CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of , 2000, between , a Trust organized under
the laws of the State of New York (the Trust), and XXXXX BROTHERS XXXXXXXX &
CO., a limited partnership formed under the laws of the State of New York
(BBH&Co. or the Custodian),
W I T N E S S E T H:
WHEREAS, the Trust wishes to employ BBH&Co. to act as custodian for the
Trust and to provide related services, all as provided herein, and BBH&Co. is
willing to accept such employment, subject to the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Trust and BBH&Co. hereby agree, as follows:
1. Appointment of Custodian. The Trust hereby appoints BBH&Co. as the Trust's
custodian, and BBH&Co. hereby accepts such appointment. All Investments of the
Trust delivered to the Custodian or its agents or Subcustodians shall be dealt
with as provided in this Agreement. The duties of the Custodian with respect to
the Trust's Investments shall be only as set forth expressly in this Agreement
which duties are generally comprised of safekeeping and various administrative
duties that will be performed in accordance with Instructions and as reasonably
required to effect Instructions.
2. Representations, Warranties and Covenants of the Trust. The Trust hereby
represents, warrants and covenants each of the following:
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2.1 This Agreement has been, and at the time of delivery of
each Instruction such Instruction will have been, duly authorized,
executed and delivered by the Trust. This Agreement does not violate
any Applicable Law or conflict with or constitute a default under the
Trust's prospectus or other organic document, agreement, judgment,
order or decree to which the Trust is a party or by which it or its
Investments is bound.
2.2 By providing an Instruction with respect to the first
acquisition of an Investment in a jurisdiction other than the United
States of America, the Trust shall be deemed to have confirmed to the
Custodian that the Trust has (a) assessed and accepted all material
Country or Sovereign Risks and accepted responsibility for their
occurrence, (b) made all determinations required to be made by the
Trust, and (iii) appropriately and adequately disclosed to its
shareholders, other investors and all persons who have rights in or to
such Investments, all material investment risks, including those
relating to the custody and settlement infrastructure or the servicing
of securities in such jurisdiction.
2.3 The Trust shall safeguard and shall solely be responsible
for the safekeeping of any testkeys, identification codes, passwords,
other security devices or statements of account with which the
Custodian provides it. In furtherance and not limitation of the
foregoing, in the event the Trust utilizes any on-line service offered
by the Custodian, the Trust and the Custodian shall be fully
responsible for the security of each party's connecting terminal,
access thereto and the proper and authorized use thereof and the
initiation and application of continuing effective safeguards in
respect thereof. Additionally, if the Trust uses any on-line or similar
communications service made available by the Custodian, the Trust shall
be solely responsible for ensuring the security of its access to the
service and for the use of the service, and shall only attempt to
access the service and the Custodian's computer systems as directed by
the Custodian. If the Custodian provides any computer software to the
Trust relating to the services described in this Agreement, the Trust
will only use the software for the purposes for which the Custodian
provided the software to the Trust, and will abide by the license
agreement accompanying the software and any other security policies
which the Custodian provides to the Trust.
3. Representation and Warranty of BBH&Co. BBH&Co. hereby represents and warrants
that this Agreement has been duly authorized, executed and delivered by BBH&Co.
and does not and will not violate any Applicable Law or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound.
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4. Instructions. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
Instruction shall mean a directive initiated by the Trust, acting directly or
through its board of trustees, officers or other Authorized Persons, which
directive shall conform to the requirements of this Section 4.
4.1 Authorized Persons. For purposes hereof, an Authorized Person shall
be a person or entity authorized to give Instructions for or on behalf of the
Trust by written notices to the Custodian or otherwise in accordance with
procedures delivered to and acknowledged by the Custodian, including without
limitation the Trust's Investment Adviser or Foreign Custody Manager. The
Custodian may treat any Authorized Person as having full authority of the Trust
to issue Instructions hereunder unless the notice of authorization contains
explicit limitations as to said authority. The Custodian shall be entitled to
rely upon the authority of Authorized Persons until it receives appropriate
written notice from the Trust to the contrary.
4.2 Form of Instruction. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Trust from time to time unless the Trust shall elect to
transmit such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of
this Section.
4.2.1 Trust Designated Secured-Transmission Method.
Instructions may be transmitted through a secured or tested
electro-mechanical means identified by the Trust or by an Authorized
Person entitled to give Instruction and acknowledged and accepted by
the Custodian; it being understood that such acknowledgment shall
authorize the Custodian to receive and process such means of delivery
but shall not represent a judgment by the Custodian as to the
reasonableness or security of the method determined by the Authorized
Person.
4.2.2 Written Instructions. Instructions may be transmitted in
a writing that bears the manual signature of Authorized Persons.
4.2.3 Other Forms of Instruction. Instructions may also be
transmitted by another means determined by the Trust or Authorized
Persons and acknowledged and accepted by the Custodian (subject to the
same limits as to acknowledgements as is contained in Subsection 4.2.1,
above) including Instructions given orally or by SWIFT, telex or
telefax (whether tested or untested).
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When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. Oral Instructions shall be binding upon the Custodian only if and
when the Custodian takes action with respect thereto. With respect to telefax
instructions, the parties agree and acknowledge that receipt of legible
instructions cannot be assured, that the Custodian cannot verify that authorized
signatures on telefax instructions are original or properly affixed, and that
the Custodian shall not be liable for losses or expenses incurred through
actions taken in reliance on inaccurately stated, illegible or unauthorized
telefax instructions. The provisions of Section 4A of the Uniform Commercial
Code shall apply to Funds Transfers performed in accordance with Instructions.
In the event that a Funds Transfer Services Agreement is executed between the
Trust or and Authorized Person and the Custodian, such an agreement shall
comprise a designation of form of a means of delivering Instructions for
purposes of this Section 4.2.
4.3 Completeness and Contents of Instructions. The Authorized Person
shall be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in the
Trust's Investments and upon any delivery and transfer of any Investment or
moneys, the person initiating such Instruction shall give the Custodian an
Instruction with appropriate detail, including, without limitation:
4.3.1 The transaction date and the date and location of
settlement;
4.3.2 The specification of the type of transaction;
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4.3.4 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money to be
received or delivered and currency information. Where an Instruction is
communicated by electronic means, or otherwise where an Instruction contains an
identifying number such as a CUSIP, SEDOL or ISIN number, the Custodian shall be
entitled to rely on such number as controlling notwithstanding any inconsistency
contained in such Instruction, particularly with respect to Investment
description;
4.3.5 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian may give prompt notice of such determination to the
Trust, and the Trust shall thereupon amend or otherwise reform such Instruction.
In such event, the Custodian shall have no obligation to take any action in
response to the Instruction initially delivered until the redelivery of an
amended or reformed Instruction
4.4 Timeliness of Instructions. In giving an Instruction, the Trust
shall take into consideration delays which may occur due to the involvement of a
Subcustodian or agent, differences in time zones, and other factors particular
to a given market, exchange or issuer. When the Custodian has established
specific timing requirements or deadlines with respect to particular classes of
Instruction, or when an Instruction is received by the Custodian at such a time
that it could not reasonably be expected to have acted on such instruction due
to time zone differences or other factors beyond its reasonable control, the
execution of any Instruction received by the Custodian after such deadline or at
such time (including any modification or revocation of a previous Instruction)
shall be at the risk of the Trust.
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5. Safekeeping of Trust Assets. The Custodian shall hold
Investments delivered to it or Subcustodians for the Trust in accordance with
the provisions of this Section. The Custodian shall not be responsible for (a)
the safekeeping of Investments not delivered or that are not caused to be issued
to it or its Subcustodians; or, (b) pre-existing faults or defects in
Investments that are delivered to the Custodian, or its Subcustodians. The
Custodian is hereby authorized to hold with itself or a Subcustodian, and to
record in one or more accounts, all Investments delivered to and accepted by the
Custodian, any Subcustodian or their respective agents pursuant to an
Instruction or in consequence of any corporate action. The Custodian shall hold
Investments for the account of the Trust and shall segregate Investments from
assets belonging to the Custodian and shall cause its Subcustodians to segregate
Investments from assets belonging to the Subcustodian in an account held for the
Trust or in an account maintained by the Subcustodian generally for
non-proprietary assets of the Custodian.
5.1 Use of Securities Depositories. The Custodian may deposit and
maintain Investments in any Securities Depository, either directly or through
one or more Subcustodians appointed by the Custodian. Investments held in a
Securities Depository shall be held (a) subject to the agreement, rules,
statement of terms and conditions or other document or conditions effective
between the Securities Depository and the Custodian or the Subcustodian, as the
case may be, and (b) in an account for the Trust or in bulk segregation in an
account maintained for the non-proprietary assets of the entity holding such
Investments in the Depository. If market practice or the rules and regulations
of the Securities Depository prevent the Custodian, the Subcustodian or (any
agent of either) from holding its client assets in such a separate account, the
Custodian, the Subcustodian or other agent shall as appropriate segregate such
Investments for benefit of the Trust or for benefit of clients of the Custodian
generally on its own books.
5.2 Certificated Assets. Investments which are certificated may be held
in registered or bearer form: (a) in the Custodian's vault; (b) in the vault of
a Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities Depository;
all in accordance with customary market practice in the jurisdiction in which
any Investments are held.
5.3 Registered Assets. Investments which are registered may be
registered in the name of the Custodian, a Subcustodian, or in the name of the
Trust or a nominee for any of the foregoing, and (subject always to the final
sentence of Section 5) may be held in any manner set forth in paragraph 5.2
above with or without any identification of fiduciary capacity in such
registration.
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5.4 Book Entry Assets. Investments which are represented by book-entry
may be so held in an account maintained by the Book-Entry Agent on behalf of the
Custodian, a Subcustodian or another agent of the Custodian, or a Securities
Depository.
5.5 Replacement of Lost Investments. In the event of a loss of
Investments for which the Custodian is responsible under the terms of this
Agreement, the Custodian shall replace such Investment, or in the event that
such replacement cannot be effected, the Custodian shall pay to the Trust the
fair market value of such Investment based on the last available price as of the
close of business in the relevant market on the date that a claim was first made
to the Custodian with respect to such loss, or, if less, such other amount as
shall be agreed by the parties as the date for settlement.
6. Administrative Duties of the Custodian. The Custodian shall perform the
following administrative duties with respect to Investments of the Trust.
6.1 Purchase of Investments. Pursuant to Instruction, Investments
purchased for the account of the Trust shall be paid for (a) against delivery
thereof to the Custodian or a Subcustodian, as the case may be, either directly
or through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
6.2 Sale of Investments. Pursuant to Instruction, Investments sold for
the account of the Trust shall be delivered (a) against payment therefor in
cash, by check or by bank wire transfer, (b) by credit to the account of the
Custodian or the applicable Subcustodian, as the case may be, with a Clearing
Corporation or a Securities Depository (in accordance with the rules of such
Securities Depository or such Clearing Corporation), or (c) otherwise in
accordance with an Instruction, Applicable Law, generally accepted trade
practices, or the terms of the instrument representing such Investment.
6.3 Delivery in Connection with Borrowings of the Trust or other
Collateral and Margin Requirements. Pursuant to Instruction, the Custodian may
deliver Investments or cash of the Trust in connection with borrowings and other
collateral and margin requirements.
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6.4 Futures and Options. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Trust and a futures commission
merchant regarding margin (Tri-Party Agreement), the Custodian shall (a) receive
and retain, to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the purchase or sale by the Trust of
exchange-traded futures contracts and commodity options, (b) when required by
such Tri-Party Agreement, deposit and maintain in an account opened pursuant to
such Agreement (Margin Account), segregated either physically or by book-entry
in a Securities Depository for the benefit of any futures commission merchant,
such Investments as the Trust shall have designated as initial, maintenance or
variation "margin" deposits or other collateral intended to secure the Trust's
performance of its obligations under the terms of any exchange-traded futures
contracts and commodity options; and (c) thereafter pay, release or transfer
Investments into or out of the margin account in accordance with the provisions
of the such Agreement. Alternatively, the Custodian may deliver Investments, in
accordance with an Instruction, to a futures commission merchant for purposes of
margin requirements in accordance with Rule 17f-6. The Custodian shall in no
event be responsible for the acts and omissions of any futures commission
merchant to whom Investments are delivered pursuant to this Section; for the
sufficiency of Investments held in any Margin Account; or, for the performance
of any terms of any exchange-traded futures contracts and commodity options.
6.5 Contractual Obligations and Similar Investments. From time to time,
the Trust's Investments may include Investments that are not ownership interests
as may be represented by certificate (whether registered or bearer), by entry in
a Securities Depository or by book entry agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If the Trust shall at
any time acquire such Investments, including without limitation deposit
obligations, loan participations, repurchase agreements and derivative
arrangements, the Custodian shall (a) receive and retain, to the extent the same
are provided to the Custodian, confirmations or other documents evidencing the
arrangement; and (b) perform on the Trust's account in accordance with the terms
of the applicable arrangement, but only to the extent directed to do so by
Instruction. The Custodian shall have no responsibility for agreements running
to the Trust as to which it is not a party other than to retain, to the extent
the same are provided to the Custodian, documents or copies of documents
evidencing the arrangement and, in accordance with Instruction, to include such
arrangements in reports made to the Trust.
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6.6 Exchange of Securities. Unless otherwise directed by Instruction,
the Custodian shall: (a) exchange securities held for the account of the Trust
for other securities in connection with any reorganization, recapitalization,
conversion, split-up, change of par value of shares or similar event, and (b)
deposit any such securities in accordance with the terms of any reorganization
or protective plan.
6.7 Surrender of Securities. Unless otherwise directed by Instruction,
the Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of an entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of indebtedness.
6.8 Rights, Warrants, Etc. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deposit securities in
response to any invitation for the tender thereof.
6.9 Mandatory Corporate Actions. Unless otherwise directed by
Instruction, the Custodian shall: (a) comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions or similar rights of
securities ownership affecting securities held on the Trust's account and
promptly notify the Trust of such action, and (b) collect all stock dividends,
rights and other items of like nature with respect to such securities.
6.10 Income Collection. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to the Trust with respect to
Investments and promptly credit the amount collected to a Principal or Agency
Account; provided, however, that the Custodian shall not be responsible for: (a)
the collection of amounts due and payable with respect to Investments that are
in default, or (b) the collection of cash or share entitlements with respect to
Investments that are not registered in the name of the Custodian or its
Subcustodians. The Custodian is hereby authorized to endorse and deliver any
instrument required to be so endorsed and delivered to effect collection of any
amount due and payable to the Trust with respect to Investments.
6.11 Ownership Certificates and Disclosure of the Trust's Interest. The
Custodian is hereby authorized to execute on behalf of the Trust ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Trust with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
6.12 Proxy Materials. The Custodian shall deliver, or cause to be
delivered, to the Trust proxy forms, notices of meeting, and any other notices
or announcements materially affecting or relating to Investments received by the
Custodian or any nominee.
6.13. Taxes. The Custodian shall, where applicable, assist the Trust in
the reclamation of taxes withheld on dividends and interest payments received by
the Trust. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the advice of counsel
and upon information and advice regarding the Trust's tax status that is
received from or on behalf of the Trust without duty of separate inquiry.
6.14 Other Dealings. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
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The Custodian shall attend to all nondiscretionary details in
connection with the sale or purchase or other administration of Investments,
except as otherwise directed by an Instruction, and may make payments to itself
or others for minor expenses of administering Investments under this Agreement;
provided that the Trust shall have the right to request an accounting with
respect to such expenses.
In fulfilling the duties set forth in Sections 6.6 through 6.10 above,
the Custodian shall provide to the Trust all material information pertaining to
a corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Any advance credit of cash or shares expected to be received as a
result of any corporate action shall be subject to actual collection and may,
when the Custodian deems collection unlikely, be reversed by the Custodian.
The Custodian may at any time or times in its discretion appoint (and
may at any time remove) agents (other than Subcustodians) to carry out some or
all of the administrative provisions of this Agreement (Agents), provided,
however, that the appointment of such agent shall not relieve the Custodian of
its administrative obligations under this Agreement. 7. Cash Accounts, Deposits
and Money Movements. Subject to the terms and conditions set forth in this
Section 7, the Trust hereby authorizes the Custodian to open and maintain, with
itself or with Subcustodians, cash accounts in United States Dollars, in such
other currencies as are the currencies of the countries in which the Trust
maintains Investments or in such other currencies as the Trust shall from time
to time request by Instruction.
7.1 Types of Cash Accounts. Cash accounts opened on the books of the
Custodian (Principal Accounts) shall be opened in the name of the Trust. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 7 and the general liability provisions
contained in Section 9. Cash accounts opened on the books of a Subcustodian may
be opened in the name of the Trust or the Custodian or in the name of the
Custodian for its customers generally (Agency Accounts). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Trust. Accordingly, the Custodian shall be responsible for exercising reasonable
care in the administration of such accounts but shall not be liable for their
repayment in the event such Subcustodian, by reason of its bankruptcy,
insolvency or otherwise, fails to make repayment.
7.2 Payments and Credits with Respect to the Cash Accounts. The
Custodian shall make payments from or deposits to any of said accounts in the
course of carrying out its administrative duties, including but not limited to
income collection with respect to the Trust's Investments, and otherwise in
accordance with Instructions. The Custodian and its Subcustodians shall be
required to credit amounts to the cash accounts only when moneys are actually
received in cleared funds in accordance with banking practice in the country and
currency of deposit. Any credit made to any Principal or Agency Account before
actual receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
7.3 Currency and Related Risks. The Trust bears risks of holding or
transacting in any currency. The Custodian shall not be liable for any loss or
damage arising from the applicability of any law or regulation now or hereafter
in effect, or from the occurrence of any event, which may delay or affect the
transferability, convertibility or availability of any currency in the country
(a) in which such Principal or Agency Accounts are maintained or (b) in which
such currency is issued, and in no event shall the Custodian be obligated to
make payment of a deposit denominated in a currency during the period during
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which its transferability, convertibility or availability has been affected by
any such law, regulation or event. Without limiting the generality of the
foregoing, neither the Custodian nor any Subcustodian shall be required to repay
any deposit made at a foreign branch of either the Custodian or Subcustodian if
such branch cannot repay the deposit due to a cause for which the Custodian
would not be responsible in accordance with the terms of Section 9 of this
Agreement unless the Custodian or such Subcustodian expressly agrees in writing
to repay the deposit under such circumstances. All currency transactions in any
account opened pursuant to this Agreement are subject to exchange control
regulations of the United States and of the country where such currency is the
lawful currency or where the account is maintained. Any taxes, costs, charges or
fees imposed on the convertibility of a currency held by the Trust shall be for
the account of the Trust.
7.4 Foreign Exchange Transactions. The Custodian shall, subject to the
terms of this Section and further subject to and only as allowed under the Act
(and particularly Section 17(a) and any regulations or administrative rulings or
relief thereunder), settle foreign exchange transactions (including contracts,
futures, options and options on futures) on behalf and for the account of the
Trust with such currency brokers or banking institutions, including
Subcustodians, as the Trust may direct pursuant to Instructions. The Custodian
may act as principal in any foreign exchange transaction with the Trust in
accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 Third Party Foreign Exchange Transactions. The
Custodian shall process foreign exchange transactions
(including without limitation contracts, futures, options, and
options on futures), where any third party acts as principal
counterparty to the Trust on the same basis it performs duties
as agent for the Trust with respect to any other of the
Trust's Investments. Accordingly the Custodian shall only be
responsible for delivering or receiving currency on behalf of
the Trust in respect of such contracts pursuant to
Instructions. The Custodian shall not be responsible for the
failure of any counterparty (including any Subcustodian) in
such agency transaction to perform its obligations thereunder.
The Custodian (a) shall transmit cash and Instructions to and
from the currency broker or banking institution with which a
foreign exchange contract or option has been executed pursuant
hereto, (b) may make free outgoing payments of cash in the
form of Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or
confirmation that the countervalue currency completing the
foreign exchange contract has been delivered or received or
that the option has been delivered or received, and (c) shall
hold all confirmations, certificates and other documents and
agreements received by the Custodian and evidencing or
relating to such foreign exchange transactions in safekeeping.
The Trust accepts full responsibility for its use of
third-party foreign exchange dealers and for execution of said
foreign exchange contracts and options and understands that
the Trust shall be responsible for any and all costs and
interest charges which may be incurred by the Trust or the
Custodian as a result of the failure or delay of third parties
to deliver foreign exchange.
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7.4.2 Foreign Exchange with the Custodian as
Principal. Subject to the first sentence of Section 7.4, the
Custodian may undertake foreign exchange transactions with the
Trust as principal as the Custodian and the Trust may agree
from time to time. In such event, the foreign exchange
transaction will be performed in accordance with the
particular agreement of the parties, or in the event a
principal foreign exchange transaction is initiated by
Instruction in the absence of specific agreement, such
transaction will be performed in accordance with the usual
commercial terms of the Custodian.
7.5 Delays. If no event of Force Majeure shall have occurred and be
continuing and in the event that a delay shall have been caused by the
negligence or willful misconduct of the Custodian in carrying out an Instruction
to credit or transfer cash, the Custodian shall be liable to the Trust: (a) with
respect to Principal Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Custodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected; and,
(b) with respect to Agency Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Subcustodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected. The
Custodian shall not be liable for delays in carrying out such Instructions to
transfer cash which are not due to the Custodian's own negligence or willful
misconduct.
7.6 Advances. If, for any reason in the conduct of its safekeeping
duties pursuant to Section 5 hereof or its administration of the Trust's assets
pursuant to Section 6 hereof, the Custodian or any Subcustodian advances monies
to facilitate settlement or otherwise for benefit of the Trust (whether or not
any Principal or Agency Account shall be overdrawn either during, or at the end
of, any Business Day), the Trust hereby does only against the reimbursement of
the amount of such advance:
7.6.1 acknowledge that the Trust shall have no right or title to any
Investments purchased with such Advance save a right to receive such
Investments upon: (a) the debit of the Principal or Agency Account; or,
(b) if such debit would produce an overdraft in such account, other
reimbursement of the associated Advance;
7.6.2 grant to the Custodian a security interest in all
Investments; and,
7.6.3 agree that the Custodian may secure the resulting Advance by
perfecting a security interest in all Investments under Applicable Law.
Neither the Custodian nor any Subcustodian shall be obligated to advance monies
to the Trust, and in the event that such Advance occurs, any transaction giving
rise to an Advance shall be for the account and risk of the Trust and shall not
be deemed to be a transaction undertaken by the Custodian for its own account
and risk. If such Advance shall have been made by a Subcustodian or any other
person, the Custodian may assign the security interest and any other rights
granted to the Custodian hereunder to such Subcustodian or other person. If the
Trust shall fail to repay when due the principal balance of an Advance and
accrued and unpaid interest thereon, the Custodian or its assignee, as the case
may be, shall be entitled to utilize the available cash balance in any Agency or
Principal Account and to dispose of any Investments to the extent necessary to
recover payment of all principal of, and interest on, such Advance in full. The
Custodian may assign any rights it has hereunder to a Subcustodian or third
party. Any security interest in Investments taken hereunder shall be treated as
financial assets credited to securities accounts under Articles 8 and 9 of the
Uniform Commercial Code (1997). Accordingly, the Custodian shall have the rights
and benefits of a secured creditor that is a securities intermediary under such
Articles 8 and 9.
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7.7 Integrated Account. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall collectively
constitute a single and indivisible current account with respect to the Trust's
obligations to the Custodian, or its assignee, and balances in such Principal
Accounts shall be available for satisfaction of the Trust's obligations under
this Section 7. The Custodian shall further have a right of offset against the
balances in any Agency Account maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. Subcustodians and Securities Depositories. Subject to the provisions
hereinafter set forth in this Section 8, the Trust hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Trust and
to appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form, in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and clearing agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
8.1 Domestic Subcustodians and Securities Depositories. The Custodian
may deposit and/or maintain, either directly or through one or more agents
appointed by the Custodian, Investments of the Trust in any Securities
Depository in the United States, including The Depository Trust Company,
provided such Depository meets applicable requirements of the Federal Reserve
Bank or of the Securities and Exchange Commission. The Custodian may, at any
time and from time to time, appoint any bank meeting the requirements of a
custodian and the rules and regulations thereunder, to act on behalf of the
Trust as a Subcustodian for purposes of holding Investments of the Trust in the
United States.
8.2 Foreign Subcustodians and Securities Depositories. The Custodian
may deposit and/or maintain non-U.S. Investments of the Trust in any non-U.S.
Securities Depository provided such Securities Depository meets the requirements
of an "eligible foreign custodian", or any successor rule or regulation or which
by order of the Securities and Exchange Commission is exempted therefrom.
Additionally, the Custodian may, at any time and from time to time, appoint (a)
any bank, trust company or other entity meeting the requirements of an Eligible
Foreign Custodian under Rule 17f-5 or which by order of the Securities and
Exchange Commission is exempted therefrom, or (b) any bank meeting the
requirements of a custodian and the rules and regulations thereunder, to act on
behalf of the Trust as a Subcustodian for purposes of holding Investments of the
Trust outside the United States. Such appointment of foreign Subcustodians shall
be subject to approval of the Trust in accordance with Subsections 8.2.1 and
8.2.2.
8.2.1 Board Approval of Foreign Subcustodians. Unless and
except to the extent that review of certain matters concerning the
appointment of Subcustodians shall have been delegated to the Custodian
pursuant to Subsection 8.2.2, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding Investments of
the Trust outside the United States, obtain written confirmation of the
approval of the Board of Trustees of the Trust with respect to (a) the
identity of a Subcustodian, (b) the country or countries in which, and
the Securities Depositories, if any, through which, any proposed
Subcustodian is authorized to hold Investments of the Trust, and (c)
the Subcustodian agreement which shall govern such appointment. Each
such duly approved country, Subcustodian and Securities Depository
shall be listed on Appendix A attached hereto as the same may from time
to time be amended.
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8.2.2 Delegation of Board Review of Subcustodians. From time
to time, the Custodian may offer and the Fund may accept that the
Custodian perform certain reviews of Subcustodians and of Subcustodian
Contracts as delegate of the Fund's Board. In such event, the
Custodian's duties and obligations with respect to this delegated
review will be performed in accordance with the terms of a separate
delegation agreement between the Trust and the Custodian.
8.3 Responsibility for Subcustodians. The Custodian shall be liable to
the Fund for any loss or damage to the Fund caused by or resulting from the acts
or omissions of any Subcustodian to the extent that (i) under the terms set
forth in the subcustodian agreement between the Custodian and the Subcustodian,
the Subcustodian has failed to perform in accordance with the standard of
conduct imposed under such subcustodian agreement, (ii) such acts or omissions
would be deemed to be negligence, gross negligence or willful misconduct, or
(iii) such omissions represent a failure to perform under this Agreement, each
in accordance with the terms of the relevant subcustodian agreement under the
laws, circumstances and practices prevailing in the place where the act or
omission occurred. In the countries listed by appendix to this agreement this
responsibility will be further conditioned upon ability of the Custodian to
recover from the Subcustodian. In such case, the Custodian shall use reasonable
and diligent efforts to recover on behalf of the Fund or to subrogate its rights
under the Subcustodian Agreement.
8.4 New Countries. The Trust shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith.
9. Responsibility of the Custodian. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is effected. Subject to
the specific provisions of this Section, the Custodian shall be liable for any
direct damage incurred by the Trust in consequence of the Custodian's
negligence, bad faith or willful misconduct. In no event shall the Custodian be
liable hereunder for any special, indirect, punitive or consequential damages
arising out of, pursuant to or in connection with this Agreement even if the
Custodian has been advised of the possibility of such damages and has in turn
advised the Trust. It is agreed that the Custodian shall have no duty to assess
the risks inherent in the Trust's Investments or to provide investment advice
with respect to such Investments and that the Trust as principal shall bear any
risks attendant to particular Investments such as failure of counterparty or
issuer.
9.1 Limitations of Performance. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not liable
hereunder for any loss or damage in association with such failure to perform,
for or in consequence of the following causes:
9.1.1 Force Majeure. Force Majeure shall mean any circumstance
or event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other agent of the Custodian or the Subcustodian,
including any event caused by, arising out of or involving (a) an act
of God, (b) accident, fire, water damage or explosion, (c) any
computer, system or other equipment failure or malfunction caused by
any computer virus or the malfunction or failure of any communications
medium, (d) any interruption of the power supply or other utility
service, (e) any strike or other work stoppage, whether partial or
total, (f) any delay or disruption resulting from or reflecting the
occurrence of any Sovereign Risk, (g) any disruption of, or suspension
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of trading in, the securities, commodities or foreign exchange markets,
whether or not resulting from or reflecting the occurrence of any
Sovereign Risk, (h) any encumbrance on the transferability of a
currency or a currency position on the actual settlement date of a
foreign exchange transaction, whether or not resulting from or
reflecting the occurrence of any Sovereign Risk, or (i) any other cause
similarly beyond the reasonable control of the Custodian.
9.1.2 Country Risk. Country Risk shall mean, with respect to
the acquisition, ownership, settlement or custody of Investments in a
jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for or
ownership of Investments including (a) the prevalence of crime and
corruption, (b) the inaccuracy or unreliability of business and
financial information, (c) the instability or volatility of banking and
financial systems, or the absence or inadequacy of an infrastructure to
support such systems, (d) custody and settlement infrastructure of the
market in which such Investments are transacted and held, (e) the acts,
omissions and operation of any Securities Depository, (f) the risk of
the bankruptcy or insolvency of banking agents, counterparties to cash
and securities transactions, registrars or transfer agents, and (g) the
existence of market conditions which prevent the orderly execution or
settlement of transactions or which affect the value of assets.
9.1.3 Sovereign Risk. Sovereign Risk shall mean, in respect of
any jurisdiction, including the United States of America, where
Investments is acquired or held hereunder or under a Subcustody
Agreement, (a) any act of war, terrorism, riot, insurrection or civil
commotion, (b) the imposition of any investment, repatriation or
exchange control restrictions by any Governmental Authority, (c) the
confiscation, expropriation or nationalization of any Investments by
any Governmental Authority, whether de facto or de jure, (iv) any
devaluation or revaluation of the currency, (d) the imposition of
taxes, levies or other charges affecting Investments, (vi) any change
in the Applicable Law, or (e) any other economic or political risk
incurred or experienced.
9.2. Limitations on Liability. The Custodian shall not be liable for
any loss, claim, damage or other liability arising from the following causes:
9.2.1 Failure of Third Parties. The failure of any third party
including: (a) any issuer of Investments or book-entry or other agent
of and issuer; (b) any counterparty with respect to any Investment,
including any issuer of exchange-traded or other futures, option,
derivative or commodities contract; (c) failure of an agent of the
Trust other than Xxxxx Brother Xxxxxxxx & Co.; or (d) failure of other
third parties similarly beyond the control or choice of the Custodian.
9.2.2 Information Sources. The Custodian may rely upon
information received from issuers of Investments or agents of such
issuers, information received from Subcustodians and from other
commercially reasonable sources such as commercial data bases and the
like, but shall not be responsible for specific inaccuracies in such
information, provided that the Custodian has relied upon such
information in good faith, or for the failure of any commercially
reasonable information provider.
9.2.3 Reliance on Instruction. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such action
conflicts with, or is contrary to any provision of, the Trust's
declaration of trust or by-laws, Applicable Law, or actions by the
trustees, or shareholders of the Trust.
9.2.4 Restricted Securities. The limitations inherent in the
rights, transferability or similar investment characteristics of a
given Investment of the Trust.
15
10. Indemnification. The Trust hereby indemnifies the Custodian and each
Subcustodian, and their respective agents, nominees and the partners, employees,
officers and directors, and agrees to hold each of them harmless from and
against all claims and liabilities, including counsel fees and taxes, incurred
or assessed against any of them in connection with the performance of this
Agreement and any Instruction, except such as may arise from its negligent
action, negligent failure to act or willful misconduct. If a Subcustodian or any
other person indemnified under the preceding sentence, gives written notice of
claim to the Custodian, the Custodian shall promptly give written notice to the
Trust. 11. Reports and Records. The Custodian shall:
11.1 create and maintain records relating to the
performance of its obligations under this Agreement;
11.2 make available to the Trust, its auditors,
agents and employees, during regular business hours of the Custodian,
upon reasonable request and during normal business hours of the
Custodian, all records maintained by the Custodian pursuant to
paragraph (a) above, subject, however, to all reasonable security
requirements of the Custodian then applicable to the records of its
custody customers generally; and
11.3 make available to the Trust all Electronic
Reports; it being understood that the Custodian shall not be liable
hereunder for the inaccuracy or incompleteness thereof or for errors in
any information included therein.
The Trust shall examine all records, howsoever produced or transmitted,
promptly upon receipt thereof and notify the Custodian promptly of any
discrepancy or error therein. Unless the Trust delivers written notice of any
such discrepancy or error within a reasonable time after its receipt thereof,
such records shall be deemed to be true and accurate. It is understood that the
Custodian now obtains and will in the future obtain information on the value of
assets from outside sources which may be utilized in certain reports made
available to the Trust. The Custodian deems such sources to be reliable but it
is acknowledged and agreed that the Custodian does not verify nor represent nor
warrant as to the accuracy or completeness of such information and accordingly
shall be without liability in selecting and using such sources and furnishing
such information.
12. Miscellaneous.
12.1 Proxies, etc. The Trust will promptly execute and
deliver, upon request, such proxies, powers of attorney or other instruments as
may be necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
12.2 Entire Agreement. Except as specifically provided herein,
this Agreement constitutes the entire agreement between the Trust and the
Custodian with respect to the subject matter hereof. Accordingly, this Agreement
supersedes any custody agreement or other oral or written agreements heretofore
in effect between the Trust and the Custodian with respect to the custody of the
Trust's Investments.
12.3 Waiver and Amendment. No provision of this Agreement may
be waived, amended or modified, and no addendum to this Agreement shall be or
become effective, or be waived, amended or modified, except by an instrument in
writing executed by the party against which enforcement of such waiver,
amendment or modification is sought; provided, however, that an Instruction
shall, whether or not such Instruction shall constitute a waiver, amendment or
modification for purposes hereof, shall be deemed to have been accepted by the
Custodian when it commences actions pursuant thereto or in accordance therewith.
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12.4 GOVERNING LAW AND JURISDICTION. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE PARTIES
HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE BOROUGH
OF MANHATTAN.
12.5 Notices. Notices and other writings contemplated by this
Agreement, other than Instructions, shall be delivered (a) by hand, (b) by first
class registered or certified mail, postage prepaid, return receipt requested,
(c) by a nationally recognized overnight courier or (d) by facsimile
transmission, provided that any notice or other writing sent by facsimile
transmission shall also be mailed, postage prepaid, to the party to whom such
notice is addressed. All such notices shall be addressed, as follows:
If to the Trust:
C/O Signature Financial Group.
00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile (000) 000-0000
If to the Custodian:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000,
or such other address as the Trust or the Custodian may have designated in
writing to the other.
12.6 Headings. Paragraph headings included herein are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
12.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original. This
Agreement shall become effective when one or more counterparts have been signed
and delivered by the Trust and the Custodian. 12.8 Confidentiality. The parties
hereto agree that each shall treat confidentially the terms and conditions of
this Agreement and all information provided by each party to the other regarding
its business and operations. All confidential information provided by a party
hereto shall be used by any other party hereto solely for the purpose of
rendering or obtaining services pursuant to this Agreement and, except as may be
required in carrying out this Agreement, shall not be disclosed to any third
party without the prior consent of such providing party. The foregoing shall not
be applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required to be disclosed by or to any bank examiner of the
Custodian or any Subcustodian, any Regulatory Authority, any auditor of the
parties hereto, or by judicial or administrative process or otherwise by
Applicable Law.
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12.9 Counsel. In fulfilling its duties hereunder, the
Custodian shall be entitled to receive and act upon the advice of (i) counsel
regularly retained by the Custodian in respect of such matters, (ii) counsel for
the Trust or (iii) such counsel as the Trust and the Custodian may agree upon,
with respect to all matters, and the Custodian shall be without liability for
any action reasonably taken or omitted pursuant to such advice. 12.10 Limitation
of Liability. A copy of the Trust's Declaration of Trust is on file with the
Secretary of State of The State of New York and notice is hereby given that this
Agreement has been executed on behalf of the Trust by an officer of the Trust in
such capacity and not individually. It is agreed that obligations of the Trust
hereunder shall not be binding personally upon any of the Trustees,
shareholders, officers, agents or employees of the Trust, but shall bind only
the trust property of the Trust as provided in the Declaration of Trust. The
Trust shall be liable for the obligations of any other Trust of the Trust. 13.
Definitions. The following defined terms will have the respective meanings set
forth below.
13.1 Advance shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include amounts paid to
third parties for account of the Trust or in discharge of any expense, tax or
other item payable by the Trust.
13.2 Agency Account shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 7.1.
13.3 Agent shall have the meaning set forth in the last system of
Section 6.
13.4 Applicable Law shall mean with respect to each jurisdiction, all
(a) laws, statutes, treaties, regulations, guidelines (or their equivalents);
(b) orders, interpretations licenses and permits; and (c) judgments, decrees,
injunctions writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
13.5 Authorized Person shall mean any person or entity authorized to
give Instructions on behalf of the Trust in accordance with Section 4.1.
13.6 Book-entry Agent shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar entitlement
to Investments, including without limitation a transfer agent or registrar.
13.7 Clearing Corporation shall mean any entity or system established
for purposes of providing securities settlement and movement and associated
functions for a given market.
13.8 Delegation Agreement shall mean any separate agreement entered
into between the Custodian and the Trust or its authorized representative with
respect to certain matters concerning the appointment and administration of
Subcustodians delegated to the Custodian pursuant to Rule 17f-5.
13.9 Foreign Custody Manager shall mean the Trust's foreign custody
manager.
13.10 Funds Transfer Services Agreement shall mean any separate
agreement entered into between the Custodian and the Trust or its authorized
representative with respect to certain matters concerning the processing of
payment orders from Principal Accounts of the Trust.
13.11 Instruction(s) shall have the meaning assigned in Section 4.
13.12 Investment Advisor shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Trust's Investments.
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13.13 Investments shall mean any investment asset of the Trust,
including without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets.
13.14 Margin Account shall have the meaning set forth in
Section 6.4 hereof.
13.15 Principal Account shall mean deposit accounts of the Trust
carried on the books of BBH&Co. as principal in accordance with Section 7.
13.16 Safekeeping Account shall mean an account established on the
books of the Custodian or any Subcustodian for purposes of segregating the
interests of the Trust (or clients of the Custodian or Subcustodian) from the
assets of the Custodian or any Subcustodian.
13.17 Securities Depository shall mean a central or book entry system
or agency established under Applicable Law for purposes of recording the
ownership and/or entitlement to investment securities for a given market.
13.18 Subcustodian shall mean each foreign bank appointed by the
Custodian pursuant to Section 8, but shall not include Securities Depositories.
13.19 Tri-Party Agreement shall have the meaning set forth in
Section 6.4 hereof.
14. Compensation. The Trust agrees to pay to the Custodian (a) a fee in an
amount set forth in the fee letter between the Trust and the Custodian in effect
on the date hereof or as amended from time to time, and (b) all out-of-pocket
expenses incurred by the Custodian, including the fees and expenses of all
Subcustodians, and payable from time to time. Amounts payable by the Trust under
and pursuant to this Section 14 shall be payable by wire transfer to the
Custodian at BBH&Co. in New York, New York.
15. Termination. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 Notice and Effect. This Agreement may be terminated by
either party by written notice effective no sooner than seventy-five
days following the date that notice to such effect shall be delivered
to other party at its address set forth in paragraph 12.5 hereof.
15.2 Successor Custodian. In the event of the appointment of a
successor custodian, it is agreed that the Investments of the Trust
held by the Custodian or any Subcustodian shall be delivered to the
successor custodian in accordance with reasonable Instructions. The
Custodian agrees to cooperate with the Trust in the execution of
documents and performance of other actions necessary or desirable in
order to facilitate the succession of the new custodian. If no
successor custodian shall be appointed, the Custodian shall in like
manner transfer the Trust's Investments in accordance with
Instructions.
15.3 Delayed Succession. If no Instruction has been given as
of the effective date of termination, Custodian may at any time on or
after such termination date and upon ten days written notice to the
Trust either (a) deliver the Investments of the Trust held hereunder to
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the Trust at the address designated for receipt of notices hereunder;
or (b) deliver any investments held hereunder to a bank or trust
company having a capitalization of $2M USD equivalent and operating
under the Applicable law of the jurisdiction where such Investments are
located, such delivery to be at the risk of the Trust. In the event
that Investments or moneys of the Trust remain in the custody of the
Custodian or its Subcustodians after the date of termination owing to
the failure of the Trust to issue Instructions with respect to their
disposition or owing to the fact that such disposition could not be
accomplished in accordance with such Instructions despite diligent
efforts of the Custodian, the Custodian shall be entitled to
compensation for its services with respect to such Investments and
moneys during such period as the Custodian or its Subcustodians retain
possession of such items and the provisions of this Agreement shall
remain in full force and effect until disposition in accordance with
this Section is accomplished.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
By:_______________________________
By: XXXXX BROTHERS XXXXXXXX & CO.
By: _______________________________
