Exhibit (g)(2)
CUSTODIAL SERVICES AGREEMENT
AGREEMENT dated as of the 1st day of July 2000, between Forum Trust,
LLC ("Custodian"), a limited liability company organized under the laws of the
State of Maine doing business as a nondepository trust company, and Monarch
Funds, a business trust organized under the laws of the State of Delaware
("Customer").
WHEREAS, Customer is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
and may offer one or more series of shares, each of which shall represent an
interest in a separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter listed on
Exhibit A being hereafter referred to individually as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, Custodian proposes to enter into a certain Subcustodian
Agreement with Union Bank of California ("Union Bank") dated as of the 1st day
of July 2000 (the "Subcustodian Agreement") under which Union Bank provides
certain sub-custody services on behalf of the Portfolios to Custodian; and
WHEREAS, Customer wishes to retain Custodian to provide certain
custodial services to Customer for the benefit of the Portfolios, and Custodian
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. Customer, on behalf of each Portfolio,
hereby employs Custodian as custodian of all assets of each Portfolio that are
delivered to and accepted by Custodian or any Subcustodian (as that term is
defined in Section 4) (the "Property") pursuant to the terms and conditions set
forth herein. For purposes of this Agreement, "delivery" of Property shall
include the acquisition by Customer of a security entitlement (as that term is
defined in the New York Uniform Commercial Code ("UCC")). Without limitation,
such Property shall include stocks and other equity interests of every type,
evidences of indebtedness, other instruments representing same or rights or
obligations to receive, purchase, deliver or sell same and other non-cash
investment property of a Portfolio ("Securities") and cash from any source and
in any currency ("Cash"), provided that Custodian shall have the right, in its
sole discretion, to refuse to accept as Property any property of a Portfolio
that Custodian considers not to be appropriate or in proper form for deposit for
any reason. Custodian shall not be responsible for any property of a Portfolio
held or received by Customer or others and not delivered to Custodian or any
Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions (as hereinafter defined in Section 15),
Customer shall direct Custodian to (a) settle Securities transactions and
maintain Cash in the country or other jurisdiction in which the principal
trading market for such Securities is located, where such Securities are to be
presented for payment or where such Securities are acquired and (b) maintain
Cash and cash equivalents in such countries in amounts reasonably necessary to
effect Customer's transactions in such Securities.
Instructions to settle Securities transactions in any country shall be deemed to
authorize the holding of such Securities and Cash in that country.
3. Custody Account. Except as provided in the last paragraph of Section
4, Custodian agrees to establish and maintain one or more custody accounts on
its books each in the name of Customer on behalf of a Portfolio (each, an
"Account") for any and all Property from time to time received and accepted by
Custodian or any Subcustodian for the account of such Portfolio. Upon delivery
by Customer to Custodian of any acceptable Property belonging to a Portfolio,
Customer shall, by Instructions, specifically indicate in which Portfolio such
Property belongs or if such Property belongs to more than one Portfolio, shall
allocate such Property to the appropriate Portfolio, and Custodian shall
allocate such Property to the Accounts in accordance with the Instructions.
Customer, on behalf of each Portfolio, acknowledges (i) its responsibility as a
principal for all of its obligations to Custodian arising under or in connection
with this Agreement, notwithstanding, that it may be acting on behalf of other
persons, and (ii) warrants its authority to deposit in the appropriate Account
any Property received therefor by Custodian or a Subcustodian and to give, and
authorize others to give, instructions relative thereto. Custodian may deliver
securities of the same class in place of those deposited in the Account.
Custodian shall hold, keep safe and protect as custodian for each
Account all Property in such Account and, to the extent such Property
constitutes "financial assets" as defined in the UCC, shall maintain those
financial assets in such Account as security entitlements in favor of the
Portfolio in whose name the Account is maintained. All transactions, including,
but not limited to, foreign exchange transactions, involving the Property shall
be executed or settled solely in accordance with Instructions (which shall
specifically reference the Account for which such transaction is being settled),
except that until Custodian receives Instructions to the contrary, Custodian
will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account that are
called, redeemed or retired or otherwise become payable and
all coupons and other income items that call for payment upon
presentation to the extent that Custodian or Subcustodian is
actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for Custodian to
take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to
obtain Instructions such Instructions are not received in
time for Custodian to take timely action or if actual notice
of such actions was received too late to seek Instructions,
sell in the discretion of Custodian (which sale Customer
hereby authorizes Custodian to make) such rights entitlement
or fractional interest and credit the Account with the net
proceeds of such sale;
(e) execute in Customer's name for an Account, whenever Custodian
deems it appropriate, such ownership and other certificates as
may be required to obtain the payment of income from the
Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
Custodian shall notify Customer of the amount of the
shortfall and Customer may, or may cause the Portfolio to,
at its option, deposit additional Cash in such Account or
take steps to have sufficient Cash available. Customer, on
behalf of the Portfolios agrees, when and if requested by
Custodian and required in connection with the payment of any
such taxes, to cooperate with Custodian in furnishing
information, executing documents or otherwise;
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) -
(f), including, without limitation, affiliates of Custodian
or any Subcustodian; and
(h) in the event of any loss of Securities or Cash, use its best
efforts to ascertain the circumstances relating to such loss
and promptly report the same to Customer.
4. Subcustodians and Securities Systems. Customer authorizes and
instructs Custodian to maintain the Property in each Account directly in one of
its United States ("U.S.") branches or indirectly through custody accounts that
have been established by Custodian with the following other securities
intermediaries: (a) another U.S. bank or trust company (including Union Bank
pursuant to the Subcustodian Agreement) or branch thereof located in the U.S.
that is itself qualified under the 1940 Act, to act as custodian or a non-U.S.
branch of Custodian or of any U.S. Subcustodian, or a U.S. securities depository
or clearing agency or system in which Custodian or a U.S. Subcustodian
participates (individually, a "U.S. Securities System") or (b) one of
Custodian's majority-owned non-U.S. subsidiaries, a majority-owned subsidiary of
a U.S. Subcustodian or a non-U.S. bank or trust company, acting as custodian
(individually, a "non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S. depository or
clearing agency or system in which Custodian or any Subcustodian participates
(individually, a "non-U.S. Securities System"; U.S. Securities System and
non-U.S. Securities System, collectively, "Securities System"), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
Custodian shall notify Customer of the appointment of such U.S. Subcustodian or
U.S. Securities System; provided further that in each case in which a non-U.S.
Subcustodian or non-U.S. Securities System is employed, (a) such Subcustodian or
Securities System either is (i) a "qualified U.S. bank" or (ii) an "eligible
foreign custodian" as defined by Rules 17f-5 and 17f-7, as amended, under the
1940 Act or such Subcustodian or Securities System is the subject of an order
granted by the U.S. Securities and Exchange Commission ("SEC") exempting such
agent or the subcustody arrangements thereto from all or part of the provisions
of Rule 17f-5 and 17f-7, as amended, and (b) the identity of the non-U.S.
Subcustodian and the agreement between Custodian and such non-U.S. Subcustodian
has been approved by Instructions; it being understood that Custodian shall have
no liability or responsibility for determining whether the approval of any
Subcustodian or Securities System by Instructions is proper under the 1940 Act
or any rule or regulation thereunder. Exhibit D attached hereto lists all
Subcustodians and Securities Systems that have been approved by Instructions.
Notwithstanding Section 20 hereof or any other provision hereof to the contrary,
Exhibit D may be amended solely by the delivery to Custodian of Instructions
pursuant to Section 15 hereof.
Upon receipt of Instructions from Customer, Custodian agrees to cease
the employment of any Subcustodian or Securities System with respect to
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or Securities System in accordance with the provisions of this Section. In
addition, Custodian may, at any time in its discretion, upon written
notification to Customer, terminate the employment of any Subcustodian or
Securities System.
Custodian shall deliver to Customer annually a certificate stating: (a)
the identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of Custodian and the name and address of the governmental
agency or other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
requested by Customer's Board of Trustees or if the Board of Trustees directly
approves its foreign custody arrangements, such other information relating to
such non-U.S. Subcustodians and non-U.S. Securities Systems as may reasonably be
requested by Customer to ensure compliance with Rule 17f-5 and 17f-7, as
amended. If requested by the Customer's Board of Trustees or the Board of
Trustees responsible for any Portfolio directly approves its foreign custody
arrangements, Custodian also shall furnish annually to Custodian information
concerning such non-U.S. Subcustodians and non-U.S. Securities Systems similar
in kind and scope as that furnished to Customer in connection with the initial
approval of this Agreement. Custodian agrees to promptly notify Customer if, in
the normal course of its custodial activities, Custodian learns of a material
adverse change in the financial condition of a non-U.S. Subcustodian or a
non-U.S. Securities System suffers a material loss of Property, or Custodian has
reason to believe that any non-U.S. Subcustodian or non-U.S. Securities System
has ceased to be a qualified U.S. bank or an eligible foreign custodian each
within the meaning of Rule 17f-5 and 17f-7, as amended, or has ceased to be
subject to an exemptive order from the SEC.
Notwithstanding any other provision hereof to the contrary, (i) all
Property shall be delivered (as contemplated by Section 1) by or on behalf of
Customer only to Union Bank or another Subcustodian, and (ii) all Instructions
and other directions (as contemplated by Section 2) shall be delivered by
Customer only to Union Bank or another Subcustodian. All provisions of this
Agreement (including, without limitation, the final paragraph of Section 3)
shall be interpreted to give effect to the preceding sentence and Forum shall
have authority to enter the Subcustodian Agreement as agent of Customer.
5. Use of Subcustodian. With respect to Property in an Account
that is maintained by Custodian through a Subcustodian employed pursuant to
Section 4:
(a) Custodian will identify on its books as belonging to Customer
on behalf of a Portfolio, any Property maintained through such
Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of Custodian.
(d) Any agreement Custodian shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall
require that (i) the Account will be adequately indemnified
or its losses adequately insured; (ii) the Property so
maintained is not subject to any right, charge, security
interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment in
accordance with such agreement for its safe custody or
administration; (iii) beneficial ownership of Securities be
freely transferable without the payment of money or value
other than for safe custody or administration; (iv) adequate
records will be maintained identifying the Property
maintained pursuant to such Agreement as belonging to
Customer or as being held by Custodian, on behalf of
Customer or all its customers; (v) to the extent permitted
by applicable law, officers of or auditors employed by, or
other representatives of or designated by, Custodian,
including the independent public accountants of or
designated by, Customer be given access to the books and
records of such Subcustodian relating to Property or
confirmation of the contents of those records; and (vi)
Custodian on behalf of Customer will receive periodic
reports with respect to the safekeeping of the Property,
including but not limited to notification of any transfer of
Property into or out of an Account.
6. Use of Securities System. With respect to Property in the
Account(s) that is maintained by Custodian or any Subcustodian through a
Securities System employed pursuant to Section 4:
(a) Custodian shall, and the Subcustodian will be required by its
agreement with Custodian to, identify on its books such
Property as being maintained for the account of Custodian or
Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of Custodian or a Subcustodian will be subject only to
the instructions of Custodian or such Subcustodian, as the
case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of Custodian
or Subcustodian, as the case may be, unless precluded by
applicable law, rule, or regulation.
(d) Custodian shall provide Customer with any report obtained by
Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System.
7. Agents. Custodian may at any time or times in its sole discretion
appoint (or remove) as its agent to carry out such of the provisions of this
Agreement as Custodian may from time to time direct any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as custodian,
including Union Bank; provided, however, that the appointment of any agent shall
not relieve Custodian of its responsibilities or liabilities hereunder.
Custodian shall provide reasonable notice to Customer of the appointment or
removal of any agent.
8. Records, Ownership of Property, Statements, Opinions
of Independent Certified Public Accountants.
(a) The ownership of the Property, whether maintained directly
by Custodian or indirectly through a Subcustodian or a
Securities System as authorized herein, shall be clearly
recorded on Custodian's books as belonging to the
appropriate Account and not to the Custodian. Custodian
shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions
for each Account. All accounts, books and records of
Custodian relating thereto shall be open to inspection and
audit at all reasonable times during normal business hours
by any person designated by Customer. All such accounts
shall be maintained and preserved in the form reasonably
requested by Customer. Custodian will supply to Customer
from time to time, as mutually agreed upon, a statement in
respect to any Property in an Account maintained by
Custodian or by a Subcustodian. In the absence of the filing
in writing with Custodian by Customer of exceptions or
objections to any such statement within sixty (60) days of
the mailing thereof, Customer shall be deemed to have
approved such statement and in such case or upon written
approval of Customer of any such statement, such statement
shall be presumed to be for all purposes correct with
respect to all information set forth therein.
(b) Custodian shall take all reasonable action as Customer may
request to obtain from year to year favorable opinions from
Customer's independent certified public accountants with
respect to Custodian's activities hereunder in connection with
the preparation of Customer's registration statement on Form
N-1A and Customer's Form N-SAR or other periodic reports to
the SEC and with respect to any other requirements of the SEC.
(c) At the request of Customer, Custodian shall deliver, and
shall cause the Subcustodians to deliver, to Customer a
written report prepared by Custodian's independent certified
public accountants with respect to the services provided by
Custodian under this Agreement, including, without
limitation, Custodian's accounting system, internal
accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or
maintained in a securities system or with a Subcustodian.
Such report shall be of sufficient scope and in sufficient
detail as may reasonably be required by Customer and as may
reasonably be obtained by Custodian.
(d) Customer may elect to participate in any of the electronic
on-line service and communications systems offered by
Custodian or a Subcustodian that can provide Customer, on a
daily basis, with the ability to view on-line or to print in
hard copy various reports of Account activity and of
Securities and/or Cash being held in any Account. To the
extent that such service shall include market values of
Securities in an Account, Customer hereby acknowledges that
Custodian or such Subcustodian now obtains and may in the
future obtain information on such
values from outside sources that Custodian or such
Subcustodian considers to be reliable, and Customer agrees
that Custodian and such Subcustodian (i) does not verify or
represent or warrant either the reliability of such service
nor the accuracy or completeness of any such information
furnished or obtained by or through such service and (ii)
shall be subject to the standard of care set forth in
Section 16 of this Agreement in selecting and utilizing such
service or furnishing any information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account that
are maintained by Custodian or any Subcustodian may be held directly by such
entity in the name of Customer or in bearer form or maintained, on behalf of a
Portfolio, in Custodian's or Subcustodian's name or in the name of Custodian's
or Subcustodian's nominee. Securities that are maintained through a Subcustodian
or which are eligible for deposit in a Securities System as provided above may
be maintained with the Subcustodian or the Securities System in an account for
Custodian's or Subcustodian's customers, unless prohibited by law, rule, or
regulation. Custodian or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by Custodian or Subcustodian as fiduciary or as a custodian. In
the event that any Securities in the name of Custodian or its nominee or held by
a Subcustodian and registered in the name of such Subcustodian or its nominee
are called for partial redemption by the issuer of such Security, Custodian may,
subject to the rules or regulations pertaining to allocation of any Securities
System in which such Securities have been deposited, allot, or cause to be
allotted, the called portion of the respective beneficial holders of such class
of security in any manner Custodian deems to be fair and equitable. Securities
maintained with a Securities System shall be maintained subject to the rules of
that Securities System governing the rights and obligations among the Securities
System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications pertaining to any of the Securities in any Account,
Custodian shall perform such services and only such services as are (i) set
forth in Section 3 of this Agreement, (ii) described in the applicable Service
Standards (the "Proxy Service"), and (iii) as may otherwise be agreed upon
between Custodian and Customer. The liability and responsibility of Custodian in
connection with the Proxy Service referred to in (ii) of the immediately
preceding sentence and in connection with any additional services which
Custodian and Customer may agree upon as provided in (iii) of the immediately
preceding sentence shall be as set forth in the description of the Proxy Service
and as may be agreed upon by Custodian and Customer in connection with the
furnishing of any such additional service and shall not be affected by any other
term of this Agreement. Neither Custodian nor its nominees or agents shall vote
upon or in respect of any of the Securities in an Account, execute any form of
proxy to vote thereon, or give any consent or take any action (except as
provided in Section 3) with respect thereto except upon the receipt of
Instructions.
11. Segregated Account. To assist Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, Custodian
shall, upon receipt of Instructions, establish and maintain a segregated account
or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by Custodian or a Subcustodian upon receipt by Custodian of
Instructions that include all information required by Custodian. Settlement and
payment for Securities received for an Account and delivery of Securities out of
such Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities from such purchaser
or dealer, as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of Custodian in effect from
time to time for that jurisdiction or market. Custodian shall not be liable for
any loss which results from effecting transactions in accordance with the
customary or established securities trading or securities processing practices
and procedures in the applicable jurisdiction or market.
Custodian or a Subcustodian may settle purchases and sales against, or
credit income to, an Account, and Custodian may, at its sole option upon written
notice to Customer, reverse such credits or debits to the appropriate Account in
the event that the transaction does not settle, or the income is not received in
a timely manner, and Customer agrees to hold Custodian harmless from any losses
that may result therefrom. With respect to the activities of Union Bank as
Subcustodian under the Subcustodian Agreement, such credits and reversals, if
any, shall be on a contractual basis, as outlined in the Union Bank Service
Standards, as described below and provided to Customer by Custodian.
Service Standards shall be defined as any documents issued by the
Custodian, Union Bank and other Subcustodians from time to time specifying the
procedures for communicating with a customer, the terms of any additional
services to be provided to a customer, and such other matters as may be agreed
between the parties from time to time. Copies of the current Service Standards
have been delivered to Customer.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement,
Custodian or a Subcustodian shall not be required to comply
with any Instructions to settle the purchase of any
securities for the Account unless there are sufficient
immediately available funds in the relevant currency in the
Account, provided that, if, after all expenses, debits and
withdrawals of Cash in the relevant currency ("Debits")
applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the
Account have become final entries as set forth in (c) below,
the amount of immediately available funds of the relevant
currency in such Account is at least equal to the aggregate
purchase price of all securities for which Custodian has
received Instructions to settle on that date ("Settlement
Date"), Custodian, upon settlement, shall credit the
Securities to the Account by making a final entry on its
books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable
to the Account have been made, the amount of immediately
available funds in a given currency in such Account are less
than the aggregate purchase price in such currency of all
securities for which Custodian has received Instructions to
settle on any Settlement Date, Custodian, upon settlement, may
credit the securities to the Account by making a conditional
entry on its books and records ("Conditional Credit"), pending
receipt of sufficient immediately available funds in the
relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have
been made, immediately available funds in the relevant
currency at least equal to the aggregate purchase price in
such currency of all securities subject to a Conditional
Credit on a Settlement Date are deposited into the Account,
Custodian shall make the Conditional Credit a final entry on
its books and records. In such case, Customer shall be liable
to Custodian only for late charges at a rate that Custodian
customarily charges for similar extensions of credit.
(d) If (i) within a reasonable time from the posting of a
Conditional Credit, immediately available funds at least
equal to the resultant Debit on a Settlement Date are not
deposited in the Account, or (ii) any Proceeding (as defined
below) shall occur, Custodian may sell such of the
Securities subject to the Conditional Credit as it selects
in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late
charges, and any remaining proceeds shall be credited to the
Account. If such proceeds are insufficient to satisfy such
Debit in full, Customer shall continue to be liable to
Custodian for any shortfall. Custodian shall make the
Conditional Credit a final entry on its books as to the
Securities not required to be sold to satisfy such Debit.
Pending payment in full by Customer of the purchase price
for Securities subject to a Conditional Credit, and
Custodian's making a Conditional Credit a final entry on its
books, and, unless consented to by Custodian, Customer shall
have no right to give further Instructions in respect of
Securities subject to a Conditional Credit. Custodian shall
have the sole discretion to determine which Securities shall
be deemed to have been paid for by Customer out of funds
available in the Account. Any such Conditional Credit may be
reversed (and any corresponding Debit shall be canceled) by
Custodian unless and until Custodian makes a final entry on
its books crediting such Securities to the Account. The term
"Proceeding" shall mean any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating
to Customer, whether voluntary or involuntary.
(e) Customer agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the
Account (which funds shall not include the expected proceeds
of the sale of the purchased securities).
14. Permitted Transactions. Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 (but subject to Section 3) and only for the purposes
listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or
readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by Customer requiring a
pledge of Securities, but only against receipt of amounts
borrowed or in order to satisfy requirements for additional or
substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect
any restrictions applicable to Customer.
(i) For the purpose of redeeming shares of the capital stock of
Customer against delivery of the shares to be redeemed to
Custodian, a Subcustodian or Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of Customer
against delivery of the shares to be redeemed to Custodian, a
Subcustodian or Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among Customer, on behalf of a Portfolio, the
Portfolio's investment adviser and a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc., relating to
compliance with the rules of The Options Clearing Corporation,
the Commodities Futures Trading Commission or of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by Customer.
(l) For release of Securities to designated brokers under
covered call options, provided, however, that such
Securities shall be released only upon payment to Custodian
of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of
the option, or at expiration, Custodian will receive the
Securities previously deposited from broker. Custodian will
act strictly in accordance with Instructions in the delivery
of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which
are not returned promptly when due other than to make proper
request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from
Securities related transactions.
(n) Upon the termination of this Agreement as set forth in
Section 21.
(o) For other proper purposes.
Customer agrees that Custodian and any Subcustodian shall have no
obligation to verify the purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from
Customer in respect of any of Custodian's duties hereunder that have been
received by Custodian at its address set forth in Section 22 below (i) in
writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as Customer shall
have from time to time authorized in writing to give the particular class of
Instructions in question and whose name and (if applicable) signature and office
address have been filed with Custodian; or (ii) which have been transmitted
electronically through an electronic on-line service and communications system
offered by Custodian or other electronic instruction system acceptable to
Custodian; or (iii) a telephonic or oral communication by one or more persons as
Customer shall have from time to time authorized to give the particular class of
Instructions in question and whose name has been filed with Custodian; or (iv)
upon receipt of such other form of instructions as Customer may from time to
time authorize in writing and which Custodian has agreed in writing to accept.
Instructions in the form of oral communications shall be confirmed by Customer
by tested telex or writing in the manner set forth in clause (i) above, but the
lack of such confirmation shall in no way affect any action taken by Custodian
in reliance upon such oral instructions prior to Custodian `s receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
Custodian shall have the right to assume in the absence of notice to
the contrary from Customer that any person whose name is on file with Custodian
pursuant to this Section has been authorized by Customer to give the
Instructions in question and that such authorization has not been revoked.
Custodian may act upon and conclusively rely on, without any liability to
Customer or any other person or entity for any losses resulting therefrom, any
Instructions reasonably believed by it to be furnished by the proper person or
persons as provided above.
16. Standard of Care. So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
kept indemnified by and shall be without liability to the Trust for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel acceptable to the Trust (who may be
counsel for the Trust) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
If the Trust on behalf of a Fund requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Trust or the Fund being liable for the payment of
money or incurring liability of some other form, the Trust on behalf of the
Fund, as a prerequisite to requiring the Custodian to take such action, shall
provide indemnity to the Custodian in an amount and form satisfactory to it.
If the Trust requires the Custodian to advance cash or securities for
any purpose for the benefit of a Fund or in the event that the Custodian or its
nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominees own negligent action, negligent failure to act or willful misconduct,
the Custodian promptly shall notify the Trust of the existence of any such
advances, their amount and the Fund to which the advance applies. Such advances
shall be payable on demand, on the first business day following the Trust's
receipt of notice of such demand.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. Neither Custodian nor any Subcustodians shall be liable to Customer
or a Portfolio and Customer agrees to indemnify Custodian, all Subcustodians and
their nominees, for any loss, damage or expense suffered or incurred by
Custodian, any Subcustodian or their nominees arising out of any violation of
any investment restriction or other restriction or limitation applicable to
Customer or any Portfolio pursuant to any contract or any law or regulation.
18. Fees and Expenses. Customer agrees to pay to Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time. The initial fee schedule is attached
hereto as Exhibit B. Such fees will not be abated by, nor shall Custodian be
required to account for, any profits or commissions received by Custodian in
connection with its provision of custody services under this agreement. Customer
hereby agrees to hold Custodian harmless from any liability or loss resulting
from any taxes or other governmental charges, and any expense related thereto,
which may be imposed, or assessed with respect to any Property in an Account and
also agree to hold Custodian, its Subcustodians, and their respective nominees
harmless from any liability as a record holder of Property in such Account.
Custodian is authorized to charge the applicable Account for such items, and
Custodian shall have a lien on the Property in the applicable Account for any
amount payable to Custodian under this Agreement, including but not limited to
amounts payable pursuant to Section 13 and pursuant to indemnities granted by
Customer under this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account,
Custodian shall perform such services with respect thereto as are described in
the applicable Service Standards and shall in connection therewith be subject to
the standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit D may be amended as provided in Section 4 hereof and
Exhibit B may be amended as provided for therein). No waiver of any provision
hereto shall be deemed a continuing waiver unless it is so designated. No
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right.
21. Termination.
(a) This Agreement may be terminated by Customer or Custodian by
ninety (90) days' written notice to the other; provided that
notice by Customer shall specify the names of the persons to
whom Custodian shall deliver the Securities in each Account
and to whom the Cash in such Account shall be paid. If
notice of termination is given by Custodian, Customer shall,
within ninety (90) days following the giving of such notice,
deliver to Custodian a written notice specifying the names
of the persons to whom Custodian shall deliver the
Securities in each Account and to whom the Cash in such
Account shall be paid. In either case, Custodian will
deliver such Property to the persons so specified, after
deducting therefrom any amounts that Custodian determines to
be owed to it hereunder. In addition, Custodian may in its
discretion withhold from such delivery such Property as may
be necessary to settle transactions pending at the time of
such delivery. Customer grants to Custodian a lien and right
of setoff against the Account and all Property held therein
from time to time in the full amount of the foregoing
obligations. If within ninety (90) days following the giving
of a notice of termination by Custodian, Custodian does not
receive the aforementioned written notice specifying the
names of the persons to whom Custodian shall deliver the
Securities in each Account and to whom the Cash in such
Account shall be paid, Custodian, at its election, may
deliver such Securities and pay such Cash to a bank or trust
company doing business in the State of New York to be held
and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash
until a written notice as aforesaid is delivered to
Custodian, provided that from and after the ninetieth day
Custodian's obligations shall be limited to safekeeping.
(b) This Agreement may be terminated by Customer or Custodian as
to one or more Portfolios (but less than all of the
Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such
deleted Portfolios shall take effect ninety (90) days after
the date of such delivery, or such earlier time as mutually
agreed. The execution and delivery of an amended Exhibit A
that deletes one or more Portfolios shall constitute a
termination of this Agreement only with respect to such
deleted Portfolio(s), shall be governed by Section 21(a) as
to the identification of a successor custodian and the
delivery of Cash and Securities of the Portfolio(s) so
deleted to such successor custodian, and shall not affect
the obligations of Custodian and Customer hereunder with
respect to the other Portfolios set forth in Exhibit A, as
amended from time to time.
(c) Sections 16, 17, 18, 27 and 31 shall survive the termination
of this Agreement as to one or more or all Portfolios.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though Customer
had separately contracted with Custodian by separate written instrument with
respect to each Portfolio and its related Accounts.
24. Security for Payment. To secure payment of all obligations due
hereunder, Customer hereby grants to Custodian a continuing security interest in
and right of setoff against each Account and all Property held therein from time
to time in the full amount of such obligations; provided that, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account or the Portfolio related to such Account, such
security interest and right of setoff will be limited to Property held for that
Account only and its related Portfolio. Should Customer fail to pay promptly any
amounts owed hereunder, Custodian shall be entitled to use available Cash in the
Account or applicable Account, as the case may be, and to dispose of Securities
in the Account or such applicable Account as is necessary. In any such case and
without limiting the foregoing, Custodian shall be entitled to take such other
actions or exercise such other options, powers and rights as Custodian now or
hereafter has as a secured creditor under the UCC or any other applicable law,
including, without limitation, granting to any Subcustodian a security interest
in such Accounts on terms similar to those set forth in this Section 24.
25. Representations and Warranties.
(a) Customer hereby represents and warrants to Custodian that:
(i) the employment of Custodian and the allocation of fees,
expenses and other charges to any Account as herein
provided, is not prohibited by law or any governing
documents or contracts to which it is subject;
(ii) the terms of this Agreement do not violate any
obligation by which Customer is bound, whether arising
by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Customer and each Portfolio in
accordance with its terms; and
(iv) it will deliver to Custodian a duly executed
Secretary's Certificate in the form of Exhibit C
hereto or such other evidence of such authorization
as Custodian may reasonably require, whether by way
of a certified resolution or otherwise.
(b) Custodian hereby represents and warrants to Customer that:
(i) the terms of this Agreement do not violate any
obligation by which Custodian is bound, whether arising
by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding
upon Custodian in accordance with its terms;
(iii) it will deliver to Customer such evidence of such
authorization as Customer may reasonably require,
whether by way of a certified resolution or otherwise;
(iv) it is qualified as a custodian under Section 26(a) of
the 1940 Act and that it will remain so qualified or
upon ceasing to be so qualified shall promptly notify
Customer in writing; and
26. Limitations of Liability of the Trustees and Shareholders,
Officers, Employees and Agent. A copy of the Trust Instrument of the Trust is on
file with the Secretary of the Trust. The parties agree that neither the
Shareholders, Trustees, officers, employees nor any agent of the Trust shall be
liable hereunder and that the parties to this Agreement other than the Trust
shall look solely to the Trust property for the performance of this Agreement or
payment of any claim under this Agreement.
27. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of Customer and
Custodian.
28. Third-Party Beneficiary. Customer hereby acknowledges and agrees
that with respect to the Accounts:
(a) Customer authorizes Custodian to appoint Union Bank as a
Subcustodian pursuant to the Subcustodian Agreement and to
engage Union Bank to perform any and all functions under this
Agreement on behalf of Customer, including those enumerated in
the last paragraph of Section 4.
(b) As an inducement to Union Bank to act as a Subcustodian,
Customer authorizes the Custodian to bind the Customer to
those terms of the Subcustodian Agreement, including Section
23 thereof, which will obligate the Customer to pay
obligations of each Portfolio for Property of such Portfolio
custodied pursuant to the Subcustodian Agreement.
(c) Union Bank may rely, as fully as if it were a party hereto and
named as "Custodian" herein, on the representations,
warranties, covenants and indemnities of Customer set forth in
Sections 8(d), 16, 17, 24 and 28 of this Agreement.
29. Representative Capacity and Binding Obligation. A copy of the
Certificate of Trust of Customer is on file with the Secretary of State of the
State of Delaware. Notice is hereby given that this Agreement is not executed on
behalf of the Trustees of Customer as individuals, and the obligations of this
Agreement are not binding upon any of the Trustees, officers or shareholders of
Customer individually but are binding only upon the assets and property of the
Portfolios.
Custodian agrees that no shareholder, Trustee or officer of Customer
may be held personally liable or responsible for any obligations of Customer
arising out of this Agreement.
30. Submission to Jurisdiction. Intentionally Left Blank.
31. Confidentiality. The Custodian agrees to treat all records and
other information relative to the Trust and its prior, present or potential
Shareholders confidentially and the Custodian on behalf of itself and its
employees agrees to keep confidential all such information, except after prior
notification to and approval in writing by the Trust, which approval shall not
be unreasonably withheld. The preceding notwithstanding, in the event legal
process is served
upon the Custodian requiring certain disclosure, the Custodian may divulge such
information. In such event, the Custodian shall, if legally permissible, advise
the Trust of its receipt of such legal process.
32. Severability. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
33. Entire Agreement. This Agreement together with its Exhibits,
contains the entire agreement between the parties relating to the subject matter
hereof and supersedes any oral statements and prior writings with respect
thereto.
34. Headings. The headings of the sections hereof are included for
convenience of reference only and do not form a part of this Agreement.
35. 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
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused it's duly authorized
signatories to execute this Agreement as of the date first written above.
FORUM TRUST, LLC
By:/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President
MONARCH FUNDS
By:/s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
CUSTODIAL SERVICES AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
Treasury Cash Fund
Government Cash Fund
Cash Fund
FORUM TRUST, LLC
By:/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President
MONARCH FUNDS
By:/s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
A-1
CUSTODIAL SERVICES AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Custodian of a new Exhibit B to
Customer and acceptance thereof by Customer and shall be effective as of the
date of acceptance by Customer or a date agreed upon between Custodian and
Customer.
Annual Fee as a % of
Portfolio Average Daily Net Assets
Total of all Funds 0.025% of the first $1.5 billion, 0.020% of the
next $1.0 billion and 0.015% of the balance
Such fees shall be accrued by the Trust daily and payable monthly in arrears on
the first day of the next month, however, no fee shall be payable hereunder with
respect to a Fund during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Act.
B-1
CUSTODIAL SERVICES AGREEMENT
EXHIBIT C
FORM OF SECRETARY'S CERTIFICATE
I, Xxx X. Xxxxx, hereby certify that I am the Secretary of Monarch
Funds, a business trust organized under the laws of the State of Delaware (the
"Trust"), and as such I am duly authorized to, and do hereby, certify that:
1. Organizational Documents. The Trust's organizational documents, and
all amendments thereto, have been filed with the appropriate governmental
officials of Delaware, the Trust continues to be in existence and is in good
standing, and no action has been taken to repeal such organizational documents,
the same being in full force and effect on the date hereof.
2. Bylaws. The Trust's Bylaws have been duly adopted and no action
has been taken to repeal such Bylaws, the same being in full force and effect.
3. Resolutions. Resolutions have been duly adopted on behalf of the
Trust, which resolutions (i) have not in any way been revoked or rescinded, (ii)
have been in full force and effect since their adoption, to and including the
date hereof, and are now in full force and effect, and (iii) are the only
proceedings of the Trust now in force relating to or affecting the matters
referred to therein, including, without limitation, confirming that the Trust is
duly authorized to enter into a certain custody agreement with Forum Trust, LLC
(the "Agreement"), and that certain designated officers, including those
identified in paragraph 4 of this Certificate, are authorized to execute said
Agreement on behalf of the Trust, in conformity with the requirements of the
Trust's organizational documents, Bylaws, and other pertinent documents to which
the Trust may be bound.
4. Incumbency. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Trust holding those offices
set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind the Trust, as a legal matter, with
respect to all matters pertaining to the Agreement, and to execute and deliver
said Agreement on behalf of the Trust, and the signatures set forth opposite the
respective names and titles of said officers are their true, authentic
signatures:
Name Title Signature
Xxxx X. Xxxxxx President /s/ Xxxx X. Xxxxxx
Xxxxx X. Xxxxxxxxx Vice President /s/ Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxx Treasurer /s/ Xxxxxx X. Xxxxxx
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of July,
2000.
C-1
Monarch Funds
By:/s/Xxx X. Xxxxx
Name: Xxx X. Xxxxx
Title: Secretary
I, Xxxx X. Xxxxxx, Assistant Secretary of the Trust, hereby certify
that on this 1st day of July 2000, Xxx X. Xxxxx is the duly elected Secretary of
the Trust and that the signature above is his genuine signature.
Monarch Funds
By:/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Assistant Secretary
C-2
CUSTODIAL SERVICES AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
Union Bank of California
D-1
Exhibit (g)(3)
SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of the 1st day of July 2000, between Union Bank of
California, N.A. (the "Bank") and Forum Trust, LLC ("Forum").
WHEREAS, Forum provides custodial services to Monarch Funds (the
"Registrant"), an open-end, management investment company registered under the
Investment Company Act of 1940 (the "1940 Act") pursuant to a Custodian
Agreement entered into between Forum and Registrant; and
WHEREAS, Registrant may offer one or more series of shares, each of
which shall represent an interest in a separate portfolio of Securities and Cash
(each as hereinafter defined) (all such existing and additional series now or
hereafter listed on Exhibit A being hereafter referred to individually as a
"Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, Forum wishes to retain the Bank to provide certain
sub-custodian services to Forum for the benefit of the Portfolios, and the Bank
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of the Bank. Forum, on behalf of each Portfolio, hereby
employs the Bank as Agent to act as Sub-Custodian of all Securities and Cash of
each Portfolio that are delivered to and accepted by the Bank or any
Subcustodian (as that term is defined in Section 4) (the "Property") pursuant to
the terms and conditions set forth herein. For purposes of this Agreement,
"delivery" of Property shall include the acquisition by Forum of a security
entitlement (as that term is defined in the New York Uniform Commercial Code
("UCC")). Without limitation, such Property shall include stocks and other
equity interests of every type, evidences of indebtedness, other instruments
representing same or rights or obligations to receive, purchase, deliver or sell
same and other non-cash investment property of a Portfolio ("Securities") and
cash from any source and in any currency ("Cash"), provided that the Bank shall
have the right, in its sole discretion, to refuse to accept as Property any
property of a Portfolio that the Bank considers not to be appropriate or in
proper form for deposit for any reason. The Bank shall not be responsible for
any property of a Portfolio held or received by Forum or others and not
delivered to the Bank or any Subcustodian.
2. Maintenance of Securities and Cash at the Bank and Subcustodian
Locations. Pursuant to Instructions (as hereinafter defined in Section 15),
Forum shall direct the Bank to (a) settle Securities transactions and maintain
Cash in the country or other jurisdiction in which the principal trading market
for such Securities is located, where such Securities are to be presented for
payment or where such Securities are acquired and (b) maintain Cash and cash
equivalents in such countries in amounts reasonably necessary to effect Forum's
transactions in such Securities. Instructions to settle Securities transactions
in any country shall be deemed to authorize the holding of such Securities and
Cash in that country.
3. Custody Account. The Bank agrees to establish and maintain one or
more custody accounts on its books each in the name of a Portfolio or in the
name of Forum on behalf of a
Portfolio (each, an "Account") for any and all Property from time to time
received and accepted by the Bank or any Subcustodian for the account of such
Portfolio. Upon delivery by Forum to the Bank of any acceptable Property
belonging to a Portfolio, Forum shall, by Instructions, specifically indicate in
which Portfolio such Property belongs or if such Property belongs to more than
one Portfolio, shall allocate such Property to the appropriate Portfolios, and
the Bank shall allocate such Property to the Accounts in accordance with the
Instructions. Forum, on behalf of each Portfolio, acknowledges (i) its
responsibility as a principal for all of its obligations to the Bank arising
under or in connection with this Agreement, notwithstanding that it may be
acting on behalf of other persons, and (ii) warrants its authority to deposit in
the appropriate Account any Property received therefor by the Bank or a
Subcustodian and to give, and authorize others to give, instructions relative
thereto. The Bank may deliver securities of the same class in place of those
deposited in the Account.
The Bank shall hold, keep safe and protect as custodian for each
Account all Property in such Account and, to the extent such Property
constitutes "financial assets" as defined in the UCC, shall maintain those
financial assets in such Account as security entitlements in favor of the
Portfolio in whose name the Account is maintained. All transactions, including,
but not limited to, foreign exchange transactions, involving the Property shall
be executed or settled solely in accordance with Instructions (which shall
specifically reference the Account for which such transaction is being settled),
except that until the Bank receives Instructions to the contrary, the Bank will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account that are
called, redeemed or retired or otherwise become payable and
all coupons and other income items that call for payment upon
presentation to the extent that the Bank or Subcustodian is
actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Bank to
take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Bank to take timely action or
if actual notice of such actions was received too late to seek
Instructions, sell in the discretion of the Bank (which sale
Forum hereby authorizes
the Bank to make) such rights entitlement or fractional
interest and credit the Account with the net proceeds of
such sale;
(e) execute in Forum's name for an Account, whenever the Bank
deems it appropriate, such ownership and other certificates as
may be required to obtain the payment of income from the
Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Bank shall notify Forum of the amount of the shortfall
and Forum may, or may cause the Portfolio to, at its option,
deposit additional Cash in such Account or take steps to
have sufficient Cash available. Forum, on behalf of the
Portfolios agrees, when and if requested by the Bank and
required in connection with the payment of any such taxes,
to cooperate with the Bank in furnishing information,
executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Bank or any
Subcustodian.
4. Subcustodians and Securities Systems. Forum authorizes and instructs
the Bank to maintain the Property in each Account directly in one of its United
States ("U.S.") branches or indirectly through custody accounts that have been
established by the Bank with the following other securities intermediaries: (a)
another U.S. bank or trust company or branch thereof located in the U.S. that is
itself qualified under the 1940 Act, to act as custodian, or a non-U.S. branch
of the Bank or of any such other bank or trust company (individually, a "U.S.
Subcustodian"), or a U.S. securities depository or clearing agency or system in
which the Bank or a U.S. Subcustodian participates (individually, a "U.S.
Securities System") or (b) one of Bank's majority-owned non-U.S. subsidiaries, a
majority-owned subsidiary of a U.S. Subcustodian or a non-U.S. bank or trust
company, acting as custodian (individually, a "non-U.S. Subcustodian"; U.S.
Subcustodians and non-U.S. Subcustodians, collectively, "Subcustodians"), or a
non-U.S. depository or clearing agency or system in which the Bank or any
Subcustodian participates (individually, a "non-U.S. Securities System"; U.S.
Securities System and non-U.S. Securities System, collectively, "Securities
System"), provided that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; provided further that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a) such
Subcustodian or Securities System either is (i) a "qualified U.S. bank" or (ii)
an "eligible foreign custodian" as defined by Rules 17f-5 and 17f-7, as amended,
under the 1940 Act or such Subcustodian or Securities System is the subject of
an order granted by the U.S. Securities and Exchange Commission ("SEC")
exempting such agent or the subcustody arrangements thereto from all or part of
the provisions of Rule 17f-5 and 17f-7, as amended, and (b) the identity of the
non-U.S. Subcustodian and the agreement between the Bank and such non-U.S.
Subcustodian has been approved by Instructions; it being understood that the
Bank shall have no liability or responsibility for determining whether the
approval of any Subcustodian or Securities System by Instructions is proper
under the 1940 Act or any rule or regulation thereunder. Exhibit D attached
hereto incorporates by reference all Subcustodians and Securities Systems
approved by the parties as of the date hereof.
Upon receipt of Instructions, the Bank agrees to cease the employment
of any Subcustodian or Securities System with respect to Forum, and if desirable
and practicable, appoint a replacement Subcustodian or Securities System in
accordance with the provisions of this Section. In addition, the Bank may, at
any time in its discretion, upon written notification to Forum, terminate the
employment of any Subcustodian or Securities System.
The Bank shall deliver to Forum annually a certificate stating: (a) the
identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of the Bank and the name and address of the governmental agency
or other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
requested by Forum's Board of Directors, or if the Board of Trustees responsible
for any Portfolio, directly approves its foreign custody arrangements, such
other information relating to such non-U.S. Subcustodians and non-U.S.
Securities Systems as may reasonably be requested by Forum to ensure compliance
with Rule 17f-5 and 17f-7, as amended. If requested by Forum's Board of
Directors or if the Board of Trustees responsible for any Portfolio directly
approves its foreign custody arrangements, the Bank also shall furnish annually
to Forum information concerning such non-U.S. Subcustodians and non-U.S.
Securities Systems similar in kind and scope as that furnished to Forum in
connection with the initial approval of this Agreement. Bank agrees to promptly
notify Forum if, in the normal course of its custodial activities, the Bank
learns of a material adverse change in the financial condition of a non-U.S.
Subcustodian or if a non-U.S. Securities System suffers a material loss of
Property, or if the Bank has reason to believe that any non-U.S. Subcustodian or
non-U.S. Securities System has ceased to be a qualified U.S. bank or an eligible
foreign custodian each within the meaning of Rule 17f-5 and 17f-7, as amended,
or has ceased to be subject to an exemptive order from the SEC.
5. Use of Subcustodian. With respect to Property in an Account
that is maintained by the Bank through a Subcustodian employed pursuant to
Section 4:
(a) The Bank will identify on its books as belonging to Forum on
behalf of a Portfolio, any Property maintained through such
Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Bank or its agents.
(c) Property deposited with a Subcustodian will be maintained
in an account holding only assets for clients of the Bank.
(d) Any agreement the Bank shall enter into with a non-U.S.
Subcustodian with respect to maintaining Property shall
require that (i) the Account will be adequately indemnified
or its losses adequately insured; (ii) the Securities so
maintained are not subject to any right, charge, security
interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim for payment in
accordance with such agreement for their safe custody or
administration; (iii) beneficial ownership of such
Securities be freely transferable without the payment of
money or value other than for safe custody or
administration; (iv) adequate records will be maintained
identifying the Property maintained pursuant to such
Agreement as belonging to the Bank, on behalf of its
clients; (v) to the extent permitted by applicable law,
officers of or auditors employed by, or other
representatives of or designated by, the Bank including the
independent public accountants of or designated by, Forum be
given access to the books and records of such Subcustodian
relating to Property or confirmation of the contents of
those records; and (vi) the Bank on behalf of Forum will
receive periodic reports with respect to the safekeeping of
the Property, including but not limited to notification of
any transfer of Property into or out of an Account.
6. Use of Securities System. With respect to Property in the
Account(s) that is maintained by the Bank or any Subcustodian through a
Securities System employed pursuant to Section 4:
(a) The Bank shall, and the Subcustodian will be required by its
agreement with the Bank to, identify on its books such
Property as being maintained for the account of the Bank or
Subcustodian for its clients.
(b) Any Property maintained through a Securities System for the
account of the Bank or a Subcustodian will be subject only to
the instructions of the Bank or such Subcustodian, as the case
may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for clients of the Bank, as
the case may be, unless precluded by applicable law, rule, or
regulation.
(d) The Bank shall provide Forum with any report obtained by the
Bank or Subcustodian on the Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System.
7. Agents. The Bank may at any time or times in its sole discretion
appoint (or remove) as its agent to carry out such of the provisions of this
Agreement as the Bank may from time to time direct any other U.S. bank or trust
company which is itself qualified under the 1940 Act to act as custodian;
provided, however, that the appointment of any agent shall not relieve the Bank
of its responsibilities or liabilities hereunder. Bank shall provide reasonable
notice to Forum of the appointment or removal of any agent.
8. Records, Ownership of Property, Statements, Opinions of Independent
Certified Public Accountants.
(a) The ownership of the Property, whether maintained directly
by the Bank or indirectly through a Subcustodian or a
Securities System as authorized herein, shall be clearly
recorded on the Bank's books as belonging to the appropriate
Account and not to the Bank. The Bank shall keep accurate
and detailed accounts of all investments, receipts,
disbursements and other transactions for each Account. All
accounts, books and records of the Bank relating thereto
shall be open to inspection and audit at all reasonable
times during normal business hours by any person designated
by Forum. All such accounts shall be maintained and
preserved in the form reasonably requested by Forum. The
Bank will supply to Forum from time to time,
as mutually agreed upon, a statement in respect to any
Property in an Account maintained by the Bank or by a
Subcustodian. In the absence of the filing in writing with
the Bank by Forum of exceptions or objections to any such
statement within sixty (60) days of the mailing thereof,
Forum shall be deemed to have approved such statement and in
such case or upon written approval of Forum of any such
statement, such statement shall be presumed to be for all
purposes correct with respect to all information set forth
therein.
(b) The Bank shall take all reasonable action as Forum may request
to obtain from year to year favorable opinions from each
Portfolio's independent certified public accountants with
respect to the Bank's activities hereunder in connection with
the preparation of the Registrant's registration statement on
Form N-1A and the Portfolio's Form N-SAR or other periodic
reports to the SEC and with respect to any other requirements
of the SEC.
(c) At the request of Forum, the Bank shall deliver to Forum a
written report prepared by the Bank's independent certified
public accountants with respect to the services provided by
the Bank under this Agreement, including, without
limitation, the Bank's accounting system, internal
accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or
maintained in a securities system or with a Subcustodian.
Such report shall be of sufficient scope and in sufficient
detail as may reasonably be required by Forum and as may
reasonably be obtained by the Bank. The Bank authorizes
Forum to deliver copies of such reports to the Registrant.
(d) Forum may elect to participate in any of the electronic
on-line service and communications systems offered by the
Bank that can provide Forum, on a daily basis, with the
ability to view on-line or to print on hard copy various
reports of Account activity and of Securities and/or Cash
being held in any Account. To the extent that such service
shall include market values of Securities in an Account,
Forum hereby acknowledges that the Bank now obtains and may
in the future obtain information on such values from outside
sources that the Bank considers to be reliable and Forum
agrees that the Bank (i) does not verify or represent or
warrant either the reliability of such service nor the
accuracy or completeness of any such information furnished
or obtained by or through such service and (ii) shall be
without liability in selecting and utilizing such service or
furnishing any information derived therefrom.
9. Holding of Securities, Nominees, etc. Securities in an Account that
are maintained by the Bank or any Subcustodian may be held directly by such
entity in the name of Forum or in bearer form or maintained, on behalf of a
Portfolio, in the Bank's or Subcustodian's name or in the name of the Bank's or
Subcustodian's nominee. Securities that are maintained through a Subcustodian or
which are eligible for deposit in a Securities System as provided above may be
maintained with the Subcustodian or the Securities System in an account for
Forum, unless prohibited by law, rule, or regulation. The Bank or Subcustodian,
as the case may be, may combine certificates representing Securities held in an
Account with certificates of the same issue held by Bank or Subcustodian as
fiduciary or as a custodian. In the event that any Securities in the name of the
Bank or its nominee or held by a Subcustodian and registered in the name of such
Subcustodian or its nominee are called for partial redemption by the issuer of
such Security, the Bank may, subject to the rules or regulations pertaining to
allocation of any Securities System in which such Securities have been
deposited, allot, or cause to be allotted, the called portion of the respective
beneficial holders of such class of security in any manner the Bank deems to be
fair and equitable. Securities maintained with a Securities System shall be
maintained subject to the rules of that Securities System governing the rights
and obligations among the Securities System and its participants.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications pertaining to any of the Securities in any Account, the
Bank shall perform such services and only such services as are (i) set forth in
Section 3 of this Agreement, (ii) described in the applicable Service Standards
(the "Proxy Service") and (iii) as may otherwise be agreed upon between the Bank
and Forum. The liability and responsibility of the Bank in connection with the
Proxy Service referred to in (ii) of the immediately preceding sentence and in
connection with any additional services which the Bank and Forum may agree upon
as provided in (iii) of the immediately preceding sentence shall be as set forth
in the description of the Proxy Service and as may be agreed upon by the Bank
and Forum in connection with the furnishing of any such additional service and
shall not be affected by any other term of this Agreement. Neither the Bank nor
its nominees or agents shall vote upon or in respect of any of the Securities in
an Account, execute any form of proxy to vote thereon, or give any consent or
take any action (except as provided in Section 3) with respect thereto except
upon the receipt of Instructions.
11. Segregated Account. To assist Forum in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, the Bank
shall, upon receipt of Instructions, establish and maintain a segregated account
or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred, exchanged or
delivered by the Bank or a Subcustodian upon receipt by the Bank of Instructions
that include all information required by the Bank. Settlement and payment for
Securities received for an Account and delivery of Securities out of such
Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such Securities from such purchaser
or dealer, as such practices and procedures may be modified or supplemented in
accordance with the standard operating procedures of the Bank in effect from
time to time for that jurisdiction or market. The Bank shall not be liable for
any loss which results from effecting transactions in accordance with the
customary or established securities trading or securities processing practices
and procedures in the applicable jurisdiction or market.
Notwithstanding that the Bank may settle purchases and sales against,
or credit income to, an Account, on a contractual basis, as outlined in the
applicable Service Standards as defined below and provided to Forum by the Bank,
the Bank may, at its sole option, reverse such credits or debits to the
appropriate Account in the event that the transaction does not settle, or the
income is not received in a timely manner, and Forum agrees to hold the Bank
harmless from any losses that may result therefrom.
Service Standards shall be defined as any documents issued by the Bank
from time to time specifying the procedures for communicating with Forum, the
terms of any additional services to be provided to Forum, and such other matters
as may be agreed between Forum and the Bank from time to time. Copies of the
current term standards have been delivered to Forum.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement, the
Bank shall not be required to comply with any Instructions
to settle the purchase of any securities for the Account
unless there are sufficient immediately available funds in
the relevant currency in the Account, provided that, if,
after all expenses, debits and withdrawals of Cash in the
relevant currency ("Debits") applicable to the Account have
been made and if after all Conditional Credits, as defined
below, applicable to the Account have become final entries
as set forth in (c) below, the amount of immediately
available funds of the relevant currency in such Account is
at least equal to the aggregate purchase price of all
securities for which the Bank has received Instructions to
settle on that date ("Settlement Date"), the Bank, upon
settlement, shall credit the Securities to the Account by
making a final entry on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable
to the Account have been made, the amount of immediately
available funds in a given currency in such Account are less
than the aggregate purchase price in such currency of all
securities for which the Bank has received Instructions to
settle on any Settlement Date, the Bank, upon settlement, may
credit the securities to the Account by making a conditional
entry on its books and records ("Conditional Credit"), pending
receipt of sufficient immediately available funds in the
relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have
been made, immediately available funds in the relevant
currency at least equal to the aggregate purchase price in
such currency of all securities subject to a Conditional
Credit on a Settlement Date are deposited into the Account,
the Bank shall make the Conditional Credit a final entry on
its books and records. In such case, Forum shall be liable to
the Bank only for late charges at a rate that the Bank
customarily charges for similar extensions of credit.
(d) If (i) within a reasonable time from the posting of a
Conditional Credit, immediately available funds at least
equal to the resultant Debit on a Settlement Date are not
deposited in the Account, or (ii) any Proceeding (as defined
below) shall occur, the Bank may sell such of the Securities
subject to the Conditional Credit as it selects in its sole
discretion and shall apply the net proceeds of such sale to
cover such Debit, including related late charges, and any
remaining proceeds shall be credited to the Account. If such
proceeds are insufficient to satisfy such Debit in full,
Forum shall continue to be liable to the Bank for any
shortfall. The Bank shall make the Conditional Credit a
final entry on its books as to the Securities not required
to be sold to satisfy such Debit. Pending payment in full by
Forum of the purchase price for Securities subject to a
Conditional Credit, and the Bank's making a Conditional
Credit a final entry on its books, and, unless consented to
by the Bank, Forum shall
have no right to give further Instructions in respect of
Securities subject to a Conditional Credit. The Bank shall
have the sole discretion to determine which Securities shall
be deemed to have been paid for by Forum out of funds
available in the Account. Any such Conditional Credit may be
reversed (and any corresponding Debit shall be canceled) by
the Bank unless and until the Bank makes a final entry on
its books crediting such Securities to the Account. The term
"Proceeding" shall mean any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating
to Forum, whether voluntary or involuntary.
(e) Forum agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the
Account (which funds shall not include the expected proceeds
of the sale of the purchased securities).
14. Permitted Transactions. Forum agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 (but subject to Section 3) and only for the purposes
listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or
readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by a Portfolio or Forum
requiring a pledge of Securities, but only against receipt of
amounts borrowed or in order to satisfy requirements for
additional or substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect
any restrictions applicable to a Portfolio or Forum.
(i) For the purpose of redeeming shares of the capital stock of a
Portfolio against delivery of the shares to be redeemed to the
Bank, a Subcustodian, Forum or a Portfolio's transfer agent.
(j) For the purpose of redeeming in kind shares of a Portfolio
against delivery of the shares to be redeemed to the Bank, a
Subcustodian, Forum, or a Portfolio's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among Forum, on behalf of a Portfolio, the
Portfolio's investment adviser and a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc., relating to
compliance with the rules of The Options Clearing Corporation,
the Commodities Futures Trading Commission or of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by a Portfolio.
(l) For release of Securities to designated brokers under
covered call options, provided, however, that such
Securities shall be released only upon payment to the Bank
of monies for the premium due and a receipt for the
Securities which are to be held in escrow. Upon exercise of
the option, or at expiration, the Bank will receive the
Securities previously deposited from broker. The Bank will
act strictly in accordance with Instructions in the delivery
of Securities to be held in escrow and will have no
responsibility or liability for any such Securities which
are not returned promptly when due other than to make proper
request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from
Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section
21.
(o) For other proper purposes.
Forum agrees that the Bank shall have no obligation to verify the
purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from Forum
in respect of any of the Bank's duties hereunder that have been received by the
Bank at its address set forth in Section 22 below (i) in writing (including,
without limitation, facsimile transmission) or by tested telex signed or given
by such one or more person or persons as Forum shall have from time to time
authorized in writing to give the particular class of Instructions in question
and whose name and (if applicable) signature and office address have been filed
with the Bank, or (ii) which have been transmitted electronically through an
electronic on-line service and communications system offered by the Bank or
other electronic instruction system acceptable to the Bank, or (iii) a
telephonic or oral communication by one or more persons as Forum shall have from
time to time authorized to give the particular class of Instructions in question
and whose name has been filed with the Bank; or (iv) upon receipt of such other
form of instructions as Forum may from time to time authorize in writing and
which the Bank has agreed in writing to accept. Instructions in the form of oral
communications shall be confirmed by Forum by tested telex or writing in the
manner set forth in clause (i) above, but the lack of such confirmation shall in
no way affect any action taken by the Bank in reliance upon such oral
instructions prior to the Bank's receipt of such confirmation. Instructions may
relate to specific transactions or to types or classes of transactions, and may
be in the form of standing instructions.
The Bank shall have the right to assume in the absence of notice to the
contrary from Forum that any person whose name is on file with the Bank pursuant
to this Section has been authorized by Forum to give the Instructions in
question and that such authorization has not been revoked. The Bank may act upon
and conclusively rely on, without any liability to Forum or any other person or
entity for any losses resulting therefrom, any Instructions reasonably believed
by it to be furnished by the proper person or persons as provided above.
16. Standard of Care. So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
kept indemnified by and shall be without liability to the Trust for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel acceptable to the Trust (who may be
counsel for the Trust) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
If the Trust on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Trust or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Trust on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Trust requires the Custodian to advance cash or securities for
any purpose for the benefit of a Portfolio or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominees own negligent
action, negligent failure to act or willful misconduct, the Custodian promptly
shall notify the Trust of the existence of any such advances, their amount and
the Portfolio to which the advance applies. Such advances shall be payable on
demand, on the first business day following the Trust's receipt of notice of
such demand.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Bank shall not be liable to Forum, the Registrant or a
Portfolio for any loss, damage or expense suffered or incurred by the Bank or
its nominees arising out of any violation of any investment restriction or other
restriction or limitation applicable to the Registrant or any Portfolio pursuant
to any contract or any law or regulation.
18. Fees and Expenses. Forum agrees to pay to the Bank such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time. The initial fee schedule is attached
hereto as Exhibit B. Such fees will not be abated by, nor shall the Bank be
required to account for, any profits or commissions received by the Bank in
connection with its provision of custody services under this agreement. Forum
hereby agrees to hold the Bank harmless from any liability or loss resulting
from any taxes or other governmental charges, and any expense related thereto,
which may be imposed, or assessed with respect to any Property in an
Account and also agree to hold the Bank, its Subcustodians, and their respective
nominees harmless from any liability as a record holder of Property in such
Account. The Bank is authorized to charge the applicable Account for such items,
and the Bank shall have a lien on the Property in the applicable Account for any
amount payable to the Bank under this Agreement, including but not limited to
amounts payable pursuant to Section 13 and pursuant to indemnities granted by
Forum under this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account, the
Bank shall perform such services with respect thereto as are described in the
applicable Service Standards and shall in connection therewith be subject to the
standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit B may be amended as provided for therein). No waiver of any
provision hereto shall be deemed a continuing waiver unless it is so designated.
No failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right.
21. Termination.
(a) This Agreement may be terminated by Forum or the Bank by ninety
(90) days' written notice to the other; provided that notice by Forum shall
specify the names of the persons to whom the Bank shall deliver the Securities
in each Account and to whom the Cash in such Account shall be paid. If notice of
termination is given by the Bank, Forum shall, within ninety (90) days following
the giving of such notice, deliver to the Bank a written notice specifying the
names of the persons to whom the Bank shall deliver the Securities in each
Account and to whom the Cash in such Account shall be paid. In either case, the
Bank will deliver such Property to the persons so specified, after deducting
therefrom any amounts that the Bank determines to be owed to it hereunder. In
addition, the Bank may in its discretion withhold from such delivery such
Property as may be necessary to settle transactions pending at the time of such
delivery. Forum grants to the Bank a lien and right of setoff against the
Account and all Property held therein from time to time in the full amount of
the foregoing obligations. If within ninety (90) days following the giving of a
notice of termination by the Bank, the Bank does not receive the aforementioned
written notice specifying the names of the persons to whom the Bank shall
deliver the Securities in each Account and to whom the Cash in such Account
shall be paid, the Bank, at its election, may deliver such Securities and pay
such Cash to a bank or trust company doing business in the State of California
to be held and disposed of pursuant to the provisions of this Agreement, or may
continue to hold such Securities and Cash until a written notice as aforesaid is
delivered to the Bank, provided that from and after the ninetieth day the Bank's
obligations shall be limited to safekeeping.
(b) This Agreement may be terminated by Forum or the Bank as to one or
more Portfolios (but less than all of the Portfolios) by delivery of an amended
Exhibit A deleting such Portfolios, in which case termination as to such deleted
Portfolios shall take effect ninety (90) days after the date of such delivery,
or such earlier time as mutually agreed. The execution and delivery of an
amended Exhibit A that deletes one or more Portfolios shall constitute a
termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 21 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of the Bank
and Forum hereunder with respect to the other Portfolios set forth in Exhibit A,
as amended from time to time.
(c) Sections 16, 17, 18, 278, and 301 shall survive the termination of
this Agreement as to one or more or all Portfolios.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of Forum on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Bank shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though Forum had
separately contracted with the Bank by separate written instrument with respect
to each Portfolio and its related Accounts. Forum represents and warrants that
it has been authorized by the Registrant under its Custodian Agreement or
Custodial Services Agreement with the Registrant to enter into an agreement with
the Bank which will obligate the Registrant to be liable to the Bank for any and
all obligations of any Portfolio whose securities are offered by the Registrant
arising out of Property of such Portfolio custodied hereunder.
24. Security for Payment. To secure payment of all obligations due
hereunder, Forum hereby grants to the Bank a continuing security interest in and
right of setoff against each Account and all Property held therein from time to
time in the full amount of such obligations; provided that, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account or the Portfolio related to such Account, such
security interest and right of setoff will be limited to Property held for that
Account only and its related Portfolio. Should Forum fail to pay promptly any
amounts owed hereunder, the Bank shall be entitled to use available Cash in the
Account or applicable Account, as the case may be, and to dispose of Securities
in the Account or such applicable Account as is necessary. In any such case and
without limiting the foregoing, the Bank shall be entitled to take such other
actions or exercise such other options, powers and rights as the Bank now or
hereafter has as a secured creditor under the UCC or any other applicable law.
25. Representations and Warranties.
(a) Forum hereby represents and warrants to the Bank in its own
capacity as Custodian and on behalf of the Registrant to the extent applicable
to the Registrant that:
(i) the employment of the Bank and the allocation of fees,
expenses and other charges to any Account as herein
provided, is not prohibited by law or any governing
documents or contracts to which it is subject;
(ii) the terms of this Agreement do not violate any
obligation by which Forum is bound, whether arising
by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Forum and each Portfolio in
accordance with its terms;
(iv) it will deliver to the Bank such evidence of such
authorization as the Bank may reasonably require,
whether by way of a certified resolution or
otherwise;
(v) it has delivered to Bank a true and correct copy of
each custodian agreement or custodial services
agreement between it and the Registrant and each
amendment to each such agreement;
(vi) the Bank may rely, as fully as if it were a party
thereto, on the representations, warranties,
covenants and indemnities of the Registrant, on
behalf of the applicable Portfolios, set forth in
Sections 8(d), 16, 17, 24 and 289 of each agreement
referred to in the foregoing representation;
(vii) it will deliver to the Bank a duly executed
Secretary's Certificate in the form provided for in
each custodian agreement or custodial services
agreement between Forum and the Registrant or such
other evidence of such authorization as the Bank may
reasonably require, whether by way of a certified
resolution or otherwise; and
(viii) it is qualified as a custodian under Section 26(a) of
the 1940 Act and warrants that it will remain so
qualified or upon ceasing to be so qualified shall
promptly notify the Bank in writing.
(b) The Bank hereby represents and warrants to Forum that:
(i) the terms of this Agreement do not violate any
obligation by which Bank is bound, whether arising by
contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Bank in accordance with its
terms;
(iii) it will deliver to Forum such evidence of such
authorization as Forum may reasonably require,
whether by way of a certified resolution or
otherwise; and
(iv) it is qualified as a custodian under Section 26(a) of
the 1940 Act and warrants that it will remain so
qualified or upon ceasing to be so qualified shall
promptly notify Forum in writing.
26. Limited Power of Attorney. The Bank is hereby granted a limited
power of attorney by Forum to execute on Forum's behalf any declarations,
endorsements, assignments, stock or bond powers, affidavits, certificates of
ownership or other documents required (i) to effect the sale, transfer, or other
disposition of Property held in an Account, (ii) to obtain payment with respect
to Property held in an Account, or (iii) to take any other action required with
respect to the Property held in an Account, and in the Bank's own name to
guarantee as Forum's signature any signature so affixed.
27. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of California and shall not be assignable by
either party, but shall bind the successors in interest of Forum and the Bank.
28. Third-Party Beneficiary. The Bank hereby acknowledges and agrees
that with respect to the Accounts, the Funds may rely, as fully as if they were
a party hereto, on the representations, warranties, covenants and indemnities of
the Bank set forth in Sections 8(d), 16, 17, 24 and 3029 of this Agreement.
29. Publicity. Forum shall furnish to Bank prior to any distribution
thereof, copies of any material prepared by the Registrant for distribution to
any persons other than Registrant, Registrant's service providers, Forum and
Bank that refer in any way to the Bank. Forum shall not distribute or permit the
distribution of such materials if Bank reasonably objects in writing within five
(5) business days of receipt thereof (or such other time as may be mutually
agreed) after receipt thereof; provided, however, that Forum shall be permitted
to include the name of Bank and its position as subcustodian to each Portfolio
in the Registrant's registration statement and other filings with the SEC.
30. 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 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 or requested to be
disclosed by any bank or other regulatory examiner of the Bank, Forum, or any
Subcustodian, any auditor of the parties hereto, by judicial or administrative
process or otherwise by applicable law or regulation.
31. Severability. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
32. Entire Agreement. This Agreement together with any Exhibits
attached hereto, contains the entire agreement between the parties relating to
the subject matter hereof and supersedes any oral statements and prior writings
with respect thereto.
33. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
34. 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
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused it's duly authorized
signatories to execute this Agreement as of the date first written above.
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
FORUM TRUST, LLC for itself and as agent
for Monarch Funds
By:
Xxxx X. Xxxxxx
President
SUBCUSTODY AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
As of July 1, 2000
Treasury Cash Fund
Government Cash Fund
Cash Fund
UNION BANK OF CALIFORNIA, N.A.
By:
Name:
Title:
FORUM TRUST, LLC
By:
Name: Xxxx X. Xxxxxx
Title: President
A-1
SUBCUSTODY AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Bank of a new Exhibit B to
Forum and acceptance thereof by Forum and shall be effective as of the date of
acceptance by Forum or a date agreed upon between Bank and Forum.
Fee as a % of
Portfolio Annual Average Daily Net Assets
Total of All Funds 0.010%
Such fees shall be accrued by the Trust daily and payable monthly in arrears on
the first day of the next month, however, no fee shall be payable hereunder with
respect to a Fund during any period in which the Fund invests all (or
substantially all) of its investment assets in a registered, open-end management
investment company, or separate series thereof, in accordance with Section
12(d)(1)(E) under the Act.
B-1
SUBCUSTODY AGREEMENT
EXHIBIT C
UNION BANK OF CALIFORNIA, N.A.
AND
FORUM TRUST, LLC
SECRETARY'S CERTIFICATE
I, Xxxxx X. Xxxxxxxxx, hereby certify that I am the Secretary of Forum
Trust, LLC (the "Company"), a limited liability company organized under the laws
of the State of Maine and authorized to do business as a non-depositary trust
company thereunder and as such I am duly authorized to, and do hereby, certify
that:
1. Organizational Documents. The Company's organizational documents,
and all amendments thereto, have been filed with the appropriate governmental
officials of the State of Maine, the Company continues to be in existence and is
in good standing, and no action has been taken to repeal such organizational
documents, the same being in full force and effect on the date hereof.
2. Bylaws. The Company's Amended and Restated Operating Agreement has
been duly adopted and no action has been taken to repeal such Amended and
Restated Operating Agreement, the same being in full force and effect.
3. Resolutions. Resolutions have been duly adopted on behalf of the
Company, which resolutions (i) have not in any way been revoked or rescinded,
(ii) have been in full force and effect since their adoption, to and including
the date hereof, and are now in full force and effect, and (iii) are the only
corporate proceedings of the Company now in force relating to or affecting the
matters referred to therein, including, without limitation, confirming that the
Company is duly authorized to enter into a certain subcustodian agreement with
Union Bank of California, N.A. (the "Agreement"), and that certain designated
officers, including those identified in paragraph 4 of this Certificate, are
authorized to execute said Agreement on behalf of the Company, in conformity
with the requirements of the Company's organizational documents, Amended and
Restated Operating Agreement, and other pertinent documents to which the Company
may be bound.
4. Incumbency. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Company holding those offices
set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind the Company, as a legal matter,
with respect to all matters pertaining to the Agreement, and to execute and
deliver said Agreement on behalf of the Company, and the signatures set forth
opposite the respective names and titles of said officers are their true,
authentic signatures:
C-1
Name Title Signature
Xxxx X. Xxxxxx President ________________________
Xxxxxx X. Xxxxxx Treasurer ________________________
Xxxxx X. Xxxxxxxxx Secretary ________________________
Xxxxxxxxx Xxxxxxx Assistant Treasurer ________________________
Xxxx X. Xxxxxx Assistant Secretary ________________________
5. Authorized Instructions.
(a). General. Any two of the officers of the Company listed in
Paragraph 4 are authorized to deliver instructions to Union Bank of California,
N.A. pursuant to Section 15 of the Agreement on behalf of the Company or any
Portfolio (as defined in the Agreement) in accordance with the Agreement.
(b) Securities and Cash. Any of the following persons are authorized to
deliver instructions to transfers of Securities (as such term is defined in the
Agreement) of any Portfolio on behalf of a Portfolio, and instructions with
respect to transfers of Cash (as such term is defined in the Agreement) of any
Portfolio to or from any money market mutual fund on behalf of a Portfolio and
the signatures set forth opposite the respective names and titles of said
persons are their true, authentic signatures:
Name Title Signature
Xxxxxxx X. Xxxxxxx Portfolio Manager ________________________
Xxxx Xxxxx Xxxxxxxxx Asst. Portfolio Manager ________________________
Xxxxxx XxXxx Manager,
Information Services ________________________
Xxxx X. Xxxxxx Lead Custody Analyst ________________________
Xxxxx Xxxxx Senior Manager,
Fund Accounting ________________________
Xxxxx Xxxx Senior Manager, ________________________
Fund Accounting
Xxxx X. Xxxxxxxx Senior Manager, ________________________
Fund Accounting
C-2
(c) Transfer Agency. Any two of the persons authorized by Forum
Shareholder Services, LLC listed on Appendix A may deliver instructions with
respect to the transfer of cash in connection the purchase and redemption of
shares of any Portfolio, and the payments of distributions to shareholders of
any Portfolio.
(d) Administration. Any two of the persons authorized by Forum
Administrative Services, LLC listed on Appendix B may deliver instructions with
respect to approval of bills for the payment of the expenses of any Portfolio,
and the payments of distributions to shareholders of any Portfolio.
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of July,
2000.
Xxxxx X. Xxxxxxxxx, Secretary
I, Xxxx X. Xxxxxx, President of the Company, hereby certify that on
this ___ day of July, 2000, Xxxxx X. Xxxxxxxxx is the duly elected Secretary of
the Company and that the signature above is his genuine signature.
Xxxx X. Xxxxxx, President
C-3
SUBCUSTODY AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
D-1
