depositor Representative" shall mean Xxxxx X. Xxxxxx or W.
Xxxx Xxxxxx or any other person designated in a writing signed by Depositor and
delivered to Custodian and the Recipient Representative in accordance with the
notice provisions of this Custodian Agreement, to act as its representative
under this Custodian Agreement.
"Direction" shall mean a joint written direction executed by
the Depositor Representative and one of the Disinterested Directors directing
Custodian to disburse all or a
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portion of the Securities or the Funds or to take or refrain from taking an
action pursuant to this Custodian Agreement.
"Directors" or "Board of Directors" means the persons serving
as the managers of the Depositor.
"Disinterested Director" means one of the managers of the
Depositor who is not an "interested person" of Depositor as defined by the
Investment Company Act. Upon execution of this Agreement the Depositor
Representative shall deliver to Custodian a list of the Disinterested
Directors, and the Depositor shall immediately notify the Custodian in writing
upon any changes or additions to, or deletions from, the list of Disinterested
Directors. Custodian may rely conclusively upon the list of Disinterested
Directors as provided from time to time by Depositor and shall not be obligated
to undertake any independent investigation as to the status of a Director.
"Funds" shall mean cash and cash equivalents of the Depositor
held, invested and reinvested by the Custodian in accordance with this
Agreement, together with any interest and other income thereon.
"Securities" shall mean the securities and other investment
assets (other than Funds) deposited with Custodian pursuant to this Agreement,
together with any dividends, interest and other income thereon.
"Termination Date" shall have the meaning ascribed to such
term in Section 23 hereof.
2. Appointment of and Acceptance by Custodian.
Depositor hereby appoints Custodian to serve as custodian hereunder. Custodian
hereby accepts such appointment and, upon receipt of Funds and/or Securities in
accordance with Section 3 below, agrees to hold and disburse the Funds and
Securities in accordance with this Custodian Agreement.
3. Creation of Custodian Accounts. Upon the initial
closing of Depositor's private offering of its securities, Depositor will
transfer the net offering proceeds remaining after the payment of expenses of
the offering, funding of the Depositor's operating account(s), and other
deductions as directed by Depositor, into a cash management account. After the
initial closing, Depositor will deposit subsequent net proceeds received in the
offering (which are not held by Depositor as operating funds in accordance with
the Investment Company Act) into the cash management account.
a. Cash Management Account. The cash management account
created above shall be held by Custodian and the Funds therein shall
be invested in accordance with the instructions of the Cash Manager.
Funds deposited in this account shall be disbursed to purchase
Securities, to make distributions to the equity owners of Depositor,
or for
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other purposes as specified by, and upon receipt by Custodian of, a Direction.
b. Securities Custodianship. The Custodian will accept
and maintain physical possession of the stock certificates or other
evidences of ownership of Securities acquired by the Depositor.
Securities held by the Custodian hereunder may be (i) withdrawn only
upon receipt by the Custodian of a Direction in connection with the
sale, exchange, redemption, making of a conversion, the exercise of
warrants or rights, assents to changes in the terms of the Securities,
or other transactions necessary or appropriate in the ordinary course
of business relating to the management of securities; or (ii)
distributed to the equity owners of the Depositor as specified by, and
upon receipt by the Custodian of, a Direction.
Interest, dividends and other current earnings from the investment of
the Cash Management Account and the holding of Securities shall be deposited
into the Cash Management Account unless otherwise directed in writing by the
Depositor Representative. Proceeds from the sale or other disposition of
Securities shall be deposited into the Cash Management Account.
5. Access to Securities. All Securities shall be
physically segregated at all times from those of any other person and shall be
withdrawn only in accordance with this Agreement. Except as otherwise provided
by law, no person shall be authorized or permitted to have access to the
Securities except pursuant to a resolution of the Board of Directors of
Depositor. Each such resolution shall designate not more than five persons who
shall be either Directors or responsible employees of Depositor and shall
provide that access to such Securities shall be had only by two or more such
persons jointly, at least one of whom shall be a Director. Notwithstanding the
foregoing, access shall be permitted (i) to properly authorized officers and
employees of the Custodian and (ii) for purposes of Section 7 hereof, to the
independent public accountant jointly with any two persons so designated by
resolution or such authorized officers or employees of Custodian. Such
Securities shall at all times be subject to inspection by the United States
Securities Exchange Commission through its authorized employees or agents
accompanied, unless otherwise directed by order of such Commission, by one or
more of the persons designated pursuant to this Section 5.
4. Disbursement of Funds.
a. Written Direction. Custodian shall disburse Funds
and transfer Securities, at any time and from time to time, only in
accordance with a Direction consistent with the terms of this
Agreement.
b. Confirmation. Upon the disbursement of Funds from
the cash management account described herein or the transfer
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of any Securities, Custodian will promptly confirm such disbursement
and transfer in writing to the Depositor with a copy to the
Disinterested Directors of Depositor.
The investment and reinvestment of Funds pursuant to the
instructions of the Cash Manager shall not be "disbursements" requiring
Direction and confirmation to Disinterested Directors as provided in this
Section 4.
6. Deposit/Withdrawal Notations. Each person depositing
or withdrawing Securities shall sign and deliver to the Custodian a notation in
the form attached hereto as Exhibit A. The Custodian will promptly transmit a
copy of such notation to a Director or other person authorized to receive such
notation by the Board of Directors of Depositor, who shall not be a person
designated for the purposes of Section 5 hereof. The Custodian shall preserve
a copy of each such notation for at least one year thereafter.
7. Verification of Securities. The Securities shall be
verified by actual examination by an independent public accountant retained by
the Depositor at least three times during each calendar year, at least two of
which shall be chosen by the accountant without prior notice to the Depositor.
8. Disbursement Into Court. If, at any time, there
shall exist any dispute between Depositor and Custodian with respect to the
holding or disposition of any portion of the Securities, the Funds or any other
obligations of Custodian hereunder, or if at any time Custodian is unable to
determine, to Custodian's reasonable satisfaction, the proper disposition of
any portion of the Securities or the Funds or Custodian's proper actions with
respect to its obligations hereunder, or if the Depositor has not within 30
days of the furnishing by Custodian of a notice of resignation pursuant to
Section 10 hereof, appointed a successor Custodian to act hereunder, then
Custodian may, in its sole discretion, take either or both of the following
actions:
a. suspend the performance of any of its obligations
under this Custodian Agreement until such dispute or uncertainty shall
be resolved to the reasonable satisfaction of Custodian or until a
successor Custodian shall have been appointed (as the case may be);
provided, however, that Custodian shall continue to invest the Funds
and hold the Securities in accordance with Section 9 hereof; and/or
b. petition (by means of an interpleader action or any
other appropriate method) any court of competent jurisdiction in
Charlotte, North Carolina, for instructions with respect to such
dispute or uncertainty, and pay into such court all Funds and
Securities held by it for holding and disposition in accordance with
the instructions of such court.
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Custodian shall have no liability to Depositor, its members or any other person
with respect to any such suspension of performance or disbursement into court,
specifically including any liability or claimed liability that may arise, or be
alleged to have arisen, out of or as a result of any delay in the disbursement
of Funds or Securities or any delay in or with respect to any other action
required or requested of Custodian, except for Custodian's negligence or
intentional misconduct.
9. Investment of Funds. Custodian shall invest and
reinvest the Funds as the Cash Manager shall direct (subject to applicable
minimum investment requirements), provided, however, that no investment or
reinvestment may be made except in the following:
a. direct obligations of the United States of America or
obligations the principal of and the interest on which are
unconditionally guaranteed by the United States of America; or
b. certificates of deposit issued by any bank, bank and
trust company, or national banking association (including Custodian
and its affiliates) with at least $500 million in tangible net worth,
which certificates of deposit are insured by the Federal Deposit
Insurance Corporation or a similar governmental agency.
If Custodian has not received a direction at any time that an
investment decision must be made, Custodian shall invest the Funds, or such
portion thereof as to which no direction has been received, in investments
described in clause (b) above. Each of the foregoing investments shall be made
in the name of Custodian. No investment shall be made in any instrument or
security that has a maturity of greater than six (6) months. Notwithstanding
anything to the contrary contained herein, Custodian may, upon notice to the
Depositor, sell or liquidate any of the foregoing investments at any time if
the proceeds thereof are required for any release of funds permitted or
required hereunder, and Custodian shall not be liable or responsible for any
loss, cost or penalty resulting from any such sale or liquidation. With
respect to any Funds received by Custodian for deposit or any Direction
received by Custodian with respect to investment of any Funds after ten
o'clock, a.m., Charlotte, North Carolina, time, Custodian shall not be required
to invest such Funds or to effect such investment instruction until the next
day upon which banks in Charlotte, North Carolina are open for business.
10. Resignation and Removal of Custodian. Custodian may
resign from the performance of its duties hereunder at any time by giving ten
(10) days' prior written notice to the Depositor or may be removed, with or
without cause, by the Depositor at any time by the giving of ten (10) days'
prior written notice to Custodian. Such resignation or removal shall take
effect upon the appointment of a successor Custodian as provided hereinbelow.
Upon any such notice of resignation or
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removal, the Depositor shall appoint a successor Custodian hereunder, which
shall be a commercial bank, trust company or other financial institution with a
combined capital and surplus in excess of $10,000,000. Upon the acceptance in
writing of any appointment as Custodian hereunder by a successor Custodian,
such successor Custodian shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Custodian, and the
retiring Custodian shall be discharged from its duties and obligations under
this Custodian Agreement, but shall not be discharged from any liability for
actions taken as Custodian hereunder prior to such succession. After any
retiring Custodian's resignation or removal, the provisions of this Custodian
Agreement (shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Custodian under this Custodian Agreement.
11. Liability of Custodian. Custodian shall have no
liability or obligations with respect to the Funds or the Securities except for
Custodian's willful misconduct or gross negligence. Custodian's sole
responsibility shall be for the safekeeping, investment, and disbursement of
the Funds and the Securities in accordance with the terms of this Custodian
Agreement. Custodian shall have no implied duties or obligations and shall not
be charged with knowledge or notice of any fact or circumstance not
specifically set forth herein. Custodian may rely upon any instrument, not
only as to its due execution, validity and effectiveness, but also as to the
truth and accuracy of any information contained therein, which Custodian shall
in good faith believe to be genuine, to have been signed or presented by the
person or parties purporting to sign the same and to conform to the provisions
of this Custodian Agreement. In no event shall Custodian be liable for
incidental, indirect, special, consequential or punitive damages. Custodian
shall not be obligated to take any legal action or commence any proceeding in
connection with the Funds or the Securities, any account in which Funds are
deposited, this Custodian Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. Custodian may consult legal counsel selected
by it in the event of any dispute or question as to the construction of any of
the provisions hereof or of any other agreement or of its duties hereunder, and
shall incur no liability and shall be fully protected from any liability
whatsoever in acting in accordance with the opinion or instruction of such
counsel. Depositor shall promptly pay, upon demand, the reasonable fees and
expenses of any such counsel.
12. Indemnification of Custodian. From and at all times
after the date of this Custodian Agreement, Depositor shall, to the fullest
extent permitted by law and to the extent provided herein, indemnify and hold
harmless Custodian and each director, officer, employee, attorney, agent and
affiliate of Custodian (collectively, the "Indemnified Parties") against any
and all actions, claims (whether or not valid), losses, damages, liabilities,
costs and expenses of any kind or nature whatsoever (including without
limitations reasonable attorneys' fees, costs
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and expenses) incurred by or asserted against any of the Indemnified
Parties from and after the date hereof, whether direct, indirect or
consequential as a result of or arising from or in any way relating to any
claim, demand, suit action or proceeding (including any inquiry or
investigation) by any person, whether threatened or initiated, asserting a
claim for any legal or equitable remedy against any person under any statute or
regulation, including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise, arising from or
in connection with the negotiation, preparation, execution, performance or
failure of performance of this Custodian Agreement or any transactions
contemplated herein, whether or not any such Indemnified Party is a party to
any such action, proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall have the
right to be indemnified hereunder for any liability finally determined by a
court of competent jurisdiction, subject to no further appeal, to have resulted
solely from the gross negligence or willful misconduct of such Indemnified
Party. If any such action or claim shall be brought or asserted against any
Indemnified Party. If any such action or claim shall be brought or asserted
against any Indemnified Party, such Indemnified Party shall promptly notify
Depositor in writing, and Depositor shall assume the defense thereof, including
the employment of counsel and the payment of all expenses. Such Indemnified
Party shall, in its sole discretion, have the right to employ separate counsel
in any such action and to participate in the defense thereof, and the fees and
expenses of such counsel shall be paid by such Indemnified Party unless (a)
Depositor agrees to pay such fees and expenses, or (b) Depositor shall fail to
assume the defense of such action or proceeding or shall fail, in the
reasonable discretion of such Indemnified Party, to employ counsel satisfactory
to the Indemnified Party in any such action or proceeding, or (c) that named
parties to any such action or proceeding (including any impleaded parties)
include both Indemnified Party and Depositor, and Indemnified Party shall have
been advised by counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to Depositor.
All such fees and expenses payable by Depositor pursuant to the foregoing
sentence shall be paid from time to time as incurred, both in advance of and
after the final disposition of such action or claim. All of the foregoing
losses, damages, costs and expenses of the Indemnified Parties shall be payable
by Depositor and Recipient, jointly and severally, upon demand by such
Indemnified Party. The obligations of Depositor under this Section 12 shall
survive any termination of this Custodian Agreement and the resignation or
removal of Custodian.
13. Fees and Expenses of Custodian. Depositor shall
compensate Custodian for its services hereunder in accordance with Schedule 1
attached hereto and, in addition, shall reimburse Custodian for all of its
reasonable out-of-pocket expenses, including attorneys' fees, travel expenses,
telephone and facsimile transmission costs, postage (including express mail and
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overnight delivery charges), copying charges and the like. All of the
compensation and reimbursement obligations set forth in this Section 13 shall
be payable by Depositor upon demand by Custodian. The obligations of Depositor
under this Section 13 shall survive any termination of this Custodian Agreement
and the resignation or removal of Custodian.
Custodian is authorized to, and may, disburse to itself from
the Escrow Funds, from time to time, the amount of any compensation and
reimbursement of out-of-pocket expenses due and payable hereunder (including
any amount to which Custodian or any Indemnified Party is entitled to seek
indemnification pursuant to Section 12 hereof.) Custodian shall notify the
Depositor Representative of any disbursement from the Escrow Funds to itself or
any Indemnified Party in respect of any compensation or reimbursement hereunder
and shall furnish to the Depositor Representative copies of all related
invoices and other statements. Depositor hereby grants to Custodian and the
Indemnified Parties a security interest in and lien upon the Funds and all
funds therein to secure all obligations hereunder to Custodian and the
Indemnified Parties, and Custodian and Indemnified Parties shall have the right
to offset the amount of any compensation or reimbursement due any of them
hereunder (including any claim for indemnification pursuant to Section 12
hereof) against the Escrow Funds. If for any reason funds in the Escrow Funds
are insufficient to cover such compensation and reimbursement, Depositor shall
promptly pay such amounts to Custodian or any Indemnified Party upon receipt of
an itemized invoice.
14. Representations and Warranties. Depositor makes the
following representations and warranties to Custodian:
(a) Depositor is a limited liability company, duly
organized, validly existing and in good standing under the
laws of the State of North Carolina, and has full power and
authority to execute and deliver this Custodian Agreement and
to perform its obligations hereunder;
(b) This Custodian Agreement has been duly approved
by all necessary action of Depositor, has been executed by
duly authorized managers of Depositor, and constitutes a valid
and binding agreement of Depositor, enforceable in accordance
with its terms.
(c) The execution, delivery and performance by
Depositor of this Custodian Agreement will not violate,
conflict with, or cause a default under the articles of
organization or operating agreement of Depositor, any
applicable law or regulation, any court order or
administrative ruling or decree to which Depositor is a party
or any of its property is subject, or any agreement, contract,
indenture, or other binding
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arrangement, to which Depositor is a party or any of its
property is subject.
(d) Xxxxx X. Xxxxxx or W. Xxxx Xxxxxx, or either of
them, is hereby duly appointed to act as the representative of
Depositor hereunder and has full power and authority to
execute, deliver, and cause the Depositor to perform this
Custody Agreement, to execute and deliver any Direction on
behalf of the Depositor and to take any and all other actions
as the Depositor Representative under this Agreement, all
without further consent or direction from, or notice to,
Depositor or any other party.
(e) No party other that the parties hereto have, or
shall have, any lien, claim or security interest in the Funds
or the Securities or any part thereof. No financing statement
under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Funds or the
Securities or any part thereof.
(f) All of the representations and warranties of
Depositor contained herein are true and complete as of the
date hereof and will be true and complete at the time of any
disbursement from the Funds.
15. Consent to Jurisdiction and Venue. In the event that
any party hereto commences a lawsuit or other proceeding relating to or arising
from this Agreement, the parties hereto agree that the United States District
Court for the Western District of North Carolina shall have the sole and
exclusive jurisdiction over any such proceeding. If all such courts lack
federal subject matter jurisdiction, the parties agree that the Superior Court
Division of the General Court of Justice of Mecklenburg County, North Carolina
shall have sole and exclusive jurisdiction. Any of these courts shall be
proper venue for any such lawsuit or judicial proceeding and the parties hereto
waive any objection to such venue. The parties hereto consent to and agree to
submit to the jurisdiction of any of the courts specified herein and agree to
accept service or process to vest personal jurisdiction over them in any of
these courts.
16. Notice. All notices and other communications
hereunder shall be in writing and shall be deemed to have been validly served,
given or delivered five (5) days after deposit in the United States mails, by
certified mail with return receipt requested and postage prepaid, when
delivered personally, one (1) day after delivery to any overnight courier, or
when transmitted by facsimile transmission facilities, and addressed to the
party to be notified as follows:
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If to Depositor at: Southeast Interactive Technology Fund I, LLC
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx Xxxxxxxx 00000
ATTENTION: Xxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
If to the
Custodian at: First Union National Bank of
North Carolina, as Custodian
Corporate Trust Department
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000-0000
ATTENTION: Xxxxx Xxxxxxxx
Facsimile Number: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
17. Amendment or Waiver. This Custodian Agreement may be
changed, waived, discharged or terminated only by a writing signed by the
Representatives and Custodian. No delay or omission by any party in exercising
any right with respect hereto shall operate as a waiver. A waiver on any one
occasion shall not be construed as a bar to, or waiver of, any right or remedy
on any future occasion.
18. Severability. To the extent any provision of this
escrow Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Custodian Agreement.
19. Governing Law. This Custodian Agreement shall be
construed and interpreted in accordance with the internal laws of the State of
North Carolina without giving effect to the conflict of laws principles
thereof.
20. Entire Agreement. This Custodian Agreement
constitutes the entire agreement between the parties relating to the holding,
investment and disbursement of the Escrow Funds and sets forth in their
entirety the obligations and duties of Custodian with respect to the Securities
and the Funds.
21. Binding Effect. All of the terms of this Custodian
Agreement, as amended from time to time, shall be binding upon, inure to the
benefit of and be enforceable by the respective heirs, successors and assigns
of Depositor and the Custodian.
22. Execution in Counterparts. This Custodian Agreement
may be executed in two or more counterparts, which when so executed shall
constitute one and the same agreement or direction.
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23. Termination. Upon the first to occur of (i) the
disbursement of all amounts in the Funds and all of the Securities pursuant to
Directions; (ii) the appointment of a successor Custodian pursuant to this
Agreement, the execution of a custodian agreement with such successor and the
transfer of all Funds and Securities to such successor; or (iii) the
disbursement of all amounts in the Funds and the deposit of the Securities into
court pursuant to Section 8 hereof (the "Termination Date"), this Custodian
Agreement shall terminate and Custodian shall have no further obligation or
liability whatsoever with respect to this Custodian Agreement, the Securities
or the Funds.
24. Subject to the provisions of applicable law, the
Custodian and any stockholder, director, officer or employee of the Custodian
may buy, sell, and deal in any of the securities of Depositor and become
pecuniarily interested in any transaction in which the Depositor may be
interested, and contract and lend money to Depositor and otherwise act as fully
and freely as though it were not Custodian under this Agreement. Nothing
herein shall preclude the Custodian from acting in any other capacity for
Depositor or for any other entity.
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IN WITNESS WHEREOF, the parties hereto have caused this Custodian
Agreement to be executed under seal as of the date first above written.
DEPOSITOR
SOUTHEAST INTERACTIVE TECHNOLOGY
FUND I, LLC
By: ______________________________
Manager
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA, AS CUSTODIAN
By:________________________________
Title:_____________________________
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SCHEDULE 1
Fees Payable to Custodian
14
No. ________
EXHIBIT A
TO
CUSTODIAN AGREEMENT
SOUTHEAST INTERACTIVE TECHNOLOGY FUND I, LLC
NOTATION
FOR
DEPOSIT/WITHDRAWAL OF SECURITIES OR FUNDS
_______ Deposit _____ Withdrawal
1. Date and time of deposit/withdrawal: ____________________________
2. Title and amount of
Securities or Funds
deposited or withdrawn: ___________________________________
___________________________________
___________________________________
3. Manner of acquisition or purpose
for withdrawal: ___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
4. If withdrawal, name of person to
whom delivered: ___________________________________
Custodian:
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA, N.A.
By: _________________________
[Transmit promptly to appropriate representative of Southeast Interactive
Technology Fund I, LLC (the "Fund") as provided in Section 6 of the
Custodian Agreement between the Fund and the Custodian.]
