CUSTODIAN AGREEMENT (FOREIGN AND DOMESTIC SECURITIES)
Exhibit (g)(3)
CUSTODIAN AGREEMENT
(FOREIGN AND DOMESTIC SECURITIES)
(FOREIGN AND DOMESTIC SECURITIES)
This Custodian Agreement is made by and between Old Mutual Advisor Funds (“Principal”) and
UNION BANK OF CALIFORNIA, N.A. (“Custodian”). Principal desires that Custodian hold and administer
on behalf of Principal certain Securities (as herein defined). Custodian is willing to do so on
the terms and conditions set forth in this Agreement. Accordingly, Principal and Custodian agree
as follows:
1. Definitions. Certain terms used in this Agreement are defined as follows:
1.1 “Account” means, collectively, each account maintained by Custodian pursuant to Paragraph
3 of this Agreement.
1.2 “Act” means the Investment Company Act of 1940, and the rules and regulations thereunder,
all as amended from time to time by the U.S. Securities and Exchange Commission (“SEC”).
1.3 “Board” means the Board of Trustees or the Board of Directors of Principal.
1.4 “Eligible Foreign Custodian” (“Sub-Custodian”, or collectively “Sub-Custodians”) means an
entity that is incorporated or organized under the laws of a country other than the United States
and that is a Qualified Foreign Bank, as defined in §270.17f-5(a)(5) of the Rule, or a
majority-owned direct or indirect subsidiary of a U.S. Bank or bank-holding company.
1.5 “Securities Depository”, (“Depository”, or collectively “Depositories”) means a system for
the central handling of securities as defined in §270.17f-4 of the Act.
1.6 “Emerging Market” means each market so identified on Appendix A attached hereto.
1.7 “Foreign Market” means each market so identified on Appendix A attached hereto.
1.8 “Investment Manager” means an investment advisor or manager identified by Principal in a
written notice to Custodian as having the authority to direct Custodian regarding the management,
acquisition, or disposition of Securities.
1.9 “Monitoring System” means the policies and procedures established by Custodian to fulfill
its duties to monitor the custody risks associated with maintaining
securities with a Sub-Custodian or Depository on a continuing basis, pursuant to this
Agreement.
1.10 “Rule” means collectively §270.17(f)-5 and §270.17(f)-7 of the Act, as amended from time
to time.
1.11 “Securities” means domestic or foreign securities or both within the meaning of §2(a)(36)
of the Act and regulations issued by the SEC under §270.17(f) of the Act, as amended, which are
held by Custodian in the Account, and shall include cash of any currency or other property of
Principal and all income and proceeds of sale of such securities or other property of Principal.
2. Representations
2.1 Principal represents that with respect to any Account established by Principal to hold
Securities, Principal is authorized to enter into this Agreement and to retain Custodian on the
terms and conditions and for the purposes described herein.
2.2 Custodian represents that it (i) is organized under the laws of the United States and has
its principal place of business in the United States; (ii) is a bank within the meaning of
§202(a)(2) of the Investment Advisers Act of 1940 and §2(a)(5) of the Act, as amended; and (iii)
has equity capital in excess of $1 million and (iv) is subject to and in
compliance with the standards specified in sections §270.17(f)-4(a) of the Act.
3. Establishment of Accounts. Principal hereby establishes with Custodian, and may in
the future establish, one or more Accounts in Principal’s name. The Account shall consist of
Securities delivered to and receipted for by Custodian or by any Sub-Custodian. Custodian, in its
sole discretion, may reasonably refuse to accept any property now or hereafter delivered to it for
inclusion in the Account. Principal shall be notified promptly of such refusal and any such
property shall be immediately returned to Principal.
4. Custody. Subject to the terms of this Agreement, Custodian shall be responsible for the
safekeeping and custody of the Securities. Custodian may (i) retain possession of all or any
portion of the Securities, including possession in a foreign branch or other office of Custodian;
or (ii) retain, in accordance with Paragraph 5 of this Agreement, one or more Sub-Custodians to
hold all or any portion of the Securities. Custodian and any Sub-Custodian may, in accordance with
Paragraph 5 of this Agreement, deposit definitive or book-entry Securities with one or more
Depositories.
4.1 If Custodian retains possession of Securities, Custodian shall ensure the Securities are
at all times properly identified as being held for the appropriate Account. Custodian shall
segregate physically the Securities from other securities or property held by Custodian. Custodian
shall not be required to segregate physically the
Securities from other securities or property held by Custodian for third parties as Custodian, but
Custodian shall maintain adequate records showing the true ownership of the Securities.
4.2 If Custodian deposits Securities with a Sub-Custodian, Custodian shall maintain adequate
records showing the identity and location of the Sub-Custodian, the Securities held by the
Sub-Custodian, and each Account to which such Securities belong.
4.3 If Custodian or any Sub-Custodian deposits Securities with a Depository, Custodian shall
maintain, or shall cause the Sub-Custodian to maintain, adequate records showing the identity and
location of the Depository, the Securities held by the Depository, and each Account to which such
Securities belong.
4.4 If Principal directs Custodian to deliver certificates or other physical evidence of
ownership of Securities to any broker or other party, other than a Sub-Custodian or Depository
employed by Custodian for purposes of maintaining the Account, Custodian’s sole responsibility
shall be to exercise care and diligence in effecting the delivery as instructed by Principal. Upon
completion of the delivery, Custodian shall be discharged completely of any further liability or
responsibility with respect to the safekeeping and custody of Securities so delivered.
4.5 Custodian shall ensure that (i) the Securities will not be subject to any right, charge,
security interest, lien, or claim of any kind in favor of Custodian or any Sub-Custodian except for
Custodian’s expenses relating to the Securities’ safe custody or administration or, in the case of
cash deposits, liens or rights in favor of the creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws, and (ii) the beneficial ownership of the Securities will
be freely transferable without the payment of money or value other than for safe custody or
administration.
4.6 Principal or its designee, shall have reasonable access upon reasonable notice during
regular business hours to the books and records, or shall be given confirmation of the contents of
the books and records, maintained by Custodian or any Sub-Custodian holding Securities hereunder to
verify the accuracy of such books and records. Custodian shall notify Principal promptly of any
applicable law or regulation in any country where Securities are held that would restrict such
access or confirmation.
5. Sub-Custodians and Depositories; Selection and Monitoring. With Principal’s advance
approval, as provided in Subparagraph 5.5 of this Agreement, Custodian may from time to time select
one or more Sub-Custodians and, subject to the provisions of Subparagraph 5.7, one or more
Depositories, to hold Securities hereunder.
5.1 Custodian shall establish a relationship with each Sub-Custodian governed by a written
contract providing for the reasonable care of Securities based on the
standards specified in section §270.17(f)-5(c)(1) of the Rule, and including the provisions set
forth in sections §270.17(f)-5(c)(2)(i)(A) through (F) of the Rule, or provisions which Custodian
determines provide the same or greater protection of Principal’s Securities.
5.2 In making its selection of each Sub-Custodian, Custodian shall consider whether the
Securities will be subject to reasonable care, based on the standards applicable to custodians in
the relevant market, including (i) the Sub-Custodian’s practices, procedures, and internal
controls, including, but not limited to, the physical protections available for certificated
securities (if applicable), the method of keeping custodial records, and the security and data
protection practices; (ii) the Sub-Custodian’s financial strength, general reputation and standing
in the country in which it is located, its ability to provide efficiently the custodial services
required, and the relative cost of such services; and, (iii) whether the Sub-Custodian has branch
offices in the United States, or consents to service of process in the United States, in order to
facilitate jurisdiction over and enforcement of judgments against it.
5.3 In making its selection of each Depository, Custodian shall exercise reasonable care,
prudence, and diligence in evaluating the custody risks associated with maintaining Securities with
each Depository under Custodian’s custody arrangements with each Sub-Custodian or Depository.
5.4 Custodian shall give written notice to Principal of its intention to deposit Securities
with a Sub-Custodian or, directly or through a Sub-Custodian, with a Depository. The notice shall
identify the proposed Sub-Custodian or Depository and shall include reasonably available
information relied on by Custodian in making the selection.
5.5 Within 30 days of its receipt of a notice from Custodian pursuant to Subparagraph 5.4 of
this Agreement regarding Custodian’s proposed selection of one or more Sub-Custodians or
Depositories, Principal shall give written notice to Custodian of Principal’s approval or
disapproval of the proposed selection. If Principal has not responded within 30 days of receipt of
Custodian’s request for approval of a Sub-Custodian or Depository, Principal will be deemed to have
approved the proposed selection. Principal hereby approves Custodian’s selection and use of those
Sub-Custodians and Depositories which are identified in Appendix A of this Agreement.
5.6 Custodian shall monitor under its Monitoring System the appropriateness of the continued
custody or maintaining of Principal’s Securities with each Sub-Custodian or Depository.
5.6.1 Custodian shall evaluate and determine at least annually the continued eligibility of
each Sub-Custodian and Depository approved by Principal to act as such hereunder. In discharging
this responsibility, Custodian shall (i) monitor on a continuing basis the day to day services and
reports provided by each Sub-Custodian
or Depository; (ii) at least annually, obtain and review the annual financial report published by
each Sub-Custodian, and to the extent such reports are publicly available, each Depository, and
other reports on each Sub-Custodian or Depository which Custodian may obtain from a reputable
independent analyst; and, (iii) periodically as deemed appropriate, physically inspect the
operations of each Sub-Custodian or Depository.
5.6.2 Custodian shall provide to the Board annually and at such other times as the Board may
reasonably request based on the circumstances of the Principal’s foreign custody arrangements,
written reports notifying the Board of the placement of Securities of the Principal with a
particular foreign Sub-Custodian within a Foreign Market or an Emerging Market and of any material
change in the arrangements (including any material changes in any contracts governing such
arrangements or any material changes in the established practices or procedures of Depositories)
with respect to Securities of the Principal held by any Sub-Custodian.
5.6.3 If Custodian determines that (i) any Sub-Custodian or Depository no longer satisfies the
applicable requirements described in Subparagraph 1.4 (in the case of a Sub-Custodian) or
Subparagraph 1.5 (in the case of a Depository) of this Agreement; or, (ii) any Sub-Custodian or
Depository is otherwise no longer capable or qualified to perform the functions contemplated
herein; or, (iii) any change in a contract with a Sub-Custodian or any change in established
Depository or market practices or procedures shall cause a custody arrangement to no longer meet
the requirements of the Rule, Custodian shall promptly give written notice thereof to Principal.
The notice shall, in addition, either indicate Custodian’s intention to transfer Securities held by
the removed Sub-Custodian or Depository to another Sub-Custodian or Depository previously approved
by Principal, or include a notice pursuant to Subparagraph 5.4 of this Agreement of Custodian’s
intention to deposit Securities with a new Sub-Custodian or Depository, in either instance such
transfer of Securities to be effected as soon as reasonably practical.
5.7 Notwithstanding the foregoing sub-sections of this Paragraph 5, Custodian shall have no
responsibility for the selection or monitoring of any Depository or Depository’s agent (“Compulsory
Depository”) (i) the use of which is mandated by law or regulation; (ii) because securities cannot
be withdrawn from a depository; or (iii) because maintaining securities outside the securities
depository is not consistent with prevailing market practices in the relevant market, provided
however, that Custodian shall notify Principal if Principal has directed a trade in a market
containing a Compulsory Depository, so Principal and Advisor shall have an opportunity to determine
the appropriateness of investing in such market.
5.8 Principal and Custodian agree that, for purposes of this Paragraph, Custodian’s
determination of appropriateness shall only include custody risk, and shall not include any
evaluation of “country risk” or systemic risk associated with the investment or holding of assets
in a particular country or market, including, but not
limited to (i) the use of Compulsory Depositories, (ii) the country’s or market’s financial
infrastructure, (iii) the country’s or market’s prevailing custody and settlement practices, (iv)
risk of nationalization, expropriation or other governmental actions, (v) regulation of the banking
or securities industries, (vi) currency controls, restrictions, devaluation or fluctuation, and
(vii) country or market conditions which may affect the orderly execution of securities
transactions or affect the value of the transactions. Principal and
Custodian further agree that
the evaluation of any such country and systemic risks shall be solely the responsibility of
Principal and the Adviser.
6. Registration. Subject to any specific instructions from Principal, Custodian shall hold
or cause to be held all Securities in the name of (i) Principal, or (ii) Custodian, or any
Sub-Custodian or Depository approved by Principal pursuant to Paragraph 5 of this Agreement, or in
the name of a nominee of any of them, as Custodian shall determine to be appropriate under the
circumstances.
7. Transactions. Principal or any Investment Manager from time to time may instruct
Custodian (which in turn shall be responsible for giving appropriate instructions to any
Sub-Custodian or Depository) regarding the purchase or sale of Securities in accordance with this
Paragraph 7:
7.1 Custodian shall effect and account for each Securities and currency sale on the date such
transaction actually settles; provided, however, that Principal may in its sole discretion direct
Custodian, in such manner as shall be acceptable to Custodian, to account for Securities and
currency purchases and sales on contractual settlement date, regardless of whether settlement of
such transactions actually occurs on contractual settlement date. Principal may, from time to
time, direct Custodian to change the accounting method employed by Custodian in a written notice
delivered to Custodian at least thirty (30) days prior to the date a change in accounting method
shall become effective.
7.2 Custodian shall effect purchases by charging the Account with the amount necessary to make
the purchase and effecting payment to the seller or broker for the securities or other property
purchased. Custodian shall have no liability of any kind to any person, including Principal,
except in the case of negligent or intentional tortuous acts, or willful misconduct, if the
Custodian effects payment on behalf of Principal, and the seller or broker fails to deliver the
securities or other property purchased. Custodian shall exercise such ordinary care and diligence
as would be employed by a reasonably prudent custodian and due diligence in examining and verifying
the certificates or other indicia of ownership of the property purchased before accepting them.
7.3 Custodian shall effect sales by delivering certificates or other indicia of ownership of
the Property, and, as instructed, shall receive cash for such sales. Custodian shall have no
liability of any kind to any person, including Principal, if
Custodian exercises due diligence and delivers such certificates or indicia of ownership and the
purchaser or broker fails to effect payment.
7.4 If a purchase or sale is effected through a Depository, Custodian shall exercise such
ordinary care and diligence as would be employed by a reasonably prudent custodian and due
diligence in verifying proper consummation of the transaction by the Depository.
7.5 Principal or, where applicable, Investment Manager, is responsible for ensuring that
Custodian receives timely instructions and/or funds to enable Custodian to effect settlement of any
purchase or sale of Securities or Currency Transactions. If Custodian does not receive such timely
instructions or funds, Custodian shall have no liability of any kind to any person, including
Principal, for failing to effect settlement. However, Custodian shall use reasonable efforts to
effect settlement as soon as possible after receipt of appropriate instructions. Principal shall
be liable for interest compensation and/or principal amounts to Custodian and/or its counterparty
for failure to deliver instructions or funds in a timely manner to effect settlements of foreign
exchange funds movement.
7.6 At the direction of Principal or the Investment Manager, as the case may be, Custodian
shall convert currency in the Account to other currencies through customary channels including,
without limitation, Custodian or any of its affiliates, as shall be necessary to effect any
transaction directed by Principal or the Investment Manager. Principal or the Investment Manager,
as the case may be, acknowledges that (i) the foreign currency exchange department is a part of
Custodian or one of its affiliates or subsidiaries; (ii) the Account is not obligated to effect
foreign currency exchange with Custodian; (iii) Custodian will receive benefits for such foreign
currency transactions which are in addition to the compensation which Custodian receives for
administering the Account; and (iv) Custodian will make available the relevant data so that
Principal or the Investment Manager, as the case may be, can determine that the foreign currency
exchange transactions are as favorable to the Account as terms generally available in arm’s length
transactions between unrelated parties. Foreign currency exchange transactions will be performed
in accordance with the Union Bank of California Foreign Exchange Agreement in the form of Exhibit
“C” hereto and incorporated herein by reference and Principal hereby agrees and acknowledges all of
the terms and conditions thereof. If the Principal or Investment Manager elects to give standing
instructions to Custodian to execute foreign currency exchange transactions on their behalf, or in
the event a foreign currency exchange transaction is initiated in the absence of the specific
Foreign Exchange Agreement, such transaction will be performed at the Bank’s prevailing rate, in
accordance with the usual commercial terms of the custodian.
7.7 Custodian shall have no responsibility to manage or recommend investments of the Account
or to initiate any purchase, sale, or other investment
transaction in the absence of instructions from Principal or, where applicable, an Investment
Manager.
8. Market Transactions; Settlement Dates. Custodian has identified certain Foreign
Markets and certain Emerging Markets in Appendix A of this Agreement, which Custodian may amend in
writing to Principal from time to time.
8.1 Principal agrees that all settlements of Securities transactions shall be transacted in
accordance with the local laws, customs, market practices and procedures
to which Sub-Custodians and Depositories are subject in each Foreign and Emerging Market.
8.2 Notwithstanding the foregoing Paragraph 7., Principal understands and agrees that
settlement of Securities transactions is available only on an actual settlement date basis in
certain Emerging Markets, which are identified in Appendix A, and as may be amended by Custodian in
writing to Principal from time to time.
8.2.1 For Emerging Markets with actual settlement dates, cash of any currency deposited or
delivered to the Account shall be available for use by Principal or Investment Manager only on the
actual business day on which funds of good value are available to Sub-Custodian in the Account.
8.2.2 For Emerging Markets with actual settlement dates, Securities deposited or delivered to
the Account shall be available for use by Principal or Investment Manager only on the actual
business day on which such Securities are held in the nominee name or are otherwise subject to the
control of, and in a form for good delivery by, the Sub-Custodian.
9. Capital Changes; Income.
9.1 Custodian may, without further instructions from Principal or any Investment Manager,
exchange temporary certificates and may surrender and exchange Securities for other securities in
connection with any reorganization, recapitalization, or similar transaction in which the owner of
the Securities is not given an option. Custodian has no responsibility to effect any such
exchange unless it has received actual notice of the event permitting or requiring such exchange at
its office designated in Paragraph 15 of this Agreement or at the office of its designated agents.
9.2 Custodian, or its designated agents, are authorized, as Principal’s agent, to surrender
against payment maturing obligations and obligations called for redemption, and to collect and
receive payments of interest and principal, dividends, warrants, and other things of value in
connection with Securities. Except as otherwise provided in Subparagraph 16.4 of this Agreement,
Custodian or its designated agents shall not be obligated to enforce collection of any item by
legal process or other means.
9.3 Custodian or its designated agents are authorized to sign for Principal all declarations,
affidavits, certificates, or other documents that may be required to collect or receive payments or
distributions with respect to Securities. Custodian or its designated agents are authorized to
disclose, without further consent of Principal, Principal’s identity to issuers of Securities, or
the agents of such issuers, who may request such disclosure.
10. Notices re Account Securities. Custodian shall notify Principal or, where applicable,
the Investment Manager, of any reorganization, recapitalization, or similar transaction not covered
by Paragraph 9, and any subscription rights, proxies, and other
shareholder information pertaining
to the Securities actual notice of which is received by Custodian at its office designated in
Paragraph 15 of this Agreement or at the offices of its designated agents. Custodian’s sole
responsibility in this regard shall be to give such notices to Principal or the Investment Manager,
as the case may be, within a reasonable time after Custodian receives them, and Custodian shall not
otherwise be responsible for the timeliness of such notices. Custodian has no responsibility to
respond or otherwise act with respect to any such notice unless and until Custodian has received
appropriate instructions from Principal or the Investment Manager.
11. Taxes. Custodian shall pay or cause to be paid from the Account all taxes and levies
in the nature of taxes imposed on the Account or the Securities thereof by any country. Custodian
will use its best efforts to give the Investment Manager advance written notice of the imposition
of such taxes. However, Custodian shall use reasonable efforts to obtain refunds of taxes withheld
on Securities or the income thereof that are available under applicable tax laws, treaties, and
regulations.
12. Cash. Principal may from time to time, direct Custodian to hold Account cash in The
HighMarkSM Group of mutual funds or in any investment company for which Custodian or its
affiliates or subsidiaries, acts as investment advisor or custodian, or provides other services.
Principal shall designate the particular HighMark fund or such other above-mentioned fund that
Principal deems appropriate for the Account. Principal or an Investment Manager, where
applicable, acknowledges that Custodian will receive fees for such services which will be in
addition to those fees charged by Custodian as agent for the Account.
13. Reports. Custodian shall give written reports to Principal showing (i) each
transaction involving Securities effected by or reported to Custodian; (ii) the identity and
location of Securities held by Custodian as of the date of the report; (iii) any transfer of
location of Securities not otherwise reported; and (iv) such other information as shall be agreed
upon by Principal and Custodian. Unless otherwise agreed upon by Principal and Custodian,
Custodian shall provide the reports described in this Paragraph 13 on a monthly basis.
14. Instructions from Principal.
14.1 Principal shall certify or cause to be certified to Custodian in writing the names and
specimen signatures of all persons authorized to give instructions, notices, or other
communications on behalf of Principal or any Investment Manager. Such certification shall remain
effective until Custodian receives notice to the contrary.
14.2 Principal or authorized Investment Manager, as the case may be, may give instruction,
notice, or other communication called for by this Agreement to Custodian in writing, or by
telecopy, telex, telegram, or other form of electronic communication acceptable to Custodian.
Unless otherwise expressly provided, all Instructions shall continue in full force and effect until
canceled or superseded. Principal or Investment Manager may give and Custodian may accept oral
instructions on an
exception basis; provided, however, that Principal or Investment Manager shall
promptly confirm any oral communications in writing or by telecopy or other means permitted
hereunder. Principal will hold Custodian harmless for the failure of Principal or Investment
Manager to send confirmation in writing, the failure of such confirmation to conform to the
telephone instructions received or Custodian’s failure to produce such confirmation at any
subsequent time. Custodian may electronically record any instruction given by telephone, and any
other telephone discussions with respect to the Custody Account.
14.3 All such communications shall be deemed effective upon receipt by Custodian at its
address specified in Paragraph 15 of this Agreement, as amended from time to time. Custodian
without liability may rely upon and act in accordance with any instruction that Custodian using
ordinary care believes has been given by Principal or an Investment Manager.
14.4 Custodian may at any time request instructions from Principal and may await such
instructions without incurring liability. Custodian has no obligation to act in the absence of
such requested instructions, but may, however, without liability take such action as it deems
appropriate to carry out the purposes of this Agreement.
15. Addresses. Until further notice from either party, all communications called for under
this Agreement shall be addressed as follows:
| If to Principal: | ||||||
| Name: | Old Mutual Advisor Funds | |||||
| Street Address: | ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | |||||
| ▇▇▇▇, ▇▇▇▇▇, ▇▇▇: | ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ | |||||
| Attn: | Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. | |||||
| Telephone: | ▇▇▇.▇▇▇.▇▇▇▇ | |||||
| Fax: | ▇▇▇.▇▇▇.▇▇▇▇ | |||||
| If to Custodian: | ||||||
| UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION | ||||||
| Union Bank of California Global Custody | ||||||
| Attn: ▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇, Vice President | ||||||
| ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ | ||||||
| ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||||
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
| Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||||
16. Custodian’s Responsibilities and Liabilities:
16.1 Custodian’s duties and responsibilities shall be limited to those expressly set forth in
this Agreement, or as otherwise agreed by Custodian in writing. In carrying out its
responsibilities, Custodian shall exercise no less than the same degree of care and diligence it
usually exercises with respect to similar property of its own.
16.2 Custodian (i) shall not be required to maintain any special insurance for the benefit of
Principal, and (ii) shall not be liable or responsible for any loss, damage, expense, failure to
perform or delay caused by accidents, strikes, fire, flood, war, riot, electrical or mechanical or
communication line or facility failures, acts of third parties (including without limitation any
messenger, telephone or delivery service), acts of God, war, government action, civil commotion,
fire, earthquake, or other casualty or disaster or any other cause or causes which are beyond
Custodian’s reasonable control. However, Custodian shall use reasonable efforts to replace
Securities lost or damaged due to such causes with securities of the same class and issue with all
rights and privileges pertaining thereto. Custodian shall be liable to Principal for any loss which
shall occur as the result of the failure of a Sub-Custodian to exercise reasonable care with
respect to the safekeeping of assets to the same extent that Custodian would be liable to Principal
if Custodian were holding such securities and cash in its own premises. In all cases, Custodian’s
liability for any act or failure to act under this Agreement shall be limited to the resulting
direct loss, if any, of Principal. Under no circumstances shall Custodian be liable for any
consequential, indirect, punitive, or special damage which Principal may incur or suffer in
connection with this Agreement.
16.3 The parties intend that Custodian shall not be considered a fiduciary of the Account.
Accordingly, Custodian shall have no power to make decisions regarding any policy, interpretation,
practice, or procedure with respect to the Account, but shall perform the ministerial and
administrative functions described in this Agreement as provided herein and within the framework of
policies, interpretations, rules, practices, and procedures made by Principal or an Investment
Manager, where applicable, as the same shall be reflected in instructions to Custodian from
Principal or any Investment Manager.
16.4 Custodian shall not be required to appear in or defend any legal proceedings with respect
to the Account or the Securities unless Custodian has been indemnified to its reasonable
satisfaction against loss and expense (including reasonable attorneys’ fees).
16.5 With respect to legal proceedings referred to in Subparagraph 16.4 of this agreement,
Custodian may consult with counsel acceptable to it after written notification to Principal
concerning its duties and responsibilities under this Agreement, and shall not be liable for any
action taken or not taken in good faith on the advice of such counsel.
17. Indemnities.
17.1 Principal hereby agrees to indemnify Custodian against all liability, claims, demands,
damages, losses, and costs, including reasonable attorneys’ fees and expenses of legal proceedings,
resulting from Custodian’s compliance with instructions from Principal or any Investment Manager
and the terms of this Agreement, except where Custodian has acted with negligence or willful
misconduct.
17.2 Custodian’s right to indemnity under Subparagraph 17.1 of this Agreement shall survive
the termination of this Agreement.
18 Compensation; Expenses. Principal shall reimburse Custodian for all reasonable
out-of-pocket expenses and processing costs incurred by Custodian in the administration of the
Account including, without limitation, reasonable counsel fees incurred by Custodian pursuant to
Subparagraph 16.5 of this Agreement. Principal also shall pay Custodian reasonable compensation
for its services hereunder as specified in Appendix B. Custodian shall be entitled to withdraw
such expenses or compensation from the Account if Principal fails to pay the same to Custodian
within 45 days after Custodian has sent an appropriate billing to Principal; provided, however,
that Custodian will give Principal ten (10) days prior written notice before withdrawing such
funds.
19. Amendment; Termination. This Agreement may be amended at any time by a written
instrument signed by the parties. Either party may terminate this Agreement and the Account upon
90 days’ written notice to the other unless the parties agree on a different time period. Upon
such termination, Custodian shall deliver or cause to be delivered the Securities, less any amounts
due and owing to Custodian under this Agreement, to a successor custodian designated by Principal
or, if a successor custodian has not accepted an appointment by the effective date of termination
of the Account, to Principal. Upon completion of such delivery Custodian shall be discharged of
any further liability or responsibility with respect to the Securities so delivered.
20. Successors. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors in interest. Without consent of the parties, this agreement
cannot be assigned to any third party.
21. Governing Law. The validity, construction, and administration of this Agreement shall
be governed by the applicable laws of the United States from time to time in force and effect and,
to the extent not preempted by such laws of the United States, by the laws of the State of
California from time to time in force and effect. Any action or proceeding to enforce, interpret
or adjudicate the rights and responsibilities of the parties hereunder shall be commence in the
State or Federal courts located in the State of California.
22. Effective Date. This Agreement shall be effective as of the date appearing below, and
shall supersede any prior or existing agreements between the parties pertaining to the subject
matter hereof.
| Date: December 9, 2005 | ||||
By:
|
“Principal” | |||
| /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| Authorized Signature | ||||
| ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President | ||||
| Name & Title | ||||
| Authorized Signature | ||||
| Name & Title | ||||
By:
|
Union Bank of California, National Association, “Bank” | |||
| /s/ Moon ▇▇▇▇ ▇▇▇ | ||||
| Authorized Signature | ||||
| Moon ▇▇▇▇ ▇▇▇, Vice President | ||||
| Name & Title | ||||
| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Authorized Signature | ||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President | ||||
| Name & Title | ||||