EXHIBIT (g)(2)
CUSTODY AGREEMENT
AGREEMENT, dated as of August 1, 2003 by and between THE COVENTRY GROUP
(the "Trust"), a business trust organized and existing under the laws of the
Commonwealth of Massachusetts, acting with respect to and on behalf of 1st
Source Monogram Long/Short Fund, a portfolio of Trust (the "Portfolio"), and
CUSTODIAL TRUST COMPANY, a bank organized and existing under the laws of the
State of New Jersey (the "Custodian").
WHEREAS, Trust desires that the securities, funds and other assets of
the Portfolio be held and administered by Custodian pursuant to this Agreement;
WHEREAS, the Portfolio is an investment portfolio represented by a
series of Shares included among the shares of beneficial interest issued by the
Trust, an open-end management investment company registered under the 1940 Act
(as hereinafter defined);
WHEREAS, Custodian represents that it is a bank having the
qualifications prescribed in the 1940 Act to act as custodian for management
investment companies registered under the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
Trust and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following terms, unless the
context otherwise requires, shall mean:
1.1 "AUTHORIZED PERSON" means any person authorized by resolution of
the Board of Trustees to give Oral Instructions and Written Instructions on
behalf of the Trust and identified, by name or by office, in Exhibit B hereto or
any person designated to do so by an investment adviser of the Portfolio who is
named by the Trust in Exhibit C hereto.
1.2 "BOARD OF TRUSTEES" means the Board of Trustees of the Trust or,
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "BOOK-ENTRY SYSTEM" means a book-entry system maintained by a
Federal Reserve Bank for securities of the United States government or of
agencies or instrumentalities thereof (including government-sponsored
enterprises).
1.4 "BUSINESS DAY" means any day on which banks in the State of New
Jersey and New York are open for business.
1.5 "CUSTODY ACCOUNT" means the account in the name of the Portfolio,
which is provided for in Section 3.2 below.
1.6 "DOMESTIC SECURITIES DEPOSITORY" means The Depository Trust Company
and any other clearing agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, which acts as a securities
depository.
1.7 "ELIGIBLE DOMESTIC BANK" means a bank as defined in the 1940 Act.
1.8 "ELIGIBLE FOREIGN CUSTODIAN" means any banking institution, trust
company or other entity organized under the laws of a country other than the
United States which is eligible under the 1940 Act to act as a custodian for
securities and other assets of the Portfolio held outside the United States.
1.9 "ELIGIBLE FOREIGN SECURITIES DEPOSITORY" means an Eligible
Securities Depository as defined in Rule 17f-7 under the 0000 Xxx.
1.10 "FOREIGN ASSETS" has the same meaning as in Rule 17f-5 under the
1940 Act.
1.11 "FOREIGN CUSTODY MANAGER" has the same meaning as in Rule 17f-5
under the 1940 Act.
1.12 "MASTER REPURCHASE AGREEMENT" means the Master Repurchase
Agreement of even date herewith between the Trust acting on behalf of the
Portfolio and Bear, Xxxxxxx & Co. Inc. ("Bear Xxxxxxx") as it may from time to
time be amended.
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1.13 "MASTER SECURITIES LOAN AGREEMENT" means the Master Securities
Loan Agreement of even date herewith between the Trust acting on behalf of the
Portfolio and Bear, Xxxxxxx Securities Corp. ("BS Securities") as it may from
time to time be amended.
1.14 "1940 ACT" means the Investment Company Act of 1940, as amended,
and the rules and regulations thereunder.
1.15 "ORAL INSTRUCTIONS" means instructions orally transmitted to and
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) completed in
accordance with Custodian's requirements from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust.
1.16 "PROPER INSTRUCTIONS" means Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by the Trust and Custodian.
1.17 "SECURITIES DEPOSITORY" means any Domestic Securities Depository
or Eligible Foreign Securities Depository.
1.18 "SHARES" means those shares in a series or class of beneficial
interests of Trust that represent interests in the Portfolio.
1.19 "WRITTEN INSTRUCTIONS" means written communications received by
Custodian that are (a) reasonably believed by Custodian to have been signed or
sent by an Authorized Person, (b) sent or transmitted by letter, facsimile,
central processing unit connection, on-line terminal or magnetic tape, and (c)
completed in accordance with Custodian's requirements from time to time as to
content of instructions and their manner and timeliness of delivery by the
Trust.
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ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Trust hereby appoints Custodian as custodian of
all such securities, funds and other assets of the Portfolio as may be
acceptable to Custodian and from time to time delivered to it by the Trust or
others for the account of the Portfolio.
2.2 ACCEPTANCE. Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF SECURITIES, FUNDS AND OTHER ASSETS
3.1 SEGREGATION. All securities and non-cash property of the Portfolio
in the possession of Custodian (other than securities maintained by Custodian
with a sub-custodian appointed pursuant to this Agreement or in a Securities
Depository or Book-Entry System) shall be physically segregated from other such
securities and non-cash property in the possession of Custodian. All cash,
securities and other non-cash property of the Portfolio shall be identified as
belonging it.
3.2 CUSTODY ACCOUNT. (a) Custodian shall open and maintain in its trust
department a custody account in the name of the Portfolio, subject only to draft
or order of Custodian, in which Custodian shall enter and carry all securities,
funds and other assets of the Portfolio which are delivered to Custodian and
accepted by it.
(b) If Custodian at any time fails to receive any of the documents
referred to in Section 3.10(a) below, then, until such time as it receives such
document, it shall not be obligated to receive any securities into the Custody
Account and shall be entitled to return to the Portfolio any securities that it
is holding in the Custody Account.
3.3 SECURITIES IN PHYSICAL FORM. Custodian may, but shall not be
obligated to, hold securities that may be held only in physical form.
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3.4 DISCLOSURE TO ISSUERS OF SECURITIES. Custodian is authorized to
disclose the Trust's and the Portfolio's names and addresses, and the securities
positions in the Custody Account, to the issuers of such securities when
requested by them to do so.
3.5 EMPLOYMENT OF DOMESTIC SUB-CUSTODIANS. At any time and from time to
time, Custodian in its discretion may appoint and employ, and may also cease to
employ, any Eligible Domestic Bank as sub-custodian to hold securities and other
assets of the Portfolio that are maintained in the United States and to carry
out such other provisions of this Agreement as it may determine, provided,
however, that the employment of any such sub-custodian has been approved by the
Trust. The employment of any such sub-custodian shall be at Custodian's expense
and shall not relieve Custodian of any of its obligations or liabilities under
this Agreement.
3.6 EMPLOYMENT OF FOREIGN SUB-CUSTODIANS. (a) Unless otherwise
instructed in Written Instructions, Custodian is authorized to hold any Foreign
Asset of the Portfolio in any country in which all or a portion of the primary
market for such Foreign Asset is situated.
(b) At any time and from time to time, Custodian in its discretion may
appoint and employ in accordance with the 1940 Act, and may also cease to
employ, (i) any overseas branch of any Eligible Domestic Bank, or (ii) any
Eligible Foreign Custodian selected by the Foreign Custody Manager, in each case
as a foreign sub-custodian for Foreign Assets of the Portfolio, provided,
however, that the employment of any such overseas branch has been approved by
the Trust and, provided further, that, in the case of any such Eligible Foreign
Custodian, the Foreign Custody Manager has approved the agreement pursuant to
which Custodian employs such Eligible Foreign Custodian.
(c) Set forth on Exhibit D hereto are the foreign sub-custodians that
Custodian may employ pursuant to Section 3.6(b) above. Exhibit D shall be
revised from time to time as foreign sub-custodians are added or deleted.
(d) If the Trust proposes to have the Portfolio make an investment
which is to be held in a country in which Custodian does not have appropriate
arrangements in place with either an overseas branch of an Eligible Domestic
Bank or an Eligible Foreign Custodian selected by the
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Foreign Custody Manager, then the Trust shall inform Custodian sufficiently in
advance of such investment to allow Custodian to make such arrangements.
(e) Notwithstanding anything to the contrary in Section 8.1 below,
Custodian shall have no greater liability to the Portfolio or the Trust for the
actions or omissions of any foreign sub-custodian appointed pursuant to this
Agreement than any such foreign sub-custodian has to Custodian, and Custodian
shall not be required to discharge any such liability which may be imposed on it
unless and until such foreign sub-custodian has effectively indemnified
Custodian against it or has otherwise discharged its liability to Custodian in
full.
(f) Upon the request of the Foreign Custody Manager, Custodian shall
furnish to the Foreign Custody Manager information concerning all foreign
sub-custodians employed pursuant to this Agreement which shall be similar in
kind and scope to any such information that may have been furnished to the
Foreign Custody Manager in connection with the initial approval by the Foreign
Custody Manager of the agreements pursuant to which Custodian employs such
foreign sub-custodians or as otherwise required by the 1940 Act.
3.7 EMPLOYMENT OF OTHER AGENTS. Custodian may employ other suitable
agents, which may include affiliates of Custodian such as Bear Xxxxxxx or BS
Securities, both of which are securities broker-dealers, provided, however, that
Custodian shall not employ (a) Bear Xxxxxxx to hold any securities purchased
from Bear Xxxxxxx under the Master Repurchase Agreement or any other repurchase
agreement between the Trust on behalf of the Portfolio and Bear Xxxxxxx, whether
now or hereafter in effect, or (b) BS Securities to hold any collateral pledged
by BS Securities uinder the Master Securities Loan Agreement or any other
securities loan agreement between the Trust on behalf of the Portfolio and BS
Securities, whether now or hereafter in effect.. The appointment of any agent
pursuant to this Section 3.7 shall not relieve Custodian of any of its
obligations or liabilities under this Agreement.
3.8 BANK ACCOUNTS. In its discretion and from time to time Custodian
may open and maintain one or more demand deposit accounts with any Eligible
Domestic Bank (any such accounts to be in the name of Custodian and subject only
to its draft or order), provided, however, that the opening and maintenance of
any such account shall be at Custodian's expense and shall not relieve Custodian
of any of its obligations or liabilities under this Agreement.
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3.9 DELIVERY OF ASSETS TO CUSTODIAN. Provided they are acceptable to
Custodian, the Trust shall deliver to Custodian the securities, funds and other
assets of the Portfolio, including (a) payments of income, payments of principal
and capital distributions received by the Portfolio with respect to securities,
funds or other assets owned by the Portfolio at any time during the term of this
Agreement, and (b) funds received by the Portfolio for the issuance, at any time
during such term, of Shares of the Portfolio. Custodian shall not be under any
duty or obligation to require the Trust to deliver to it any securities or other
assets owned by the Portfolio and shall have no responsibility or liability for
or on account of securities or other assets not so delivered.
3.10 DOMESTIC SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. Custodian
and any sub-custodian appointed pursuant to Section 3.5 above may deposit and/or
maintain securities of the Portfolio in a Domestic Securities Depository or in a
Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of securities of the Portfolio in any Domestic
Securities Depository or Book-Entry System, the Trust shall deliver to Custodian
a resolution of the Board of Trustees, certified by an officer of the Trust,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.5 above) on an on-going basis to deposit in such Domestic
Securities Depository or Book-Entry System all securities eligible for deposit
therein and to make use of such Domestic Securities Depository or Book-Entry
System to the extent possible and practical in connection with the performance
of its obligations hereunder (or under the applicable sub-custody agreement in
the case of such sub-custodian), including, without limitation, in connection
with settlements of purchases and sales of securities, loans of securities, and
deliveries and returns of collateral consisting of securities.
(b) Securities of the Portfolio kept in a Book-Entry System or Domestic
Securities Depository shall be kept in an account ("Depository Account") of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) in
such Book-Entry System or Domestic Securities Depository which includes only
assets held by Custodian (or such sub-custodian) as a fiduciary, custodian or
otherwise for customers.
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(c) The records of Custodian with respect to securities of the
Portfolio that are maintained in a Book-Entry System or Domestic Securities
Depository shall at all times identify such securities as belonging to the
Portfolio.
(d) If securities purchased by the Portfolio are to be held in a
Book-Entry System or Domestic Securities Depository, Custodian (or any
sub-custodian appointed pursuant to Section 3.5 above) shall pay for such
securities upon (i) receipt of advice from the Book-Entry System or Domestic
Securities Depository that such securities have been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
(or of such sub-custodian) to reflect such payment and transfer for the account
of the Portfolio. If securities sold by the Portfolio are held in a Book-Entry
System or Domestic Securities Depository, Custodian (or such sub-custodian)
shall transfer such securities upon (A) receipt of advice from the Book-Entry
System or Domestic Securities Depository that payment for such securities has
been transferred to the Depository Account, and (B) the making of an entry on
the records of Custodian (or of such sub-custodian) to reflect such transfer and
payment for the account of the Portfolio.
(e) Custodian shall provide the Trust with copies of any report
obtained by Custodian (or by any sub-custodian appointed pursuant to Section 3.5
above) from a Book-Entry System or Domestic Securities Depository in which
securities of the Portfolio are kept on the internal accounting controls and
procedures for safeguarding securities deposited in such Book-Entry System or
Domestic Securities Depository.
(f) At its election, the Trust shall be subrogated to the rights of
Custodian (or of any sub-custodian appointed pursuant to Section 3.5 above) with
respect to any claim against a Book-Entry System or Domestic Securities
Depository or any other person for any loss or damage to the Portfolio arising
from the use of such Book-Entry System or Domestic Securities Depository, if and
to the extent that the Portfolio has not been made whole for any such loss or
damage.
3.11 FOREIGN SECURITIES DEPOSITORIES. (a) Unless otherwise instructed
in Written Instructions, Custodian may place and maintain Foreign Assets of the
Trust with an Eligible Foreign Securities Depository, provided that it has
delivered to the Trust an analysis of the custody risks associated with
maintaining assets with such Eligible Securities Depository. Custodian shall
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monitor such custody risks on a continuing basis and promptly notify the Trust
of any material change in such risks.
(b) In performing its obligations under Section 3.11(a) above,
Custodian shall exercise reasonable care, prudence and diligence. In the
exercise of such care, prudence and diligence, Custodian may rely upon
assessments, determinations and monitoring made and performed with respect to an
Eligible Foreign Securities Depository by Citibank, N.A. or such other operator
of a global custody system as from time to time may be employed by Custodian and
approved by the Trust.
3.12 RELATIONSHIP WITH SECURITIES DEPOSITORIES. No Book-Entry System,
Securities Depository, or other securities depository or clearing agency
(whether foreign or domestic) which it is or may become standard market practice
to use for the comparison and settlement of trades in securities shall be an
agent or sub-contractor of Custodian for purposes of Section 3.7 above or
otherwise.
3.13 PAYMENTS FROM CUSTODY ACCOUNT. Upon receipt of Proper Instructions
but subject to its right to foreclose upon and liquidate collateral pledged to
it pursuant to Section 9.3 below, Custodian shall make payments from the Custody
Account, but only in the following cases, provided, first, that such payments
are in connection with the clearance and/or custody of securities or other
assets, second, that there are sufficient funds in the Custody Account, whether
belonging to the Portfolio or advanced to it by Custodian in its sole and
absolute discretion as set forth in Section 3.19 below, for Custodian to make
such payments, and, third, that after the making of such payments, the Portfolio
would not be in violation of any margin or other requirements agreed upon
pursuant to Section 3.19 below:
(a) For the purchase of securities for the Portfolio but only (i) in
the case of securities (other than options on securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any
sub-custodian appointed pursuant to this Agreement) of such securities
registered as provided in Section 3.21 below or in proper form for transfer or,
if the purchase of such securities is effected through a Book-Entry System or
Domestic Securities Depository, in accordance with the conditions set forth in
Section 3.10 above, and (ii) in the case of options, futures contracts and
options on futures contracts, against delivery to Custodian (or
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such sub-custodian) of evidence of title thereto in favor of the Portfolio, the
Custodian, any such sub-custodian, or any nominee referred to in Section 3.21
below;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.14(f) below, of securities owned by the Portfolio;
(c) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions of the
Portfolio;
(d) For transfer in accordance with the provisions of any agreement
among the Trust, Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of the Portfolio;
(e) For the funding of any time deposit (whether certificated or not)
or other interest-bearing account with any banking institution (including
Custodian), provided that Custodian shall receive and retain such certificate,
advice, receipt or other evidence of deposit (if any) as such banking
institution may deliver with respect to any such deposit or account;
(f) For the purchase from a banking or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Trust and such banking or other financial institution with
respect to the purchase of such loan participations and provided that Custodian
shall receive and retain such participation certificate or other evidence of
participation (if any) as such banking or other financial institution may
deliver with respect to any such loan participation;
(g) For the purchase and/or sale of foreign currencies or of options to
purchase and/or sell foreign currencies, for spot or future delivery, for the
account of the Portfolio pursuant to contracts between the Trust and any banking
or other financial institution (including Custodian, any sub-custodian appointed
pursuant to this Agreement and any affiliate of Custodian);
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(h) For transfer to a securities broker-dealer as margin for a short
sale of securities for the Portfolio, or as payment in lieu of dividends paid on
securities sold short for the Portfolio;
(i) For the payment as provided in Article IV below of any dividends,
capital gain distributions or other distributions declared on the Shares of the
Portfolio;
(j) For the payment as provided in Article IV below of the redemption
price of the Shares of the Portfolio;
(k) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for the account
of the Portfolio: interest, taxes, and administration, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees, and
other operating expenses of the Portfolio; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as deferred
expenses; and
(l) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the amount and purpose of such payment, certifying such
purpose to be a proper purpose of the Portfolio, and naming the person or
persons to whom such payment is to be made.
3.14 DELIVERIES FROM CUSTODY ACCOUNT. Upon receipt of Proper
Instructions with respect to the Portfolio but subject to its right to foreclose
upon and liquidate collateral pledged to it pursuant to Section 9.3 below,
Custodian shall release and deliver securities and other assets from the Custody
Account, but only in the following cases, provided, first, that such deliveries
are in connection with the clearance and/or custody of securities or other
assets, second, there are sufficient amounts and types of securities or other
assets in the Custody Account for Custodian to make such deliveries, and, third,
that after the making of such deliveries, the Portfolio would not be in
violation of any margin or other requirements agreed upon pursuant to Section
3.19 below:
(a) Upon the sale of securities for the account of the Portfolio but,
subject to Section 3.15 below, only against receipt of payment therefor or, if
such sale is effected through a Book-Entry System or Domestic Securities
Depository, in accordance with the provisions of Section 3.10 above;
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(b) To an offeror's depository agent in connection with tender or other
similar offers for securities of the Portfolio; provided that, in any such case,
the funds or other consideration for such securities is to be delivered to
Custodian;
(c) To the issuer thereof or its agent when such securities are called,
redeemed or otherwise become payable, provided that in any such case the funds
or other consideration for such securities is to be delivered to Custodian;
(d) To the issuer thereof or its agent for exchange for a different
number of certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new securities
are to be delivered to Custodian;
(e) To the securities broker through whom securities are being sold for
the Portfolio, for examination in accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such securities, or pursuant to provisions for conversion contained in such
securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new securities and
funds, if any, are to be delivered to Custodian;
(g) In the case of warrants, rights or similar securities, to the
issuer of such warrants, rights or similar securities, or its agent, upon the
exercise thereof, provided that, in any such case, the new securities and funds,
if any, are to be delivered to Custodian;
(h) To the borrower thereof, or its agent, in connection with any loans
of securities for the Portfolio pursuant to any securities loan agreement
entered into by the Trust, but only against receipt by Custodian of such
collateral as is required under such securities loan agreement;
(i) To any lender, or its agent, as collateral for any borrowings from
such lender by the Portfolio that require a pledge of assets of the Portfolio,
but only against receipt by Custodian of the amounts borrowed;
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(j) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Portfolio or the Trust;
(k) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian and a securities broker-dealer, relating to
compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions of the Portfolio;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, Custodian, and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations) regarding margin
or other deposits in connection with transactions of the Portfolio;
(m) For delivery to a securities broker-dealer as margin for a short
sale of securities for the Portfolio;
(n) To the issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter, collectively, "ADRs") for such securities, or
its agent, against a written receipt therefor adequately describing such
securities, provided that such securities are delivered together with
instructions to issue ADRs in the name of Custodian or its nominee and to
deliver such ADRs to Custodian;
(o) In the case of ADRs, to the issuer thereof, or its agent, against a
written receipt therefor adequately describing such ADRs, provided that such
ADRs are delivered together with instructions to deliver the securities
underlying such ADRs to Custodian or an agent of Custodian; or
(p) For any other proper purpose, but only upon receipt of Proper
Instructions, specifying the securities or other assets to be delivered, setting
forth the purpose for which such delivery is to be made, certifying such purpose
to be a proper purpose of the Portfolio, and naming the person or persons to
whom delivery of such securities or other assets is to be made.
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3.15 DELIVERY PRIOR TO FINAL PAYMENT. When instructed by the Trust to
deliver securities of the Portfolio against payment, Custodian shall be
entitled, but only if in accordance with generally accepted market practice, to
deliver such securities prior to actual receipt of final payment therefor and,
exclusively in the case of securities in physical form, prior to receipt of
payment therefor. In any such case, the Portfolio shall bear the risk that final
payment for such securities may not be made or that such securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and Custodian shall have no liability for any of the foregoing.
3.16 CREDIT PRIOR TO FINAL PAYMENT. In its sole discretion and from
time to time, Custodian may credit the Custody Account, prior to actual receipt
of final payment thereof, with (a) proceeds from the sale of securities of the
Portfolio which it has been instructed to deliver against payment, (b) proceeds
from the redemption of securities or other assets in the Custody Account, and
(c) income from securities, funds or other assets in the Custody Account. Any
such credit shall be conditional upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received in full.
Custodian may, in its sole discretion and from time to time, permit the
Portfolio to use funds so credited to its Custody Account in anticipation of
actual receipt of final payment. Any funds so used shall constitute an advance
subject to Section 3.19 below.
3.17 DEFINITION OF FINAL PAYMENT. For purposes of this Agreement,
"final payment" means payment in funds which are (or have become) immediately
available, under applicable law are irreversible, and are not subject to any
security interest, xxxx, xxxx or other encumbrance.
3.18 PAYMENTS AND DELIVERIES OUTSIDE THE UNITED STATES. Notwithstanding
anything to the contrary that may be required by Section 3.13 or Section 3.14
above, or elsewhere in this Agreement, in the case of securities and other
assets maintained outside the United States and in the case of payments made
outside the United States, Custodian and any sub-custodian appointed pursuant to
this Agreement may receive and deliver such securities or other assets, and may
make such payments, in accordance with the laws, regulations, customs,
procedures and practices applicable in the relevant local market outside the
United States.
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3.19 CLEARING CREDIT. Custodian may, in its sole discretion and from
time to time, advance funds to the Trust to facilitate the settlement of the
Portfolio's transactions in the Custody Account. Any such advance (a) shall be
repayable immediately upon demand made by Custodian, (b) shall be fully secured
as provided in Section 9.3 below, and (c) shall bear interest at such rate, and
be subject to such other terms and conditions, as Custodian and the Trust may
agree.
3.20 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise
instructed by the Trust, Custodian shall with respect to all securities and
other assets held for the Portfolio:
(a) Subject to Section 8.4 below, receive into the Custody Account of
the Portfolio any funds or other property, including payments of principal,
interest and dividends, due and payable on or on account of such securities and
other assets;
(b) Deliver securities of the Portfolio to the issuers of such
securities or their agents for the transfer thereof into the name of the
Portfolio, Custodian or any of the nominees referred to in Section 3.21 below;
(c) Endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or securities in temporary form for
securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws of the United States, or the laws
or regulations of any other taxing authority, in connection with the transfer of
such securities or other assets or the receipt of income or other payments with
respect thereto;
(f) Receive and hold for the Portfolio all rights and similar
securities issued with respect to securities or other assets of the Portfolio;
(g) As may be required in the execution of Proper Instructions,
transfer funds from the Custody Account of the Portfolio to any demand deposit
account maintained by Custodian pursuant to Section 3.8 above; and
15
(h) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase and transfer of, and other
dealings in, such securities and other assets.
3.21 REGISTRATION AND TRANSFER OF SECURITIES. All securities held for
the Portfolio that are issuable only in bearer form shall be held by Custodian
in that form, provided that any such securities shall be held in a Securities
Depository or Book-Entry System if eligible therefor. All other securities and
all other assets held for the Portfolio may be registered in the name of (a)
Custodian as agent, (b) any sub-custodian appointed pursuant to this Agreement,
(c) any Securities Depository, or (d) any nominee or agent of any of them. The
Trust shall furnish to Custodian appropriate instruments to enable Custodian to
hold or deliver in proper form for transfer, or to register as in this Section
3.21 provided, any securities or other assets delivered to Custodian which are
registered in the name of the Portfolio.
3.22 RECORDS. (a) Custodian shall maintain complete and accurate
records with respect to securities, funds and other assets held for the
Portfolio, including (i) journals or other records of original entry containing
an itemized daily record in detail of all receipts and deliveries of securities
and all receipts and disbursements of funds; (ii) ledgers (or other records)
reflecting (A) securities in transfer, if any, (B) securities in physical
possession, (C) monies and securities borrowed and monies and securities loaned
(together with a record of the collateral therefor and substitutions of such
collateral), (D) dividends and interest received, and (E) dividends receivable
and interest accrued; and (iii) cancelled checks and bank records related
thereto. Custodian shall keep such other books and records with respect to
securities, funds and other assets of the Portfolio which are held hereunder as
the Trust may reasonably request.
(b) All such books and records maintained by Custodian for the
Portfolio shall (i) be maintained in a form acceptable to the Trust and in
compliance with rules and regulations of the Securities and Exchange Commission,
(ii) be the property of the Portfolio and at all times during the regular
business hours of Custodian be made available upon request for inspection by
duly authorized officers, employees or agents of the Trust and employees or
agents of the Securities and Exchange Commission, and (iii) if required to be
maintained under the 1940 Act, be preserved for the periods prescribed therein.
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3.23 ACCOUNT REPORTS BY CUSTODIAN. Custodian shall furnish the Trust
with a daily activity statement, including a summary of all transfers to or from
the Custody Account (in the case of securities and other assets maintained in
the United States, on the day following such transfers). At least monthly and
from time to time, Custodian shall furnish the Trust with a detailed statement
of the securities, funds and other assets held for the Portfolio under this
Agreement.
3.24 OTHER REPORTS BY CUSTODIAN. Custodian shall provide the Trust with
such reports as the Trust may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding securities which
are employed by Custodian or any sub-custodian appointed pursuant to this
Agreement.
3.25 PROXIES AND OTHER MATERIALS. (a) Unless otherwise instructed by
the Trust, Custodian shall promptly deliver to the Trust all notices of
meetings, proxy materials (other than proxies) and other announcements, which it
receives regarding securities held by it in the Custody Account. Whenever
Custodian or any of its agents receives a proxy with respect to securities in
the Custody Account, Custodian shall promptly request instructions from the
Trust on how such securities are to be voted, and shall give such proxy, or
cause it to be given, in accordance with such instructions. If the Trust timely
informs Custodian that the Trust wishes to vote any such securities in person,
Custodian shall promptly seek to have a legal proxy covering such securities
issued to the Trust. Unless otherwise instructed by the Trust, neither Custodian
nor any of its agents shall exercise any voting rights with respect to
securities held hereunder.
(b) Unless otherwise instructed by the Trust, Custodian shall promptly
transmit to the Trust all other written information received by Custodian from
issuers of securities held in the Custody Account. With respect to tender or
exchange offers for such securities or with respect to other corporate
transactions involving such securities, Custodian shall promptly transmit to the
Trust all written information received by Custodian from the issuers of such
securities or from any party (or its agents) making any such tender or exchange
offer or participating in such other corporate transaction. If the Trust, with
respect to such tender or exchange offer or other corporate transaction, desires
to take any action that may be taken by it pursuant to the terms of such offer
or other transaction, the Trust shall notify Custodian (i) in the case of
securities maintained outside the United States, such number of Business Days
prior to the date on which
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Custodian is to take such action as will allow Custodian to take such action in
the relevant local market for such securities in a timely fashion, and (ii) in
the case of all other securities, at least five Business Days prior to the date
on which Custodian is to take such action.
3.26 CO-OPERATION. Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trust to keep the books
of account of the Portfolio and/or to compute the value of the assets of the
Portfolio.
ARTICLE IV
REDEMPTION OF PORTFOLIO SHARES;
DIVIDENDS AND OTHER DISTRIBUTIONS
4.1 TRANSFER OF FUNDS. From such funds as may be available for the
purpose in the Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of the Portfolio or to
pay dividends or other distributions to holders of Shares of the Portfolio,
Custodian shall transfer each amount specified in such Proper Instructions to
such account of the Portfolio or of an agent thereof (other than Custodian), at
such bank, as the Trust may designate therein with respect to such amount.
4.2 SOLE DUTY OF CUSTODIAN. Custodian's sole obligation with respect to
the redemption of Shares of the Portfolio and the payment of dividends and other
distributions thereon shall be its obligation set forth in Section 4.1 above,
and Custodian shall not be required to make any payments to the various holders
from time to time of Shares of the Portfolio nor shall Custodian be responsible
for the payment or distribution by the Trust, or any agent designated in Proper
Instructions given pursuant to Section 4.1 above, of any amount paid by
Custodian to the account of the Trust or such agent in accordance with such
Proper Instructions.
ARTICLE V
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions to do so, Custodian shall establish
and maintain a segregated account or accounts for and on behalf of the
Portfolio, into which account or accounts may be transferred funds and/or
securities, including securities maintained in a Securities Depository:
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(a) in accordance with the provisions of any agreement among the Trust,
Custodian and a securities broker-dealer (or any futures commission merchant),
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions of the Portfolio,
(b) for purposes of segregating funds or securities in connection with
securities options purchased or written by the Portfolio or in connection with
financial futures contracts (or options thereon) purchased or sold by the
Portfolio,
(c) which constitute collateral for loans of securities made by the
Portfolio,
(d) for purposes of compliance by the Portfolio with requirements under
the 1940 Act for the maintenance of segregated accounts by registered management
investment companies in connection with reverse repurchase agreements,
when-issued, delayed delivery and firm commitment transactions, and short sales
of securities, and
(e) for other proper purposes, but only upon receipt of Proper
Instructions, specifying the purpose or purposes of such segregated account and
certifying such purposes to be proper purposes of the Portfolio.
ARTICLE VI
CERTAIN REPURCHASE TRANSACTIONS
6.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of the Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of the Portfolio, shall
from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make from the Custody Account of the Portfolio the transfers of funds
and deliveries of securities which the Portfolio is required to make pursuant to
the Master Repurchase Agreement and shall receive for the Custody Account of the
Portfolio the transfers of funds and deliveries of securities which the seller
under the Master Repurchase Agreement is
19
required to make pursuant thereto. Custodian shall make and receive all such
transfers and deliveries pursuant to, and subject to the terms and conditions
of, the Master Repurchase Agreement.
6.2 COLLATERAL. Custodian shall daily xxxx to market the securities
purchased under the Master Repurchase Agreement and held in the Custody Account
of the Portfolio, and shall give to the seller thereunder any such notice as may
be required thereby in connection with such xxxx-to-market.
6.3 EVENTS OF DEFAULT. Custodian shall promptly notify the Trust of any
event of default under the Master Repurchase Agreement (as such term "event of
default" is defined therein) of which it has actual knowledge.
6.4 MASTER REPURCHASE AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Repurchase Agreement. The Trust
shall provide Custodian, prior to the effectiveness thereof, with a copy of any
amendment to the Master Repurchase Agreement.
ARTICLE VII
CERTAIN SECURITIES LENDING TRANSACTIONS
7.1 TRANSACTIONS. If and to the extent that the necessary funds and
securities of the Portfolio have been entrusted to it under this Agreement, and
subject to Custodian's right to foreclose upon and liquidate collateral pledged
to it pursuant to Section 9.3 below, Custodian, as agent of the Portfolio, shall
from time to time (and unless the Trust gives it Proper Instructions to do
otherwise) make from the Custody Account of the Portfolio the transfers of funds
and deliveries of securities which the Portfolio is required to make pursuant to
the Master Securities Loan Agreement and shall receive for the Custody Account
the transfers of funds and deliveries of securities which the borrower under the
Master Securities Loan Agreement is required to make pursuant thereto. Custodian
shall make and receive all such transfers and deliveries pursuant to, and
subject to the terms and conditions of, the Master Securities Loan Agreement.
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7.2 COLLATERAL. Custodian shall daily xxxx to market, in the manner
provided for in the Master Securities Loan Agreement, all loans of securities
which may from time to time be outstanding thereunder.
7.3 DEFAULTS. Custodian shall promptly notify the Trust of any default
under the Master Securities Loan Agreement (as such term "default" is defined
therein) of which it has actual knowledge.
7.4 MASTER SECURITIES LOAN AGREEMENT. Custodian hereby acknowledges its
receipt from the Trust of a copy of the Master Securities Loan Agreement. The
Trust shall provide Custodian, prior to the effectiveness thereof, with a copy
of any amendment to the Master Securities Loan Agreement.
ARTICLE VIII
CONCERNING THE CUSTODIAN
8.1 STANDARD OF CARE. Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Portfolio or the Trust for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim which
does not arise from willful misfeasance, bad faith or negligence on the part of
Custodian. Custodian shall be entitled to rely on and may act upon advice of
counsel in all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. In no event shall Custodian be liable
for special, incidental or consequential damages, even if Custodian has been
advised of the possibility of such damages, or be liable in any manner
whatsoever for any action taken or omitted upon instructions from the Trust or
any agent of the Trust.
8.2 ACTUAL COLLECTION REQUIRED. Custodian shall not be liable for, or
considered to be the custodian of, any funds belonging to the Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such funds or collect on
such instrument.
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8.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any assets or evidence of title thereto
received or delivered by it or its agents.
8.4 LIMITATION ON DUTY TO COLLECT. Custodian shall promptly notify the
Trust whenever any money or property due and payable from or on account of any
securities or other assets held hereunder for the Portfolio is not timely
received by it. Custodian shall not, however, be required to enforce collection,
by legal means or otherwise, of any such money or other property not paid when
due, but shall receive the proceeds of such collections as may be effected by it
or its agents in the ordinary course of Custodian's custody and safekeeping
business or of the custody and safekeeping business of such agents.
8.5 EXPRESS DUTIES ONLY. Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Portfolio or the Trust. In particular, Custodian shall not be
under any obligation at any time to monitor or to take any other action with
respect to compliance by the Portfolio or the Trust with the 1940 Act, the
provisions of the Trust's trust instruments or by-laws, or the Portfolio's
investment objectives, policies and limitations as in effect from time to time.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION. The Portfolio shall indemnify and hold harmless
Custodian, any sub-custodian appointed pursuant to this Agreement and any
nominee of any of them, from and against any loss, damages, cost, expense
(including attorneys' fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933, the Securities
Exchange Act of 1934, the 1940 Act, and any federal, state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from the fact
that securities or other assets in the Custody Account are registered in the
name of any such nominee, or (b) from any action or
22
inaction by Custodian or such sub-custodian or nominee (i) at the request or
direction of or in reliance on the advice of the Trust or any of its agents, or
(ii) upon Proper Instructions, or (c) generally, from the performance of its
obligations under this Agreement, provided that Custodian, any such
sub-custodian or any nominee of any of them shall not be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from willful misfeasance, bad faith or negligence on the part of
Custodian or any such sub-custodian or nominee.
9.2 INDEMNITY TO BE PROVIDED. If the Trust requests Custodian to take
any action with respect to securities or other assets of the Portfolio, which
may, in the opinion of Custodian, result in
Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Portfolio shall have provided indemnity therefor to
Custodian in an amount and form satisfactory to Custodian.
9.3 SECURITY. As security for the payment of any present or future
obligation or liability of any kind which the Portfolio may have to Custodian
with respect to or in connection with the Custody Account or this Agreement, or
which the Portfolio may otherwise have to Custodian, the Trust hereby pledges to
Custodian all securities, funds and other assets of every kind which are in the
Custody Account or otherwise held for the Portfolio pursuant to this Agreement,
and hereby grants to Custodian a lien, right of set-off and continuing security
interest in such securities, funds and other assets.
ARTICLE X
FORCE MAJEURE
Custodian shall not be liable for any failure or delay in performance
of its obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; strikes; epidemics; riots; power failures; computer
failure and any such circumstances beyond its reasonable control as may cause
interruption, loss or malfunction of utility, transportation, computer (hardware
or software) or telephone communication service; accidents; labor disputes; acts
of civil or military authority; actions by
23
any governmental authority, de jure or de facto; or inability to obtain labor,
material, equipment or transportation.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
11.1 REPRESENTATIONS WITH RESPECT TO PORTFOLIOS. The Trust represents
and warrants that (a) it has all necessary power and authority to perform the
obligations hereunder of the Portfolio, (b) the execution and delivery by it of
this Agreement, and the performance by it of the obligations hereunder of the
Portfolio, have been duly authorized by all necessary action and will not
violate any law, regulation, charter, by-law, or other instrument, restriction
or provision applicable to it or the Portfolio or by which it or the Portfolio,
or their respective assets, may be bound, and (c) this Agreement constitutes a
legal, valid and binding obligation of the Portfolio, enforceable against it in
accordance with its terms.
11.2 REPRESENTATIONS OF CUSTODIAN. Custodian represents and warrants
that (a) it has all necessary power and authority to perform its obligations
hereunder, (b) the execution and delivery by it of this Agreement, and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary action and will not violate any law, regulation, charter, by-law, or
other instrument, restriction or provision applicable to it or by which it or
its assets may be bound, and (c) this Agreement constitutes a legal, valid and
binding obligation of it, enforceable against it in accordance with its terms.
ARTICLE XII
COMPENSATION OF CUSTODIAN
The Portfolio shall pay Custodian such fees and charges as are set
forth in Exhibit A hereto, as such Exhibit A may from time to time be revised by
Custodian upon 14 days' prior written notice to the Trust. Any annual fee or
other charges payable by the Portfolio shall be paid monthly by automatic
deduction from funds available therefor in the Custody Account, or, if there are
no such funds, upon presentation of an invoice therefor. Out-of-pocket expenses
24
incurred by Custodian in the performance of its services hereunder for the
Portfolio and all other proper charges and disbursements of the Custody Account
shall be charged to the Custody Account by Custodian and paid in the same manner
as the annual fee and other charges referred to in this Article XII.
ARTICLE XIII
TAXES
13.1 TAXES PAYABLE BY PORTFOLIOS. Any and all taxes, including any
interest and penalties with respect thereto, which may be levied or assessed
under present or future laws or in respect of the Custody Account or any income
thereof shall be charged to such Custody Account by Custodian and paid in the
same manner as the annual fee and other charges referred to in Article XII
above.
13.2 TAX RECLAIMS. Upon the written request of the Trust, Custodian
shall exercise, on behalf of the Portfolio, any tax reclaim rights of the
Portfolio which arise in connection with foreign securities in the Custody
Account.
ARTICLE XIV
AUTHORIZED PERSONS; NOTICES
14.1 AUTHORIZED PERSONS. Custodian may rely upon and act in accordance
with any notice, confirmation, instruction or other communication which is
reasonably believed by Custodian to have been given or signed on behalf of the
Trust by one of the Authorized Persons designated by the Trust in Exhibit B
hereto, as it may from time to time be revised. The Trust may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance with
Section 14.4 below, but no revision of Exhibit B hereto shall be effective until
Custodian actually receives such notice.
14.2 INVESTMENT ADVISERS. Custodian may also rely upon and act in
accordance with any Written or Oral Instructions given with respect to the
Portfolio which are reasonably believed by
25
Custodian to have been given or signed by one of the persons designated from
time to time by any of the investment advisers of the Portfolio who are
specified in Exhibit C hereto (if any) as it may from time to time be revised.
The Trust may revise Exhibit C hereto at any time by notice in writing to
Custodian given in accordance with Section 14.4 below, and each investment
adviser specified in Exhibit C hereto (if any) may at any time by like notice
designate an Authorized Person or remove an Authorized Person previously
designated by it, but no revision of Exhibit C hereto (if any) and no
designation or removal by such investment adviser shall be effective until
Custodian actually receives such notice.
14.3 ORAL INSTRUCTIONS. Custodian may rely upon and act in accordance
with Oral Instructions. All Oral Instructions shall be confirmed to Custodian in
Written Instructions. However, if Written Instructions confirming Oral
Instructions are not received by Custodian prior to a transaction, it shall in
no way affect the validity of the transaction authorized by such Oral
Instructions or the authorization given by an Authorized Person to effect such
transaction. Custodian shall incur no liability to the Portfolio or the Trust in
acting upon Oral Instructions. To the extent such Oral Instructions vary from
any confirming Written Instructions, Custodian shall advise the Trust of such
variance, but unless confirming Written Instructions are timely received, such
Oral Instructions shall govern.
14.4 ADDRESSES FOR NOTICES. Unless otherwise specified herein, all
demands, notices, instructions, and other communications to be given hereunder
shall be sent, delivered or given to the recipient at the address, or the
relevant telephone number, set forth after its name herein below:
If to the Trust:
____________________
for The 1st Source Monogram Long/Short Fund
____________________________________
____________________________________
Attention:__________________________
Telephone: (___)________-___________
Facsimile: (___)________-___________
26
If to Custodian:
CUSTODIAL TRUST COMPANY
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Vice President - Trust Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as either party hereto shall have provided to the other
by notice given in accordance with this Section 14.4. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
14.5 REMOTE CLEARANCE. With the prior consent in writing of Custodian,
the Trust may give Remote Clearance Instructions (as defined herein below) and
Bulk Input Instructions (as defined herein below) for the receipt, delivery or
transfer of securities, provided that such Instructions are given in accordance
with the procedures prescribed by Custodian from time to time as to content of
instructions and their manner and timeliness of delivery by the Trust. Custodian
shall be entitled to conclusively assume that all Remote Clearance Instructions
and Bulk Input Instructions have been given by an Authorized Person, and
Custodian is hereby irrevocably authorized to act in accordance therewith. For
purposes of this Agreement, "Remote Clearance Instructions" means instructions
that are input directly via a remote terminal which is located on the premises
of the Trust, or of an investment adviser named in Exhibit C hereto, and linked
to Custodian; and "Bulk Input Instructions" means instructions that are input by
bulk input computer tape delivered to Custodian by messenger or transmitted to
it via such transmission mechanism as the Trust and Custodian shall from time to
time agree upon.
ARTICLE XV
TERMINATION
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all securities (other than
27
securities held in a Book-Entry System or Securities Depository) and other
assets then owned by the Portfolio and held by Custodian as custodian, and (b)
transfer any securities held in a Book-Entry System or Securities Depository to
an account of or for the benefit of the Portfolio, provided that the Portfolio
shall have paid to Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled.
ARTICLE XVI
LIMITATION OF LIABILITIES
To the extent that Trustees of Trust are regarded as entering into this
Agreement, they do so only as trustees of the Trust and not individually. The
obligations under this Agreement of the Trust or the Portfolio shall not be
binding upon any trustee, officer or employee of the Trust individually, or upon
any holder of Shares individually, but shall be binding only upon the assets and
property of the Portfolio. Such trustees, officers, employees and holders, when
acting in such capacities, shall not be personally liable under this Agreement,
and Custodian shall look solely to the assets and property of the Portfolio for
the performance of this Agreement and the payment of any claim against the
Portfolio under this Agreement.
ARTICLE XVII
MISCELLANEOUS
17.1 BUSINESS DAYS. Nothing contained in this Agreement shall require
Custodian to perform any function or duty on a day other than a Business Day.
17.2 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
17.3 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Portfolio and such other printed
matter as merely identifies Custodian as custodian for the Portfolio. The Trust
shall submit printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel prior to any
deadline for printing.
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17.4 NO WAIVER. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
17.5 AMENDMENTS. This Agreement cannot be changed orally and, except as
otherwise provided herein with respect to the Exhibits attached hereto, no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
17.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
17.7 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
17.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party. Any
purported assignment in violation of this Section 17.8 shall be void.
17.9 JURISDICTION. Any suit, action or proceeding with respect to this
Agreement may be brought in the Supreme Court of the State of New York, County
of New York, or in the United States District Court for the Southern District of
New York, and the parties hereto hereby submit to the non-exclusive jurisdiction
of such courts for the purpose of any such suit, action or proceeding, and
hereby waive for such purpose any other preferential jurisdiction by reason of
their present or future domicile or otherwise. Each of the parties hereto hereby
irrevocably waives its right to trial by jury in any suit, action or proceeding
with respect to this Agreement.
17.10 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
THE COVENTRY GROUP on behalf of
1ST SOURCE MONOGRAM LONG/SHORT FUND
By: _______________________________
Name:
Title:
CUSTODIAL TRUST COMPANY
By: _______________________________
Name:
Title:
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EXHIBIT A
CUSTODY FEES AND TRANSACTION CHARGES
DOMESTIC FEES. The Portfolio shall pay Custodian the following fees for
assets maintained in the United States ("Domestic Assets") and charges for
transactions in the United States, all such fees and charges to be payable
monthly:
(1) an annual fee of the greater of (a) the total of (i) _.__% (___
basis points) per annum of the value of the Domestic Assets in the Custody
Account or $5,000, any such percentage fee to be based upon the total market
value of such Domestic Assets as determined on the last Business Day of the
month for which such fee is charged;
(2) a transaction charge of $9 for each receive or deliver of
book-entry securities into or from the Custody Account (but not for any such
receive or deliver of book-entry securities loaned by the Portfolio or
constituting collateral for a loan of securities, or any such receive or deliver
in a repurchase transaction representing (a) a cash sweep investment for the
Portfolio's account or (b) the investment by the Portfolio of cash collateral
for a loan of securities);
(3) a transaction charge of $40 for each receive or deliver into or
from the Custody Account of securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Portfolio's account,
computed on the basis of a 360-day year and for the actual number of days such
repurchase transaction is outstanding at a rate of 0.10% (ten basis points) per
annum on the amount of the purchase price paid by the Portfolio in such
repurchase transaction;
(5) a charge of $10 for each "free" transfer of funds from the Custody
Account;
(6) a service charge for each holding of securities or other assets of
the Portfolio that are sold by way of private placement or in such other manner
as to require services by Custodian which in its reasonable judgment are
materially in excess of those ordinarily required for the holding of publicly
traded securities in the United States.
31
INTERNATIONAL FEES. A transaction charge of $__ shall be charged for
each receive or deliver into or from the Custody Account of securities in
Euroclear or Clearstream. In addition, the Portfolio shall pay Custodian fees
for assets maintained by the Portfolio outside the United States ("Foreign
Assets") and charges for other transactions by the Portfolio outside the United
States (including, without limitation, charges for funds transfers and tax
reclaims) in accordance with such schedule of fees and charges for each country
in which Foreign Assets of the Portfolio are held as Custodian shall from time
to time provide to the Trust. Any asset-based fee shall be based upon the total
market value of the applicable Foreign Assets as determined on the last Business
Day of the month for which such fee is charged.
32
EXHIBIT B
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Custody Account.
Name Signature
___________________________________ ___________________________________
___________________________________ ___________________________________
___________________________________ ___________________________________
33
EXHIBIT C
INVESTMENT ADVISERS
34
EXHIBIT D
APPROVED FOREIGN SUB-CUSTODIANS AND SECURITIES DEPOSITORIES
Foreign Sub-custodian Country(ies) Securities Depositories
35
