EXHIBIT 99(G)
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of May 5, 2005, between THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ FUNDS,
an open-end management investment company organized as a Delaware business trust
and duly registered with the U.S. Securities and Exchange Commission under the
Investment Company Act of 1940 ("▇▇▇ ▇▇▇▇ ▇▇▇") with several separate series of
shares listed on the attached "Exhibit 1" (which may be amended from time to
time) (the "FUND"), and ▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO., a limited partnership
formed under the laws of the State of New York (BBH&CO. or the CUSTODIAN),
W I T N E S S E T H:
WHEREAS, the Fund wishes to employ BBH&Co. to act as custodian for the
Fund and to provide related services, all as provided herein, and BBH&Co. is
willing to accept such employment, subject to the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby appoints BBH&Co. as the Fund's
Custodian, and BBH&Co. hereby accepts such appointment. All Investments of the
Fund delivered to the Custodian or its agents or Subcustodians shall be dealt
with as provided in this Agreement. The duties of the Custodian with respect to
the Fund's Investments shall be only as set forth expressly in this Agreement
which duties are generally comprised of safekeeping and various administrative
duties that will be performed in accordance with Instructions and as reasonably
required to effect Instructions.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND. The Fund hereby
represents, warrants and covenants each of the following:
2.1 This Agreement has been, and at the time of delivery of each
Instruction such Instruction will have been, duly authorized, executed and
delivered by the Fund. Neither this Agreement nor any Instruction issued
thereunder violates any Applicable Law or conflicts with or constitutes a
default under the Fund's prospectus, articles of organization or other
constitutive document or any agreement, judgment, order or decree to which the
Fund is a party or by which it or its Investments is bound.
2.2 By providing an Instruction with respect to the first acquisition of
an Investment in a jurisdiction other than the United States of America, the
Fund shall be deemed to have confirmed to the Custodian that the Fund has (a)
assessed and accepted all material Country or Sovereign Risks and accepted
responsibility for their occurrence, (b) made all determinations required to be
made by the Fund under the 1940 Act, and (iii) appropriately and adequately
disclosed to its shareholders, other investors and all persons who have rights
in or to such Investments, all material investment risks, including those
relating to the custody and settlement infrastructure or the servicing of
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securities in such jurisdiction.
2.3 The Fund shall safeguard and shall solely be responsible for the
safekeeping of any testkeys, identification codes, passwords, other security
devices or statements of account with which the Custodian provides it. If the
Fund uses any on-line or similar communications service made available by the
Custodian, the Fund shall be solely responsible for ensuring the security of its
access to the service and for the use of the service, and shall only attempt to
access the service and the Custodian's computer systems as directed by the
Custodian. If the Custodian provides any computer software to the Fund relating
to the services described in this Agreement, the Fund will only use the software
for the purposes for which the Custodian provided the software to the Fund and
will abide by the license agreement accompanying the software and any other
security policies which the Custodian provides to the Fund.
3. REPRESENTATION AND WARRANTY OF BBH&CO. BBH&Co. hereby represents and warrants
that this Agreement has been duly authorized, executed and delivered by BBH&Co.
and does not and will not violate any Applicable Law or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound.
4. INSTRUCTIONS. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
INSTRUCTION shall mean a directive initiated by the Fund, acting through its
board of directors or trustees or other Authorized Person, which directive shall
conform to the requirements of this Section 4.
4.1 AUTHORIZED PERSONS. For purposes hereof, an AUTHORIZED PERSON shall be
a person or entity (designated by the Fund in a written instruction delivered to
the Custodian) authorized to give Instructions to the Custodian by written
notices or otherwise for or on behalf of the Fund in accordance with procedures
delivered to and acknowledged by the Custodian. The Custodian may treat any
Authorized Person as having the full authority of the Fund to issue Instructions
hereunder unless the notice of authorization contains explicit limitations as to
said authority. The Custodian shall be entitled to rely upon the authority of
Authorized Persons until it receives appropriate written notice from the Fund to
the contrary.
4.2 FORM OF INSTRUCTION. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Fund from time to time unless the Fund shall elect to transmit
such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of this
Section.
4.2.1 FUND DESIGNATED SECURED-TRANSMISSION METHOD. Instructions may
be transmitted through a secured or tested electro-mechanical means
identified by the Fund or by an Authorized Person entitled to give
Instruction and acknowledged and accepted by the Custodian, it being
understood that such acknowledgment shall authorize the Custodian to
accept such means of delivery but shall not represent a
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judgment by the Custodian as to the reasonableness or security of the
means utilized by the Authorized Person.
4.2.2 WRITTEN INSTRUCTIONS. Instructions may be transmitted in a
writing that bears the manual signature of Authorized Persons.
4.2.3 OTHER FORMS OF INSTRUCTION. Instructions may also be
transmitted by another means determined by the Fund or Authorized Persons
and acknowledged and accepted by the Custodian (subject to the same limits
as to acknowledgements as are contained in Subsection 4.2.1, above)
including Instructions given orally or by SWIFT, telex or telefax (whether
tested or untested).
When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but the Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. Oral Instructions shall be binding upon the Custodian only if and
when the Custodian takes action with respect thereto. With respect to telefax
instructions, the parties agree and acknowledge that receipt of legible
instructions cannot be assured, that the Custodian cannot verify that authorized
signatures on telefax instructions are original or properly affixed, and that
the Custodian shall not be liable for losses or expenses incurred through
actions taken in reliance on inaccurately stated, illegible or unauthorized
telefax instructions. The provisions of Section 4A of the Uniform Commercial
Code shall apply to Funds Transfers performed in accordance with Instructions.
The Funds Transfer Services Schedule and the Electronic and Online Services
Schedule to this Agreement shall each comprise a designation of a means of
delivering Instructions for purposes of this Section 4.2.
4.3 COMPLETENESS AND CONTENTS OF INSTRUCTIONS. The Authorized Person shall
be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in the Fund's
Investments and upon any delivery and transfer of any Investment or moneys, the
person initiating the Instruction shall give the Custodian an Instruction with
appropriate detail, including, without limitation:
4.3.1 The transaction date and the date and location of settlement;
4.3.2 The specification of the type of transaction;
4.3.3 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money to be
received or delivered and currency information. Where an Instruction is
communicated by electronic means, or otherwise where an Instruction
contains an identifying number such as a CUSIP, SEDOL or ISIN number, the
Custodian shall be entitled to rely on such number as controlling
notwithstanding any inconsistency contained in the Instruction,
particularly with respect to Investment description; and
4.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian determines that an Instruction is either unclear or
incomplete, the Custodian may give prompt notice of such determination to the
Fund, and the Fund shall thereupon amend or otherwise reform the
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Instruction. In such event, the Custodian shall have no obligation to take any
action in response to the Instruction initially delivered until the redelivery
of an amended or reformed Instruction.
4.4 TIMELINESS OF INSTRUCTIONS. In giving an Instruction, the Fund shall
take into consideration delays which may occur due to the involvement of a
Subcustodian or agent (where the use of such Subcustodian or agent would be
reasonably anticipated), differences in time zones, and other factors particular
to a given market, exchange or issuer. When the Custodian has established
specific timing requirements or deadlines with respect to particular classes of
Instruction, or when an Instruction is received by the Custodian at such a time
that it could not reasonably be expected to have acted on such instruction due
to time zone differences or other factors beyond its reasonable control, the
execution of any Instruction received by the Custodian after such deadline or at
such time (including any modification or revocation of a previous Instruction)
shall be at the risk of the Fund.
5. SAFEKEEPING OF FUND ASSETS. The Custodian shall hold Investments delivered to
it or Subcustodians for the Fund in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the safekeeping of
Investments not delivered or that are not caused to be issued to it or its
Subcustodians; or, (b) pre-existing faults or defects in Investments that are
delivered to the Custodian or its Subcustodians. The Custodian is hereby
authorized to hold with itself or a Subcustodian, and to record in one or more
accounts, all Investments delivered to and accepted by the Custodian, any
Subcustodian or their respective agents pursuant to an Instruction or in
consequence of any corporate action (such as a dividend, stock split,
reorganization, reclassification or merger) or income event. The Custodian shall
hold Investments for the account of the Fund and shall segregate Investments
from assets belonging to the Custodian and shall cause its Subcustodians to
segregate Investments from assets belonging to the Subcustodian in an account
held for the Fund or in an account maintained by the Subcustodian generally for
non-proprietary assets of the Custodian.
5.1 USE OF SECURITIES DEPOSITORIES. The Custodian may deposit and maintain
Investments in any Securities Depository, either directly or through one or more
Subcustodians appointed by the Custodian. Investments held in a Securities
Depository shall be held (a) subject to the agreement, rules, statement of terms
and conditions or other document or conditions effective between the Securities
Depository and the Custodian or the Subcustodian, as the case may be, and (b) in
an account for the Fund or in bulk segregation in an account maintained for the
non-proprietary assets of the entity holding such Investments in the Depository.
If market practice or the rules and regulations of the Securities Depository
prevent the Custodian, the Subcustodian or any agent of either from holding its
client assets in such a separate account, the Custodian, the Subcustodian or
other agent shall as appropriate segregate such Investments for benefit of the
Fund or for benefit of clients of the Custodian generally on its own books.
5.2 CERTIFICATED ASSETS. Investments which are certificated may be held in
registered or bearer form: (a) in the Custodian's vault; (b) in the vault of a
Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an
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account maintained by the Custodian, Subcustodian or agent at a Securities
Depository; all in accordance with customary market practice in the jurisdiction
in which any Investments are held.
5.3 REGISTERED ASSETS. Investments which are registered may be registered
in the name of the Custodian, a Subcustodian, or in the name of the Fund or a
nominee for any of the foregoing, and may be held in any manner set forth in
Section 5.2 above with or without any identification of fiduciary capacity in
such registration.
5.4 BOOK ENTRY ASSETS. Investments which are represented by book-entry may
be so held in an account maintained by the Book-entry Agent on behalf of the
Custodian, a Subcustodian or another Agent of the Custodian, or a Securities
Depository.
5.5 DAMAGES FOR LOST INVESTMENTS. In the event of a loss of Investments
for which loss the Custodian is responsible under the terms of this Agreement,
the Custodian shall replace such Investment, or in the event that such
replacement cannot be effected, the Custodian shall pay to the Fund the actual
damages sustained by the Fund as a result of such loss which shall be determined
by the fair market value of such Investment on the date that the loss becomes
known.
6. ADMINISTRATIVE DUTIES OF THE CUSTODIAN. The Custodian shall perform the
following administrative duties with respect to Investments of the Fund.
6.1 PURCHASE OF INVESTMENTS. Pursuant to Instruction, Investments
purchased for the account of the Fund shall be paid for (a) against delivery
thereof to the Custodian or a Subcustodian, as the case may be, either directly
or through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
6.2 SALE OF INVESTMENTS. Pursuant to Instruction, Investments sold for the
account of the Fund shall be delivered (a) against payment therefor in cash, by
check or by bank wire transfer, (b) by credit to the account of the Custodian or
the applicable Subcustodian, as the case may be, with a Clearing Corporation or
a Securities Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in accordance with an
Instruction, Applicable Law, generally accepted trade practices, or the terms of
the instrument representing such Investment.
6.3 DELIVERY AND RECEIPT IN CONNECTION WITH BORROWINGS OF THE FUND OR
OTHER COLLATERAL AND MARGIN REQUIREMENTS. Pursuant to Instruction, the Custodian
shall deliver or receive Investments or cash of the Fund in connection with
borrowings or loans by the Fund and other collateral and margin requirements.
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6.4 FUTURES AND OPTIONS. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures commission
merchant regarding margin (TRI-PARTY AGREEMENT), the Custodian shall (a) receive
and retain, to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the purchase or sale by the Fund of
exchange-traded futures contracts and commodity options, (b) when required by
such Tri-Party Agreement, deposit and maintain in an account opened pursuant to
such Agreement (MARGIN ACCOUNT), segregated either physically or by book-entry
in a Securities Depository for the benefit of any futures commission merchant,
such Investments as the Fund shall have designated as initial, maintenance or
variation "margin" deposits or other collateral intended to secure the Fund's
performance of its obligations under the terms of any exchange-traded futures
contracts and commodity options; and (c) thereafter pay, release or transfer
Investments into or out of the Margin Account in accordance with the provisions
of such Agreement. Alternatively, the Custodian may deliver Investments, in
accordance with an Instruction, to a futures commission merchant for purposes of
margin requirements in accordance with Rule 17f-6 under the 1940 Act. The
Custodian shall in no event be responsible for the acts and omissions of any
futures commission merchant to whom Investments are delivered pursuant to this
Section; for the sufficiency of Investments held in any Margin Account; or, for
the performance of any terms of any exchange-traded futures contracts and
commodity options.
6.5 CONTRACTUAL OBLIGATIONS AND SIMILAR INVESTMENTS. From time to time,
the Fund's Investments may include Investments that are not ownership interests
as may be represented by certificate (whether registered or bearer), by entry in
a Securities Depository or by Book-Entry Agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If the Fund shall at
any time acquire such Investments, including without limitation deposit
obligations, loan participations, repurchase agreements and derivative
arrangements, the Custodian shall (a) receive and retain, to the extent the same
are provided to the Custodian, confirmations or other documents evidencing the
arrangement; and (b) perform on the Fund's account in accordance with the terms
of the applicable arrangement, but only to the extent directed to do so by
Instruction. The Custodian shall have no responsibility for agreements running
to the Fund as to which it is not a party other than to retain, to the extent
the same are provided to the Custodian, documents or copies of documents
evidencing the arrangement and, in accordance with Instruction, to include such
arrangements in reports made to the Fund.
6.6 EXCHANGE OF SECURITIES. Unless otherwise directed by Instruction, the
Custodian shall: (a) exchange securities held for the account of the Fund for
other securities in connection with any reorganization, recapitalization,
conversion, stock split, change of par value of shares or similar event, and (b)
deposit any such securities in accordance with the terms of any reorganization
or protective plan.
6.7 SURRENDER OF SECURITIES. Unless otherwise directed by Instruction, the
Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of an entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of indebtedness.
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6.8 RIGHTS, WARRANTS, ETC. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of the issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deliver securities in
response to any tender offer.
6.9 MANDATORY CORPORATE ACTIONS. Unless otherwise directed by Instruction,
the Custodian shall: (a) comply with the terms of all mandatory or compulsory
exchanges, calls, tenders, redemptions or similar rights of securities ownership
affecting securities held on the Fund's account and promptly notify the Fund of
such action; and (b) collect all stock dividends, rights and other items of like
nature with respect to such securities.
6.10 INCOME COLLECTION. Unless otherwise directed by Instruction, the
Custodian shall present for payment and collect any amount due and payable to
the Fund with respect to Investments and promptly credit the amount collected to
a Principal or Agency Account; provided, however, that the Custodian shall not
be responsible for: (a) the collection of amounts due and payable with respect
to Investments that are in default or (b) the collection of cash or share
entitlements with respect to Investments that are not registered in the name of
the Custodian or its Subcustodians. The Custodian is hereby authorized to
endorse and deliver any instrument required to be so endorsed and delivered to
effect collection of any amount due and payable to the Fund with respect to
Investments.
6.11 CORPORATE ACTION INFORMATION. In fulfilling the duties set forth in
Sections 6.6 through 6.10 above, the Custodian shall provide to the Fund, within
48 hours of the Custodian's receipt, such material information pertaining to a
corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Information relative to any pending corporate action made available
to the Fund via any of the services described in the Electronic and Online
Services Schedule shall constitute the delivery of such information by the
Custodian. Any advance credit of cash or shares expected to be received as a
result of any corporate action shall be subject to actual collection and may be
reversed by the Custodian.
6.12 PROXY MATERIALS. The Custodian shall deliver, or cause to be
delivered, within 48 hours to the Fund proxy forms, notices of meeting, and any
other notices or announcements materially affecting or relating to Investments
received by the Custodian. Information relative to any pending corporate action
made available to the Fund via any of the services described in the Electronic
and Online Services Schedule shall constitute the delivery of such information
by the Custodian.
6.13 OWNERSHIP CERTIFICATES AND DISCLOSURE OF THE FUND'S INTEREST. The
Custodian is hereby authorized to execute on behalf of the Fund ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
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With respect to securities issued in the United States of America, the Custodian
[ ] may [ ] may not release the identity of the Fund to an issuer which requests
such information pursuant to the Shareholder Communications Act of 1985 for the
specific purpose of direct communications between such issuer and the Fund. IF
NO BOX IS CHECKED, THE CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT
RECEIVES CONTRARY INSTRUCTIONS FROM THE FUND. With respect to securities issued
outside of the United States of America, information shall be released in
accordance with law or custom of the particular country in which such security
is located.
6.14. TAXES. The Custodian shall, where applicable, assist the Fund in the
reclamation of taxes withheld on dividends and interest payments received by the
Fund. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the advice of counsel
and upon information and advice regarding the Fund's tax status that is received
from or on behalf of the Fund without duty of separate inquiry.
6.15 OTHER DEALINGS. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom the payment or delivery is made.
6.16 NONDISCRETIONARY DETAILS AND MINOR EXPENSES. The Custodian shall
attend to all nondiscretionary details in connection with the sale or purchase
or other administration of Investments, except as otherwise directed by
Instruction, and may make payments to itself or others for minor expenses of
administering Investments under this Agreement, provided that the Fund shall
have the right to request an accounting with respect to such expenses.
6.17 USE OF AGENTS. The Custodian may at any time in its discretion
appoint (and may at any time remove) agents (other than Subcustodians) to carry
out some or all of the administrative provisions of this Agreement (AGENTS),
provided, however, that the appointment of an Agent shall not relieve the
Custodian of its obligations under this Agreement.
7. CASH ACCOUNTS, DEPOSITS AND MONEY MOVEMENTS. Subject to the terms and
conditions set forth in this Section 7, the Fund hereby authorizes the Custodian
to open and maintain, with itself or with Subcustodians, cash accounts in United
States Dollars, in such other currencies as are the currencies of the countries
in which the Fund maintains Investments or in such other currencies as the Fund
shall from time to time request by Instruction.
7.1 TYPES OF CASH ACCOUNTS. Cash accounts opened on the books of the
Custodian (PRINCIPAL ACCOUNTS) shall be opened in the name of the Fund. Such
accounts collectively shall be a deposit obligation of the Custodian
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and shall be subject to the terms of this Section 7 and the general liability
provisions contained in Section 9. Cash accounts opened on the books of a
Subcustodian may be opened in the name of the Fund or the Custodian or in the
name of the Custodian for its customers generally (AGENCY ACCOUNTS). To the
extent cash accounts are opened with Subcustodians outside of the United States,
such deposits shall be obligations of the Subcustodian and shall be treated as
an Investment of the Fund. Accordingly, the Custodian shall be responsible for
exercising reasonable care in the administration of such accounts, but shall not
be liable for their repayment in the event the Subcustodian, by reason of its
bankruptcy, insolvency or otherwise, fails to make repayment.
7.2 PAYMENTS AND CREDITS WITH RESPECT TO THE CASH ACCOUNTS. The Custodian
shall make payments from or deposits to any of the cash accounts in the course
of carrying out its administrative duties, including but not limited to income
collection with respect to the Fund's Investments, and otherwise in accordance
with Instructions. The Custodian and its Subcustodians shall be required to
credit amounts to the cash accounts only when moneys are actually received in
cleared funds in accordance with banking practice in the country and currency of
deposit. Any credit made to any Principal or Agency Account before actual
receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed to in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
7.3 CURRENCY AND RELATED RISKS. The Fund bears the risks of holding or
transacting in any currency, including any ▇▇▇▇ to market exposure associated
with a foreign exchange transaction undertaken with the Custodian. The Custodian
shall not be liable for any loss or damage arising from the applicability of any
law or regulation now or hereafter in effect, or from the occurrence of any
event outside of its control, which may delay or affect the transferability,
convertibility or availability of any currency in the country (a) in which such
Principal or Agency Accounts are maintained or (b) in which such currency is
issued, and in no event shall the Custodian be obligated to make payment of a
deposit denominated in a currency during the period during which its
transferability, convertibility or availability has been affected by any such
law, regulation or event. Without limiting the generality of the foregoing,
neither the Custodian nor any Subcustodian shall be required to repay any
deposit made at a foreign branch of either the Custodian or Subcustodian if such
branch cannot repay the deposit due to a cause for which the Custodian would not
be responsible in accordance with the terms of Section 9 of this Agreement
unless the Custodian or such Subcustodian expressly agrees in writing to repay
the deposit under such circumstances. All currency transactions in any account
opened pursuant to this Agreement are subject to exchange control regulations of
the United States and of the country where such currency is the lawful currency
or where the account is maintained. Any taxes, costs, charges or fees imposed on
the convertibility of a currency held by the Fund shall be for the account of
the Fund.
7.4 FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
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account of the Fund with such currency brokers or banking institutions,
including Subcustodians, as the Fund may direct pursuant to Instructions. The
Custodian may act as principal in any foreign exchange transaction with the Fund
in accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 THIRD PARTY FOREIGN EXCHANGE TRANSACTIONS. The Custodian
shall process foreign exchange transactions (including without
limitation contracts, futures, options, and options on futures),
where any third party acts as principal counterparty to the Fund on
the same basis it performs duties as agent for the Fund with respect
to any other of the Fund's Investments. Accordingly the Custodian
shall only be responsible for delivering or receiving currency on
behalf of the Fund in respect of such contracts pursuant to
Instructions. The Custodian shall not be responsible for the failure
of any counterparty (including any Subcustodian) in such agency
transaction to perform its obligations thereunder. The Custodian (a)
shall transmit cash and Instructions to and from the currency broker
or banking institution with which the Fund has executed a foreign
exchange contract or option, (b) may make free outgoing payments of
cash in the form of Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or
confirmation that the countervalue currency completing the foreign
exchange contract has been delivered or received or that the option
has been delivered or received, and (c) shall hold in safekeeping
all confirmations, certificates and other documents and agreements
received by the Custodian and evidencing or relating to such foreign
exchange transactions. The Fund accepts full responsibility for its
use of third-party foreign exchange dealers and for execution of the
foreign exchange contracts and options and understands that the Fund
shall be responsible for any and all costs and interest charges
which may be incurred by the Fund or the Custodian as a result of
the failure or delay of third parties to deliver foreign exchange.
7.4.2 FOREIGN EXCHANGE WITH THE CUSTODIAN AS PRINCIPAL. The
Custodian, as principal, may undertake such foreign exchange
transactions with the Fund as the Custodian and the Fund may agree
from time to time. In this event, the foreign exchange transaction
will be performed in accordance with the particular agreement of the
parties, or in the event a principal foreign exchange transaction is
initiated by Instruction in the absence of specific agreement, the
transaction will be performed in accordance with the usual
commercial terms of the Custodian. In the event that either party
defaults on the settlement of any such foreign exchange transaction
with the other party, the non-defaulting party shall be liable for
contracted currency of the transaction together with any ▇▇▇▇ to
market exposure associated with the replacement purchase of the
contracted currency undertaken with the other party.
7.5 DELAYS. In the event that a delay shall not have been caused by Force
Majeure and shall have been
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caused by the negligence, bad faith or willful misconduct of the Custodian or a
Subcustodian in crediting or transferring cash, the Custodian shall be liable to
the Fund: (a) with respect to Principal Accounts, for interest to be calculated
at the rate customarily paid on such deposit and currency by the Custodian on
overnight deposits at the time the delay occurs for the period from the day when
the transfer should have been effected until the day it is in fact effected;
and, (b) with respect to Agency Accounts, for interest to be calculated at the
rate customarily paid on such deposit and currency by the Subcustodian on
overnight deposits at the time the delay occurs for the period from the day when
the transfer should have been effected until the day it is in fact effected. The
Custodian shall not be liable for delays in carrying out Instructions to
transfer cash which are not due to the Custodian's or its Subcustodian's
negligence, bad faith or willful misconduct.
7.6 ADVANCES. If, for any reason in connection with this Agreement the
Custodian or any Subcustodian makes an Advance to facilitate settlement or
otherwise for the benefit of the Fund (whether or not any Principal or Agency
Account shall be overdrawn either during, or at the end of, any Business Day),
the Fund hereby does:
7.6.1 acknowledge that the Fund shall have no right, title or
interest in or to any Investments purchased with such Advance or proceeds
of such Investments, and that any credit to an account of Fund shall be
provisional, until: (a) the debit of the Principal or Agency Account by
Custodian for an amount equal to Advance Costs; and/or (b) if such debit
produces an overdraft in such account, reimbursement to the Custodian or
Subcustodian for the amount of such overdraft;
7.6.2 acknowledge that the Custodian has an automatically perfected
statutory security interest in Investments purchased with any such Advance
pursuant to Section 9-206 of the Uniform Commercial Code as in effect in
the State of New York from time to time;
7.6.3 in addition, in order to secure the obligations of the Fund to
pay or perform any and all obligations of the Fund pursuant to this
Agreement, including without limitation to repay any Advance made pursuant
to this Agreement, grant to the Custodian a security interest in all
Investments and proceeds thereof (as defined in the Uniform Commercial
Code as currently in effect in the State of New York); and agree to take,
and agree that the Custodian may take, in respect of the security interest
referenced above, any further actions that the Custodian may reasonably
require.
7.7 CUSTODIAN'S RIGHTS Neither the Custodian nor any Subcustodian shall be
obligated to make any Advance or to allow an Advance to occur to the Fund, and
in the event that the Custodian or any Subcustodian does make or allow an
Advance, any such Advance and any transaction giving rise to such Advance shall
be for the account and risk of the Fund and shall not be deemed to be a
transaction undertaken by the Custodian for its own account and risk. If such
Advance shall have been made or allowed by a Subcustodian or any other person,
the Custodian may assign all or part of its security interest referenced above
and any other rights granted to the Custodian hereunder to such Subcustodian or
other person. If the Fund fails to repay the Advance Costs when due, the
Custodian or its assignee, as the case may be, shall be entitled to a portion of
the available cash balance in any Agency or Principal Account equal to such
Advance Costs, and the Fund authorizes the Custodian, on behalf of the
12
Fund, to pay an amount equal to such Advance Costs irrevocably to such
Subcustodian or other person, and to dispose of any property in such Account to
the extent necessary to make such payment. Any Investments and funds credited to
accounts subject to this Agreement created pursuant hereto shall be treated as
financial assets credited to securities accounts under Articles 8 and 9 of the
Uniform Commercial Code as in effect in the State of New York from time to time.
Accordingly, the Custodian and any Subcustodian shall have the rights and
benefits of a secured creditor that is a securities intermediary under such
Articles 8 and 9.
7.8 INTEGRATED ACCOUNT. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall collectively
constitute a single and indivisible current account with respect to the Fund's
obligations to the Custodian or its assignee, and balances in the Principal
Accounts shall be available for satisfaction of the Fund's obligations under
this Section 7. The Custodian shall further have a right of offset against the
balances in any Agency Account maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Fund and to
appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and Clearing Agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
8.1 SECURITIES DEPOSITORIES AND DOMESTIC SUBCUSTODIANS. The Custodian may
deposit and/or maintain, either directly or through one or more Agents appointed
by the Custodian, Investments of the Fund in any Securities Depository in the
United States, including The Depository Trust Company, provided such Depository
meets applicable requirements of the Federal Reserve Bank or of the Securities
and Exchange Commission. The Custodian may, from time to time, appoint any bank
as defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under section 17(f) of the 1940 Act and the rules and regulations
thereunder to act on behalf of the Fund as a Subcustodian for purposes of
holding Investments of the Fund in the United States.
8.2 FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Unless instructed
otherwise by the Fund, the Custodian may deposit and/or maintain non-U.S.
Investments of the Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 promulgated under the 1940 Act, or any successor
rule or regulation ("Rule 17f-7") or which by order of the Securities and
Exchange Commission is exempted therefrom. Prior to the time that securities are
placed with such
13
depository, but subject to the provisions of Section 8.4 below, the Custodian
shall have prepared an assessment of the custody risks associated with
maintaining assets with the Securities Depository and shall have established a
system to monitor such risks on a continuing basis in accordance with Section.
8.5. Additionally, the Custodian may, from time to time, appoint (a) any bank,
trust company or other entity meeting the requirements of an "eligible foreign
custodian" under Rule 17f-5 promulgated under the 1940 Act or which by order of
the Securities and Exchange Commission is exempted therefrom, or (b) any bank as
defined in Section 2(a)(5) of the 1940 Act meeting the requirements of a
custodian under Section 17(f) of the 1940 Act and the rules and regulations
thereunder, to act on behalf of the Fund as a Subcustodian for purposes of
holding Investments of the Fund outside the United States.
8.3 DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From time to time, the
Custodian may agree to perform certain reviews of Subcustodians and of
Subcustodian Contracts as delegated by the Fund's Board of Trustees (the
"Board"). In such event, the Custodian's duties and obligations with respect to
this delegated review will be performed in accordance with the terms of the
attached 17f-5 Delegation Schedule to this Agreement, as it may be amended from
time to time by the mutual written consent of both parties.
8.4 BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and except to the
extent that the Board has delegated to the Custodian and the Custodian has
accepted delegation of review of certain matters concerning the appointment of
Subcustodians pursuant to Section 8.3, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding Investments of the Fund
outside the United States, obtain written confirmation of the approval of the
Board with respect to (a) the identity of a Subcustodian and (b) the
Subcustodian agreement which shall govern such appointment, such approval to be
signed by an Authorized Person. An Instruction to open an account in a given
country shall comprise authorization of the Custodian to hold assets in such
country in accordance with the terms of this Agreement. The Custodian shall not
be required to make independent inquiry as to the authorization of the Fund to
invest in such country.
8.5 MONITORING AND RISK ASSESSMENT OF SECURITIES DEPOSITORIES. Prior to
the placement of any assets of the Fund with a non-U.S. Securities Depository,
the Custodian: (a) shall provide to the Fund or its authorized representative an
assessment of the custody risks associated with maintaining assets within such
Securities Depository; and (b) shall have established a system to monitor the
custody risks associated with maintaining assets with such Securities Depository
on a continuing basis and to promptly notify the Fund or its Investment Advisor
of any material changes in such risk. In performing its duties under this
Section, the Custodian shall use reasonable care and may rely on such reasonable
sources of information as may be available including but not limited to: (i)
published ratings; (ii) information supplied by a Subcustodian that is a
participant in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign Financial Regulatory
Authority. It is acknowledged that information procured through some or all of
these sources may not be independently verifiable by the Custodian and that
direct access to Securities Depositories is limited under most circumstances.
Accordingly, the Custodian shall not be responsible for
14
errors or omissions in its duties hereunder provided that it has performed its
monitoring and assessment duties with reasonable care. The risk assessment shall
be provided to the Fund or its Investment Advisor by such means as the Custodian
shall reasonably establish. Advice of material change in such assessment shall
be provided by the Custodian in the manner established as customary between the
Fund and the Custodian for transmission of material market information.
8.6 RESPONSIBILITY FOR SUBCUSTODIANS. Except as provided in the last
sentence of this Section 8.6, the Custodian shall be liable to the Fund for any
loss or damage to the Fund caused by or resulting from the acts or omissions of
any Subcustodian to the extent that such acts or omissions would be deemed to be
negligence, gross negligence or willful misconduct in accordance with the terms
of the relevant Subcustodian agreement and under the laws, circumstances and
practices prevailing in the place where the act or omission occurred. The
liability of the Custodian in respect of the countries and Subcustodians
designated by the Custodian from time to time on the Global Custody Network
Listing shall be subject to the additional condition that the Custodian actually
recovers such loss or damage from the Subcustodian,
8.7 NEW COUNTRIES. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event, the
Custodian is unable to establish such arrangements prior to the time the
investment is to be acquired, the Custodian is authorized to designate at its
discretion a local safekeeping agent, and the use of the local safekeeping agent
shall be at the sole risk of the Fund, and accordingly the Custodian shall be
responsible to the Fund for the actions of such agent if and only to the extent
the Custodian shall have recovered from such agent for any damages caused the
Fund by such agent, provided the Custodian exercised reasonable care in its
selection of, and in the performance of its monitoring and assessment duties of,
such agent.
9. RESPONSIBILITY OF THE CUSTODIAN. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is rendered. Subject to
the specific provisions of this Section, the Custodian shall be liable for any
direct damage incurred by the Fund in consequence of the Custodian's negligence,
bad faith or willful misconduct. In no event shall the Custodian be liable
pursuant to this Section for any special, indirect, punitive or consequential
damages arising out of, pursuant to or in connection with this Agreement even if
the Custodian has been advised of the possibility of such damages. It is agreed
that the Custodian shall have no duty to assess the risks inherent in the Fund's
Investments or to provide investment advice with respect to such Investments and
that the Fund as principal shall bear any risks attendant to particular
Investments such as failure of counterparty or issuer.
9.1 LIMITATIONS OF PERFORMANCE. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not be
liable hereunder for any loss or damage in association with such failure
15
to perform for or in consequence of the following causes:
9.1.1 FORCE MAJEURE. FORCE MAJEURE shall mean any circumstance
or event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and
which adversely affects the performance by the Custodian of its
obligations hereunder, by the Subcustodian of its obligations under
its Subcustody Agreement or by any other Agent of the Custodian or
the Subcustodian, including any event caused by, arising out of or
involving (a) an act of God, (b) accident, fire, water or wind
damage or explosion, (c) any computer, system or other equipment
failure or malfunction caused by any computer virus or the
malfunction or failure of any communications medium, (d) any
interruption of the power supply or other utility service, (e) any
strike or other work stoppage, whether partial or total, (f) any
delay or disruption resulting from or reflecting the occurrence of
any Country or Sovereign Risk, (g) any disruption of, or suspension
of trading in, the securities, commodities or foreign exchange
markets, whether or not resulting from or reflecting the occurrence
of any Country or Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not
resulting from or reflecting the occurrence of any Country or
Sovereign Risk, or (i) any other cause similarly beyond the
reasonable control of the Custodian.
9.1.2 COUNTRY RISK. COUNTRY RISK shall mean, with respect to
the acquisition, ownership, settlement or custody of Investments in
a jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for
or ownership of Investments including (a) the prevalence of crime
and corruption (other than that of the Custodian or Subcustodian),
(b) the inaccuracy or unreliability of business and financial
information, (c) the instability or volatility of banking and
financial systems, or the absence or inadequacy of an infrastructure
to support such systems, (d) the failure of custody and settlement
infrastructure of the market in which such Investments are
transacted and held, (e) the acts, omissions and operation of any
Securities Depository, (f) the risk of the bankruptcy or insolvency
of banking agents, counterparties to cash and securities
transactions, registrars or transfer agents, and (g) the existence
of market conditions which prevent the orderly execution or
settlement of transactions or which affect the value of assets.
9.1.3 SOVEREIGN RISK. SOVEREIGN RISK shall mean, in respect of
any jurisdiction, including the United States of America, where
Investments are acquired or held hereunder or under a Subcustody
Agreement, (a) any act of war, terrorism, riot, insurrection or
civil commotion, (b) the imposition of any investment, repatriation
or exchange control restrictions by any governmental authority, (c)
the confiscation, expropriation or nationalization of any
Investments by any governmental authority, whether de facto or de
jure, (d) any devaluation or revaluation of the currency, (e) the
imposition of taxes, levies or other charges affecting Investments,
(f) any change in the Applicable Law, or (g) any other economic or
political risk
16
incurred or experienced.
9.2. LIMITATIONS ON LIABILITY. The Custodian shall not be liable for any
loss, claim, damage or other liability arising from the following causes:
9.2.1 FAILURE OF THIRD PARTIES. The failure of any third party
including: (a) any issuer of Investments or Book-Entry Agent or
other agent of an issuer; (b) any counterparty with respect to any
Investment, including any issuer of exchange-traded or other
futures, option, derivative or commodities contract; (c) failure of
an Investment Advisor, foreign custody manager or other agent of the
Fund; or (d) failure of other third parties similarly beyond the
control or choice of the Custodian.
9.2.2 INFORMATION SOURCES. The Custodian may rely upon
information received from issuers of Investments or agents of such
issuers, information received from commercially reasonable sources
such as commercial data bases and the like, but shall not be
responsible for specific inaccuracies in such information, provided
that the Custodian has relied upon such information in good faith,
or for the failure of any commercially reasonable information
provider.
9.2.3 RELIANCE ON INSTRUCTION. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such
action conflicts with, or is contrary to any provision of, the
Fund's declaration of trust, certificate of incorporation or by-laws
or other constitutive document, Applicable Law, or actions by the
trustees, directors or shareholders of the Fund.
9.2.4 RESTRICTED SECURITIES. The limitations inherent in the
rights, transferability or similar investment characteristics of a
given Investment of the Fund.
10. INDEMNIFICATION.
10.1 BY THE FUND The Fund hereby indemnifies the Custodian and its
partners, employees, and officers , and agrees to hold each of them harmless
from and against all claims and liabilities, including counsel fees and taxes,
incurred or assessed against any of them in connection with the performance of
this Agreement and any Instruction, except for claims and liabilities that are
due to the negligence, bad faith or willful misconduct of the Custodian. The
Fund shall not be liable for any payment or settlement effected without its
prior written consent, which consent shall not be unreasonably withheld.
10.2 BY THE CUSTODIAN. The Custodian hereby indemnifies the Fund, its
officers, trustees and directors, and agrees to hold each of them harmless, from
and against all claims and liabilities, including counsel fees and taxes,
incurred or assessed against any of them directly resulting from its material
breach of this Agreement, its violation of any lawful Instruction, and any acts
or omissions that constitute negligence, bad faith or willful misconduct of the
Custodian, a Subcustodian or any agent of the Custodian or a Subcustodian except
as provided in
17
Sections 7.1 and 8.6 hereof. The Custodian shall not be liable for any payment
or settlement effected without its prior written consent, which consent shall
not be unreasonably withheld.
11. REPORTS AND RECORDS.
11.1 The Custodian shall:
11.1.1 create and maintain records relating to the performance
of its obligations under this Agreement;
11.1.2 make available to the Fund, its auditors, agents and
employees, upon reasonable request and during normal business hours
of the Custodian, all records maintained by the Custodian pursuant
to Section 11.1.1 above, subject, however, to all reasonable
security requirements of the Custodian then applicable to the
records of its custody customers generally; and
11.1.3 make available to the Fund all Electronic Reports; it
being understood that the Custodian shall not be liable hereunder
for the inaccuracy or incompleteness thereof or for errors in any
information included therein, provided that the inaccuracy,
incompleteness or error, as the case may be, was not the result of
the Custodian's negligence, bad faith or willful misconduct.
11.2 The Fund shall examine all records, however produced or transmitted,
promptly upon receipt and notify the Custodian promptly of any discrepancy or
error.
11.3 The Fund acknowledges that the Custodian obtains information on the
value of assets from outside sources which may be utilized in certain reports
made available to the Fund. The Custodian deems such sources to be reliable but
the Fund acknowledges and agrees that the Custodian does not verify such
information nor make any representations or warrantees as to its accuracy or
completeness and accordingly shall be without liability in selecting and using
such sources and furnishing such information.
12. MISCELLANEOUS.
12.1 POWERS OF ATTORNEY, ETC. The Fund will promptly execute and deliver,
upon request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
12.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
understanding and agreement of the parties hereto and supersedes any other oral
or written agreements heretofore in effect between the Fund and the Custodian
with respect to the subject matter hereof. No provision of this Agreement may be
amended or terminated except by a statement in writing signed by the party
against which enforcement of the amendment or
18
termination is sought, provided, however, that an Instruction shall, whether or
not such Instruction shall constitute a waiver, amendment or modification for
purposes hereof, be deemed to have been accepted by the Custodian when it
commences actions pursuant thereto or in accordance therewith. In the event of a
conflict between the terms of this Agreement and the terms of a service level
agreement or other operating agreement in place between the parties from time to
time, the terms of this Agreement shall control.
12.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the Custodian and the Fund and their successors
and assignees, provided that neither party may assign this Agreement without the
prior written consent of the other party, which consent shall not be
unreasonably withheld. Each party agrees that only the parties to this Agreement
and/or their successors in interest shall have a right to enforce the terms of
this Agreement. Accordingly, no client of the Custodian or other third party
shall have any rights under this Agreement and such rights are explicitly
disclaimed by the parties.
12.4 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. THE
PARTIES HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY. THE
PARTIES IRREVOCABLY WAIVE ANY OBJECTION EITHER PARTY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING IN ANY OF THE AFORESAID
COURTS AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. FURTHERMORE, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY
RIGHT THAT IT MAY HAVE TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
12.5 NOTICES. Notices and other writings contemplated by this Agreement,
other than Instructions, shall be delivered (a) by hand, (b) by first class
registered or certified mail, postage prepaid, return receipt requested, (c) by
a nationally recognized overnight courier, or (d) by facsimile transmission,
provided that any notice or other writing sent by facsimile transmission shall
also be mailed, postage prepaid, to the party to whom such notice is addressed.
All such notices shall be addressed, as follows:
If to the Fund:
The ▇▇▇▇▇▇▇, ▇▇▇▇▇ Funds C/O
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Associates
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
19
Attn: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Custodian:
▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Senior Legal Officer, Investor Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇,
or such other address as the Fund or the Custodian may have designated in
writing to the other.
12.6 HEADINGS. Paragraph headings included herein are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
12.7 SEVERABILITY. In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall not affect the
remainder of this Agreement, which shall continue to be in force.
12.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when counterparts have been signed and delivered by the Fund
and the Custodian. A photocopy or telefax of the Agreement shall be acceptable
evidence of the existence of the Agreement and the Custodian shall be protected
in relying on the photocopy or telefax until the Custodian has received the
original of the Agreement.
12.9 CONFIDENTIALITY. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering or obtaining services pursuant
to this Agreement and, except as may be required in carrying out this Agreement,
shall not be disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any information that
is publicly available when provided or thereafter becomes publicly available
other than through a breach of this Agreement, or that is required to be
disclosed by or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by judicial or
administrative process or otherwise by Applicable Law. The provisions under this
Section shall survive the termination of this Agreement.
20
12.10 RECORDING. Each party authorizes the other party to record any and
all telephonic or other oral communications given to the other party. This
authorization will remain in effect until and unless either party delivers a
written revocation to the other. Both parties further agree to solicit valid
written or other consent from any of its employees with respect to telephone
communications to the extent such consent is required by Applicable Law.
12.11 COUNSEL/CERTIFIED PUBLIC ACCOUNTANT . In fulfilling its duties
hereunder, the Custodian shall be entitled to receive and act upon the advice of
(i) counsel and/or a certified public accountant regularly retained by the
Custodian in respect of such matters, (ii) counsel and/or a certified public
accountant for the Fund or (iii) such counsel or certified public accountant as
the Fund and the Custodian may agree upon, with respect to all matters, and the
Custodian shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
12.12 CONFLICT. Nothing contained in this Agreement shall prevent the
Custodian and its associates from (i) dealing as a principal or an intermediary
in the sale, purchase or loan of the Fund's Investments to or from the Custodian
or its associates; (ii) acting as a custodian, a subcustodian, a trustee, an
agent, securities dealer, an investment manager or in any other capacity for any
other client whose interests may be adverse to the interests of the Fund; or
(iii) buying, holding, lending, and dealing in any way in any assets for the
benefit of its own account, or for the account of any other client whose
interests may be adverse to the Fund notwithstanding that the same or similar
assets may be held or dealt in by, or for the account of the Fund by the
Custodian; provided that in no case shall the Custodian or its Agents (including
its employees) be permitted to act in a manner that is contrary to Applicable
Law or the other provisions of this Agreement. The Fund hereby voluntarily
consents to, and waives any potential conflict of interest between the Custodian
and/or its associates and the Fund, and agrees that: (a) the Custodian's and/or
its associates' engagement in any such transaction shall not disqualify the
(a) Custodian from continuing to perform as the custodian of the
Fund under this Agreement;
(b) the Custodian and/or its associates shall not be under any
duty to disclose any information in connection with any such
transaction to the Fund; and
(c) the Custodian and/or its associates shall not be liable to
account to the Fund for any profits or benefits made or
derived by or in connection with any such transaction.
13. DEFINITIONS. The following defined terms will have the respective meanings
set forth below.
13.1 ADVANCE(S) shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include, without
limitation, amounts due to the Custodian as the principal counterparty to any
foreign exchange transaction with the Fund as described in Section 7.4.2 hereof,
or paid to third parties for
21
account of the Fund or in discharge of any expense, tax or other item payable by
the Fund.
13.2 ADVANCE COSTS shall mean any Advance, interest on the Advance and any
related expenses, including without limitation any ▇▇▇▇ to market loss of the
Custodian or Subcustodian on any Investment to which Section 7.6.1 applies.
13.3 AGENCY ACCOUNT(S) shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 7.1
hereof.
13.4 AGENT(S) shall have the meaning set forth in the last sentence of
Section 6 hereof.
13.5 APPLICABLE LAW shall mean with respect to each jurisdiction, all (a)
laws, statutes, treaties, regulations, guidelines (or their equivalents); (b)
orders, interpretations, licenses and permits; and (c) judgments, decrees,
injunctions, writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
13.6 AUTHORIZED PERSON(S) shall mean any person or entity authorized to
give Instructions on behalf of the Fund in accordance with Section 4.1 hereof.
13.7 BOOK-ENTRY AGENT(S) shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar entitlement
to Investments, including without limitation a transfer agent or registrar.
13.8 CLEARING CORPORATION shall mean any entity or system established for
purposes of providing securities settlement and movement and associated
functions for a given market(s).
13.9 DELEGATION SCHEDULE shall mean any separate schedule entered into
between the Custodian and the Fund or its authorized representative with respect
to certain matters concerning the appointment and administration of
Subcustodians delegated to the Custodian pursuant to Rule 17f-5 under the 1940
Act.
13.10 ELECTRONIC AND ONLINE SERVICES SCHEDULE shall mean any separate
agreement entered into between the Custodian and the Fund or its authorized
representative with respect to certain matters concerning certain electronic and
online services as described therein and as may be made available from time to
time by the Custodian to the Fund.
13.11 ELECTRONIC REPORTS shall mean any reports prepared by the Custodian
and remitted to the Fund or its authorized representative via the internet or
electronic mail.
22
13.12 FORCE MAJEURE shall have the meaning assigned in Section 9.1.1
hereof.
13.13 FOREIGN CUSTODY MANAGER shall mean the Fund's foreign custody
manager appointed pursuant to Rule 17f-5 of the 1940 Act.
13.14 FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given
by Section 2(a)(50) of the ▇▇▇▇ ▇▇▇.
13.15 FUNDS TRANSFER SERVICES SCHEDULE shall mean any separate schedule
entered into between the Custodian and the Fund or its authorized representative
with respect to certain matters concerning the processing of payment orders from
Principal Accounts of the Fund.
13.16 GLOBAL CUSTODY NETWORK LISTING shall mean the Countries and
Subcustodians approved by the Fund for Investments in U.S and non-U.S. Markets.
13.17 INSTRUCTION(S) shall have the meaning assigned in Section 4 hereof.
13.18 INVESTMENT ADVISOR shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Fund's Investments. As of the date of this Agreement,
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Associates acts as Investment Advisor to the Fund.
13.19 INVESTMENT(S) shall mean any investment asset of the Fund, including
without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets, but shall not include any Principal Account.
13.20 MARGIN ACCOUNT shall have the meaning set forth in Section 6.4
hereof.
13.21 PRINCIPAL ACCOUNT(S) shall mean deposit accounts of the Fund carried
on the books of BBH&Co. as principal in accordance with Section 7 hereof.
13.22 SAFEKEEPING ACCOUNT shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the interests
of the Fund (or clients of the Custodian or Subcustodian) from the assets of the
Custodian or any Subcustodian.
13.23 SECURITIES DEPOSITORY shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording the ownership
and/or entitlement to investment securities for a given
23
market that, if a foreign Securities Depository, meets the definitional
requirements of Rule 17f-7 under the 1940 Act.
13.24 SUBCUSTODIAN(S) shall mean each foreign and/or domestic bank
appointed by the Custodian pursuant to Section 8 hereof, but shall not include
Securities Depositories.
13.25 TRI-PARTY AGREEMENT shall have the meaning set forth in Section 6.4
hereof.
13.26 1940 ACT shall mean the Investment Company Act of 1940.
14. COMPENSATION. The Fund agrees to pay to the Custodian (a) a fee in an amount
set forth in the fee letter between the Fund and the Custodian in effect on the
date hereof or as amended from time to time (which shall include all fees
payable by the Custodian to any Subcustodian), and (b) all reasonable
out-of-pocket expenses incurred by the Custodian, including the out-of-pocket
expenses of all Subcustodians and other amounts paid by the Custodian to a third
party for account or benefit of the Fund, and payable from time to time. Amounts
payable by the Fund under and pursuant to this Section 14 shall be payable by
wire transfer to the Custodian at BBH&Co. in New York, New York.
15. TERMINATION. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 TERM, NOTICE AND EFFECT. This Agreement shall have an initial term of
three (3) years from the date hereof. Thereafter, either of the parties hereto
may terminate this Agreement for any reason by giving to the other party a
notice in writing pursuant to Section 12.5 hereof specifying the date of such
termination, which shall not be less than seventy-five (75) days after the date
of giving of such notice. Notwithstanding the foregoing provisions, either party
may terminate this Agreement at any time (a) for cause, which is a material
breach of the Agreement not cured within 60 days, in which case termination
shall be effective upon written receipt of notice by the non-terminating party,
or (b) upon thirty (30) days written notice to the other party in the event that
either party is adjudged bankrupt or insolvent, or there shall be commenced
against such party a case under any applicable bankruptcy, insolvency, or other
similar law now or hereafter in effect.
15.2 NOTICE AND SUCCESSION. In the event a termination notice is given by
a party hereto, all reasonable costs and expenses associated with any required
systems, facilities, procedures, personnel, and other resourced modifications as
well as the movement of records and materials and the conversion thereof shall
be paid by the party for which services shall cease to be performed hereunder.
Furthermore, to the extent that it appears impracticable given the circumstances
to effect an orderly delivery of the necessary and appropriate records of
BBH&Co. to a
24
successor within the time specified in the notice of termination as aforesaid,
BBH&Co. and the Fund agree that this Agreement shall remain in full force and
effect for such reasonable period as may be required to complete necessary
arrangements with a successor.
15.3 SUCCESSOR CUSTODIAN. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the Fund held by the Custodian
or any Subcustodian shall be delivered to the successor custodian in accordance
with reasonable Instructions. The Custodian agrees to cooperate with the Fund in
the execution of documents and performance of other actions necessary or
desirable in order to facilitate the succession of the new custodian. If no
successor custodian shall be appointed, the Custodian shall in like manner
transfer the Fund's Investments in accordance with Instructions.
15.4 DELAYED SUCCESSION. If no transfer Instruction has been given as of
the effective date of termination, Custodian may at any time on or after such
termination date and upon ten (10) consecutive calendar days written notice to
the Fund either (a) deliver the Investments of the Fund held hereunder to the
Fund at the address designated for receipt of notices hereunder; or (b) deliver
any investments held hereunder to a bank or trust company having a
capitalization of $2,000,000 USD equivalent and operating under the Applicable
Law of the jurisdiction where such Investments are located, such delivery to be
at the risk of the Fund. In the event that Investments or moneys of the Fund
remain in the custody of the Custodian or its Subcustodians after the date of
termination owing to the failure of the Fund to issue Instructions with respect
to their disposition or owing to the fact that such disposition could not be
accomplished in accordance with such Instructions despite diligent efforts of
the Custodian, the Custodian shall be entitled to compensation for its services
with respect to such Investments and moneys during such period as the Custodian
or its Subcustodians retain possession of such items and the provisions of this
Agreement shall remain in full force and effect until disposition in accordance
with this Section is accomplished.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO. THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ FUNDS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ -------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Partner Title: Co president
Date: 5/6/05 Date: 5/6/05
25
FUNDS TRANSFER SERVICES SCHEDULE TO CUSTODIAN AGREEMENT
1. Execution of Payment Orders. ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. (the CUSTODIAN) is
hereby instructed by The ▇▇▇▇▇▇▇, ▇▇▇▇▇ Funds (the FUND) to execute each payment
order, whether denominated in United States dollars or other applicable
currencies, received by the Custodian in the Fund's name as sender and
authorized and confirmed by an Authorized Person as defined in a Custodian
Agreement dated as of May 5, 2005 by and between the Custodian and the Fund, as
amended or restated from time thereafter (the AGREEMENT), provided that the Fund
has sufficient available funds on deposit in a Principal Account as defined in
the Agreement and provided that the order (i) is received by the Custodian in
the manner specified in this Funds Transfer Services Schedule or any amendment
hereafter; (ii) complies with any written instructions and restrictions of the
Fund as set forth in this Funds Transfer Services Schedule or any amendment
hereafter; (iii) is authorized by the Fund or is verified by the Custodian in
compliance with a security procedure set forth in Paragraph 2 below for
verifying the authenticity of a funds transfer communication sent to the
Custodian in the name of the Fund or for the detection of errors set forth in
any such communication; and (iv) contains sufficient data to enable the
Custodian to process such transfer.
2. Security Procedure. The Fund hereby elects to use the procedure selected
below as its security procedure (the SECURITY PROCEDURE). The Security Procedure
will be used by the Custodian to verify the authenticity of a payment order or a
communication amending or canceling a payment order. The Custodian will act on
instructions received, provided the instruction is authenticated by the Security
Procedure. The Fund agrees and acknowledges in connection with (i) the size,
type and frequency of payment orders normally issued or expected to be issued by
the Fund to the Custodian, (ii) all of the security procedures offered to the
Fund by the Custodian, and (iii) the usual security procedures used by customers
and receiving banks similarly situated, that authentication through the Security
Procedure shall be deemed commercially reasonable for the authentication of all
payment orders submitted to the Custodian. The Fund hereby elects (PLEASE CHOOSE
ONE) the following Security Procedure as described below:
[ ] BIDS and BIDS Worldview Payment Products. BIDS and BIDS Worldview
Payment Products, are on-line payment order authorization facilities
with built-in authentication procedures. The Custodian and the Fund
shall each be responsible for maintaining the confidentiality of
passwords or other codes to be used by them in connection with BIDS.
The Custodian will act on instructions received through BIDS without
duty of further confirmation unless the Fund notifies the Custodian
that its password is not secure.
[ ] SWIFT. The Custodian and the Fund shall comply with SWIFT's
authentication procedures. The Custodian will act on instructions
received via SWIFT provided the instruction is authenticated by the
SWIFT system.
[ ] Tested Telex. The Custodian will accept payment orders sent by
tested telex, provided the test key matches the algorithmic key the
Custodian and the Fund have agreed to use.
[ ] Computer Transmission. The Custodian is able to accept transmissions
sent from the Fund's computer facilities to the Custodian's computer
facilities provided such transmissions are encrypted and digitally
certified or are otherwise authenticated in a reasonable manner
based on available technology. Such procedures shall be established
in an operating protocol between the Custodian and the Fund.
[ ] Telefax Instructions. A payment order transmitted to the Custodian
by telefax transmission shall transmitted by the Fund to a telephone
number specified from time to time by the Custodian for such
purposes. If it detects no discrepancies, the Custodian will follow
one of the procedures below.
1. If the telefax requests a repetitive payment order, the
Custodian may call the Fund at its last known telephone
number, request to speak to an Authorized Person, and
confirm the authorization and the details of the payment
order (a CALLBACK); or
2. If the telefax requests a non-repetitive order, the
Custodian will perform a Callback.
26
All faxes must be accompanied by a fax cover sheet which indicates
the sender's name, company name, telephone number, fax number,
number of pages, and number of transactions or instructions
attached.
[ ] Telephonic. A telephonic payment order shall be called into the
Custodian at the telephone number designated from time to time by
the Custodian for that purpose. The caller shall identify
herself/himself as an Authorized Person. The Custodian shall obtain
the payment order data from the caller. The Custodian shall then:
1. If a telephonic repetitive payment order, the Custodian
may perform a Callback; or
2. If a telephonic non-repetitive payment order, the
Custodian will perform a Callback.
In the event the Fund chooses a procedure which is not a Security Procedure as
described above, the Fund agrees to be bound by any payment order (whether or
not authorized) issued in its name and accepted by the Custodian in compliance
with the procedure selected by the Fund.
3. Rejection of Payment Orders. The Custodian shall give the Fund timely notice
of the Custodian's rejection of a payment order. Such notice may be given in
writing or orally by telephone, each of which is hereby deemed commercially
reasonable. In the event the Custodian fails to execute a properly executable
payment order and fails to give the Fund notice of the Custodian's
non-execution, the Custodian shall be liable only for the Fund's actual damages
and only to the extent that such damages are recoverable under UCC 4A (as
defined in Paragraph 7 below). Notwithstanding anything in this Funds Transfer
Services Schedule and the Agreement to the contrary, the Custodian shall in no
event be liable for any consequential or special damages under this Funds
Transfer Services Schedule, whether or not such damages relate to services
covered by UCC 4A, even if the Custodian has been advised of the possibility of
such damages. Whenever compensation in the form of interest is payable by the
Custodian to the Fund pursuant to this Funds Transfer Services Schedule, such
compensation will be payable as specified in UCC 4A.
4. Cancellation of Payment Orders. The Fund may cancel a payment order but the
Custodian shall have no liability for the Custodian's failure to act on a
cancellation instruction unless the Custodian has received such cancellation
instruction at a time and in a manner affording the Custodian reasonable
opportunity to act prior to the Custodian's execution of the order. Any
cancellation shall be sent and confirmed in the manner set forth in Paragraph 2
above.
5. Responsibility for the Detection of Errors and Unauthorized Payment Orders.
Except as may be provided, the Custodian is not responsible for detecting any
Fund error contained in any payment order sent by the Fund to the Custodian. In
the event that the Fund's payment order to the Custodian either (i) identifies
the beneficiary by both a name and an identifying or bank account number and the
name and number identify different persons or entities, or (ii) identifies any
bank by both a name and an identifying number and the number identifies a person
or entity different from the bank identified by name, execution of the payment
order, payment to the beneficiary, cancellation of the payment order or actions
taken by any bank in respect of such payment order may be made solely on the
basis of the number. The Custodian shall not be liable for interest on the
amount of any payment order that was not authorized or was erroneously executed
unless the Fund so notifies the Custodian within thirty (30) business days
following the Fund's receipt of notice that such payment order had been
processed. If a payment order in the name of the Fund and accepted by the
Custodian was not authorized by the Fund, the liability of the parties will be
governed by the applicable provisions of UCC 4A.
6. Laws and Regulations. The rights and obligations of the Custodian and the
Fund with respect to any payment order executed pursuant to this Funds Transfer
Services Schedule will be governed by any applicable laws, regulations,
circulars and funds transfer system rules, the laws and regulations of the
United States of America and of other relevant countries including exchange
control regulations and limitations on dealings or other sanctions, and
including without limitation those sanctions imposed under the law of the United
States of America by the Office of Foreign Assets Control. Any taxes, fines,
costs, charges or fees imposed by relevant authorities on such transactions
shall be for the account of the Fund.
7. Miscellaneous. All accounts opened by the Fund or its authorized agents at
the Custodian subsequent to the date hereof shall be governed by this Funds
Transfer Schedule. All terms used in this Funds Transfer Services
27
Schedule shall have the meaning set forth in Article 4A of the Uniform
Commercial Code as currently in effect in the State of New York (UCC 4A) unless
otherwise set forth herein. The terms and conditions of this Funds Transfer
Services Schedule are in addition to, and do not modify or otherwise affect, the
terms and conditions of the Agreement and any other agreement or arrangement
between the parties hereto.
8. Indemnification. The Custodian does not recommend the sending of instructions
by telefax or telephonic means as provided in Paragraph 2. BY ELECTING TO SEND
INSTRUCTIONS BY TELEFAX OR TELEPHONIC MEANS, THE FUND AGREES TO INDEMNIFY THE
CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR ALL LOSSES THEREFROM.
OPTIONAL: The Custodian will perform a Callback if instructions are
sent by telefax or telephonic means as provided in Paragraph 2 above. THE
FUND MAY, AT ITS OWN RISK AND BY HEREBY AGREEING TO INDEMNIFY THE
CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR ALL LOSSES
THEREFROM, ELECT TO WAIVE A CALLBACK BY THE CUSTODIAN BY INITIALING
HERE:____
The undersigned acknowledges that (I/we) have received a copy of this document.
Accepted and agreed:
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO. THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ FUNDS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Title: Co president
Date: 5/6/05 Date: 5/6/05
28
ELECTRONIC AND ON-LINE SERVICES
SCHEDULE
This Electronic and On-Line Services Schedule (this SCHEDULE) to a Custodian
Agreement dated as of May 5, 2005 (as amended from time to time hereafter, the
AGREEMENT) by and between ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. (WE, US, OUR) and The
▇▇▇▇▇▇▇, ▇▇▇▇▇ Funds (YOU, YOUR), provides general provisions governing your use
of and access to the Services (as hereinafter defined) provided to you by us via
the Internet (at ▇▇▇.▇▇▇▇▇.▇▇▇ or such other URL as we may instruct you to use
to access our products) and via a direct dial-up connection between your
computer and our computers, as of ________________, _____, 2005 (the EFFECTIVE
DATE). Use of the Services constitutes acceptance of the terms and conditions of
this Schedule, any Appendices hereto, the Terms and Conditions posted on our web
site, and any terms and conditions specifically governing a particular Service
or our other products, which may be set forth in the Agreement or in a separate
related agreement (collectively, the RELATED AGREEMENTS).
1. GENERAL TERMS.
You will be granted access to our suite of online products, which may
include, but shall not be limited to the following services via the
Internet or dial-up connection (each separate service is a SERVICE;
collectively referred to as the SERVICES):
1.1. BIDS(R) and BIDS WorldView, a system for effectuating securities and
fund trade instruction and execution, processing and handling
instructions, and for the input and retrieval of other information;
1.2. F/X WorldView, a system for executing foreign exchange trades;
1.3. Fund WorldView, a system for receiving fund and prospectus
information;
1.4. BBHCOnnect, a system for placing securities trade instructions and
following the status and detail of trades;
1.5. ActionView(SM), a system for receiving certain corporate action
information;
1.6. Risk View, an interactive portfolio risk analysis tool; and
1.7. Such other services as we shall from time to time offer.
2. SECURITY / PASSWORDS.
2.1. A digital certificate and/or an encryption key may be required to
access certain Services. You may apply for a digital certificate
and/or an encryption key by following the procedures set forth at
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/▇▇▇▇▇/. You also will need an identification code
(ID) and password(s) (PASSWORD) to access the Services.
2.2. You agree to safeguard your digital certificate and/or encryption
key, ID, and Password and not to give or make available,
intentionally or otherwise, your digital certificate, ID, and/or
Password to any unauthorized person. You must immediately notify us
in writing if you believe that your digital certificate and/or
encryption key, Password, or ID has been compromised or if you
suspect unauthorized access to your account by means of the Services
or otherwise, or when a person to whom a digital certificate and/or
an encryption key, Password, or ID has been assigned leaves or is no
longer permitted to access the Services.
2.3. We will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your
failure (be it intentional, unintentional, or negligent) to maintain
the confidentiality of your ID and/or Password and/or the security
of your digital certificate and/or encryption key.
29
3. INSTRUCTIONS.
3.1. Proper instructions under this Schedule shall be provided as
designated in the Related Agreements (INSTRUCTIONS).
3.2. The following additional provisions apply to Instructions provided
via the Services:
a. Instructions sent by electronic mail will not be accepted or
acted upon.
b. You authorize us to act upon Instructions received through the
Services utilizing your digital certificate, ID, and/or
Password as though they were duly authorized written
instructions, without any duty of verification or inquiry on
our part, and agree to hold us harmless for any losses you
experience as a result.
c. From time to time, the temporary unavailability of third party
telecommunications or computer systems required by the
Services may result in a delay in processing Instructions. In
such an event, we shall not be liable to you or any third
party for any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind
(including without limitation, reasonable attorneys',
accountants', consultants', or experts' fees and
disbursements) that you experience due to such a delay.
4. ELECTRONIC DOCUMENTS.
We may make periodic statements, disclosures, notices, and other documents
available to you electronically, and, subject to any delivery and receipt
verification procedures required by law, you agree to receive such
documents electronically and to check the statements for accuracy. If you
believe any such statement contains incorrect information, you must follow
the procedures set forth in the Related Agreement(s).
5. MALICIOUS CODE.
You understand and agree that you will be responsible for the introduction
(by you, your employees, agents, or representatives) into the Services,
whether intentional or unintentional, of (i) any virus or other code,
program, or sub-program that damages or interferes with the operation of
the computer system containing the code, program or sub-program, or halts,
disables, or interferes with the operation of the Services themselves; or
(ii) any device, method, or token whose knowing or intended purpose is to
permit any person to circumvent the normal security of the Services or the
system containing the software code for the Services (MALICIOUS CODE). You
agree to take all necessary actions and precautions to prevent the
introduction and proliferation of any Malicious Code into those systems
that interact with the Services.
6. INDEMNIFICATION.
For avoidance of doubt, you hereby agree that the provisions in the
Related Agreement(s) related to your indemnification of us and any
limitations on our liability and responsibilities to you shall be
applicable to this Agreement, and are hereby expressly incorporated
herein. You agree that the Services are comprised of telecommunications
and computer systems, and that it is possible that Instructions,
information, transactions, or account reports might be added to, changed,
or omitted by electronic or programming malfunction, unauthorized access,
or other failure of the systems which comprise the Services, despite the
security features that have been designed into the Services. You agree
that we will not be liable for any action taken or not taken in complying
with the terms of this Schedule, except for our negligence, bad faith or
willful misconduct. The provisions of this paragraph shall survive the
termination of this Schedule and the Related Agreements.
7. PAYMENT.
You may be charged for services hereunder as set forth in a fee schedule
from time to time agreed by us.
8. TERM/TERMINATION.
30
8.1. This Schedule is effective as of the date you sign it or first use
the Services, whichever is first, and continues in effect until such
time as either you or we terminate the Schedule in accordance with
this Section 8 and/or until your off-line use of the Services is
terminated.
8.2. We may terminate your access to the Services at any time, for any
reason, with five (5) business days prior notice; provided that we
may terminate your access to the Services with no prior notice (i)
if your account with us is closed, (ii) if you fail to comply with
any of the terms of this Agreement, (iii) if we believe that your
continued access to the Services poses a security risk, or (iv) if
we believe that you are violating or have violated applicable laws,
and we will not be liable for any loss you may experience as a
result of such termination. You may terminate your access to the
Services at any time by giving us ten (10) business days notice.
Upon termination, we will cancel all your Passwords and IDs and any
in-process or pending Instructions will be carried out or cancelled,
at our sole discretion; provided that we either carry out or cancel
any in-process or pending Instructions within 24 hours of
termination; and provided further that we immediately notify you of
any cancellation of an in-process or pending Instruction.
9. MISCELLANEOUS.
9.1. NOTICES. All notices, requests, and demands (other than routine
operational communications, such as Instructions) shall be in such
form and effect as provided in the Related Agreement(s).
9.2. INCONSISTENT PROVISIONS. Each Service may be governed by separate
terms and conditions in addition to this Schedule and the Related
Agreement(s). Except where specifically provided to the contrary in
this Schedule, in the event that such separate terms and conditions
conflict with this Schedule and the Related Agreement(s), the
provisions of this Schedule shall prevail to the extent this
Schedule applies to the transaction in question.
9.3. BINDING EFFECT; ASSIGNMENT; SEVERABILITY. This Schedule shall be
binding on you, your employees, officers and agents. Neither party
may assign or delegate its rights and duties under this Schedule
without the prior written consent of the other party, which consent
shall not be unreasonably withheld. In the event that any provision
of this Schedule conflicts with the law under which this Schedule is
to be construed or if any such provision is held invalid or
unenforceable by a court with jurisdiction over you and us, such
provision shall be deemed to be restated to effectuate as nearly as
possible the purposes of the Schedule in accordance with applicable
law. The remaining provisions of this Schedule and the application
of the challenged provision to persons or circumstances other than
those as to which it is invalid or unenforceable shall not be
affected thereby, and each such provision shall be valid and
enforceable to the full extent permitted by law.
9.4. CHOICE OF LAW; JURY TRIAL. This Schedule shall be governed by and
construed, and the legal relations between the parties shall be
determined, in accordance with the laws of the State of New York,
without giving effect to the principles of conflicts of laws. Each
party agrees to waive its right to trial by jury in any action or
proceeding based upon or related to this Agreement. The parties
agree that all actions and proceedings based upon or relating to
this Schedule shall be litigated exclusively in the federal and
state courts located within New York City, New York.
31
The undersigned acknowledges that (I/we) have received a copy of this
document.
THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ FUNDS ("YOU")
BY: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------
TITLE: Co president
DATE: 5/6/05
32
17F-5 DELEGATION SCHEDULE
By its execution of this Delegation Schedule dated as of May 5, 2005, The
▇▇▇▇▇▇▇, ▇▇▇▇▇ Funds, a management investment company registered with the
Securities and Exchange Commission (the COMMISSION) under the Investment Company
Act of 1940, as amended (the 1940 ACT), acting through its Board of Trustees
(the BOARD) or its duly appointed representative (the FUND), hereby appoints
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO., a New York limited partnership with an office in
Boston, Massachusetts (the DELEGATE) as its delegate to perform certain
functions with respect to the custody of Fund's Assets outside the United
States.
1. Maintenance of Fund's Assets Abroad. The Fund, acting through its Board or
its duly authorized representative, hereby instructs the Delegate pursuant to
the terms of the Custodian Agreement dated as of the date hereof executed by and
between the Fund and the Delegate (the CUSTODIAN AGREEMENT) to place and
maintain the Fund's Assets in countries outside the United States in accordance
with Instructions received from the Fund's Investment Advisor. Such instruction
shall constitute an Instruction under the terms of the Custodian Agreement. The
Fund acknowledges that (a) the Delegate shall perform services hereunder only
with respect to the countries where it accepts delegation as Foreign Custody
Manager as indicated on the Delegate's Global Custody Network Listing; (b)
depending on conditions in the particular country, advance notice may be
required before the Delegate shall be able to perform its duties hereunder in or
with respect to such country (such advance notice to be reasonable in light of
the specific facts and circumstances attendant to performance of duties in such
country); and (c) nothing in this Delegation Schedule shall require the Delegate
to provide delegated or custodial services in any country, and there may from
time to time be countries as to which the Delegate determines it will not
provide delegation services.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the 1940 Act as
amended, the Board hereby delegates to the Delegate, and the Delegate hereby
accepts such delegation and agrees to perform only those duties set forth in
this Delegation Schedule concerning the safekeeping of the Fund's Assets in each
of the countries as to which it acts as the Board's delegate. The Delegate is
hereby authorized to take such actions on behalf of or in the name of the Fund
as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause the Fund's Assets to be placed
with a particular Eligible Foreign Custodian in
33
accordance herewith. The Fund confirms to the Delegate that the Fund or its
Investment Advisor has considered the Sovereign Risk and prevailing Country Risk
as part of its continuing investment decision process, including such factors as
may be reasonably related to the systemic risk of maintaining the Fund's Assets
in a particular country, including, but not limited to, financial
infrastructure, prevailing custody and settlement systems and practices
(including the use of any Securities Depository in the context of information
provided by the Custodian in the performance of its duties as required under
Rule 17f-7 and the terms of the Custodian Agreement governing such duties), and
the laws relating to the safekeeping and recovery of the Fund's Assets held in
custody pursuant to the terms of the Custodian Agreement.
3. Selection of Eligible Foreign Custodian and Contract Administration. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
the Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Delegate shall place and
maintain the Fund's Assets with an Eligible Foreign Custodian, provided that the
Delegate shall have determined that the Fund's Assets will be subject to
reasonable care based on the standards applicable to custodians in the relevant
market after considering factors relevant to the safekeeping of such assets
including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections available
for certificated securities (if applicable), the controls and procedures for
dealing with any Securities Depository, the method of keeping custodial
records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite financial
strength to provide reasonable care for the Fund's Assets;
(iii) The Eligible Foreign Custodian's general reputation and standing;
and
(iv) Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Eligible Foreign Custodian, such as by virtue of the
existence of any offices of such Eligible Foreign Custodian in the United
States or such Eligible Foreign Custodian's appointment of an agent for
service of process in the United States or consent to jurisdiction in the
United States.
The Delegate shall be required to make the foregoing determination to the best
of its knowledge and belief based only on information reasonably available to
it.
(b) Contract Administration. The Delegate shall cause the foreign custody
arrangements with an
34
Eligible Foreign Custodian to be governed by a written contract that the
Delegate has determined will provide reasonable care for Fund assets based on
the standards applicable to custodians in the relevant market. Each such
contract shall, except as set forth in the last paragraph of this subsection
(b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately
protected against the risk of loss of assets held in accordance with such
contract;
(ii) That the Fund's Assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors (except a claim of payment for
their safe custody or administration) and, in the case of cash deposits,
that the Fund's Assets will not be subject to liens or rights in favor of
creditors of such Custodian arising under bankruptcy, insolvency or
similar laws;
(iii) That beneficial ownership of the Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) That adequate records will be maintained identifying the Fund's
Assets as belonging to the Fund or as being held by a third party for the
benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the
contents of such records; and
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of the Fund's Assets, including,
but not limited to, notification of any transfer to or from the Fund's
account or a third party account containing the Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3(b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of
care and protection for the Fund's Assets as the specified provisions, in
their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in this
Delegation Schedule to the contrary, the duties under this Section 3 shall apply
only to Eligible Foreign Custodians selected by the Delegate and shall not apply
to Securities Depositories or to any Eligible Foreign Custodian that the
Delegate is directed to use pursuant to Section 7 of this Delegation Schedule.
4. Monitoring. The Delegate shall establish a system to monitor at reasonable
intervals (but at least
35
quarterly) the appropriateness of maintaining the Fund's Assets with each
Eligible Foreign Custodian that has been selected by the Delegate pursuant to
Section 3 of this Delegation Schedule. The Delegate shall monitor the continuing
appropriateness of placement of the Fund's Assets in accordance with the
criteria established under Section 3(a) of this Delegation Schedule. The
Delegate shall monitor the continuing appropriateness of the contract governing
the Fund's arrangements in accordance with the criteria established under
Section 3(b) of this Delegation Schedule.
5. Reporting. At least quarterly and more frequently as mutually agreed between
the parties, the Delegate shall provide to the Board written reports specifying
placement of the Fund's Assets with each Eligible Foreign Custodian selected by
the Delegate pursuant to Section 3 of this Delegation Schedule and shall
promptly report on any material changes to such foreign custody arrangements.
Delegate will prepare such a report with respect to any Eligible Foreign
Custodian that the Delegate has been instructed to use pursuant to Section 7 of
this Delegation Schedule only to the extent specifically agreed with respect to
the particular situation.
6. Withdrawal of Fund's Assets. If the Delegate determines that an arrangement
with a specific Eligible Foreign Custodian selected by the Delegate under
Section 3 of this Delegation Schedule no longer meets the requirements of said
Section, Delegate shall withdraw the Fund's Assets from the non-complying
arrangement as soon as reasonably practicable; provided, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to provide information regarding the particular circumstances and
to act only in accordance with Instructions of the Fund or its Investment
Advisor with respect to such liquidation or other withdrawal.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this Delegation
Schedule, the Fund, acting through its Board, its Investment Advisor or its
other Authorized Representative, may direct the Delegate to place and maintain
the Fund's Assets with a particular Eligible Foreign Custodian, including
without limitation with respect to investment in countries as to which the
Custodian will not provide delegation services. In such event, the Delegate
shall be entitled to rely on any such instruction as an Instruction under the
terms of the Custodian Agreement and shall have no duties under this Delegation
Schedule with respect to such arrangement save those that it may undertake
specifically in writing with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this Delegation Schedule,
the Delegate agrees to exercise reasonable care, prudence and diligence such as
a person having responsibility for safekeeping the
36
Fund's Assets would exercise.
9. Representations. The Delegate hereby represents and warrants that it is a
U.S. Bank and that this Delegation Schedule has been duly authorized, executed
and delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
The Fund hereby represents and warrants that its Board of Directors has
determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation Schedule
has been duly authorized, executed and delivered by the Fund and is a legal,
valid and binding agreement of the Fund.
10. Effectiveness; termination. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Delegate, as indicated by the date set forth below the Delegate's signature.
This Delegation Schedule may be terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party. Such
termination shall be effective on the 30th calendar day following the date on
which the non-terminating party shall receive the foregoing notice. The
foregoing to the contrary notwithstanding, this Delegation Schedule shall be
deemed to have been terminated concurrently with the termination of the
Custodian Agreement.
11. Notices. Notices and other communications under this Delegation Schedule are
to be made in accordance with the arrangements designated for such purpose under
the Custodian Agreement unless otherwise indicated in a writing referencing this
Delegation Schedule and executed by both parties.
12. Definitions. Capitalized terms not otherwise defined in this Delegation
Schedule have the following meanings:
a. Country Risk - shall have the meaning set forth in Section 9.1.2 of the
Custodian Agreement.
b. Eligible Foreign Custodian - shall have the meaning set forth in Rule
17f-5(a)(1) of the 1940 Act and shall also include a U.S. Bank.
c. Fund's Assets - shall mean any of the Fund's investments (including
foreign currencies) for which the primary market is outside the United
States, and such cash and cash equivalents as are reasonably necessary to
effect the Fund's transactions in such investments.
37
d. Instructions - shall have the meaning set forth in the Custodian
Agreement.
e. Securities Depository - shall have the meaning set forth in Rule 17f-7
of the 1940 Act.
f. Sovereign Risk - shall have the meaning set forth in Section 9.1.3 of
the Custodian Agreement.
g . U.S. Bank - shall mean a bank which qualifies to serve as a custodian
of assets of investment companies under Section 17(f) of the 1940 Act.
13. Governing Law and Jurisdiction. This Delegation Schedule shall be construed
in accordance with the laws of the State of New York. The parties hereby submit
to the exclusive jurisdiction of the Federal courts sitting in the State of New
York or of the state courts of such State.
14. Fees. Delegate shall perform its functions under this Delegation Schedule
for the compensation determined under the Custodian Agreement.
15. Integration. This Delegation Schedule sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. The terms of the Custodian Agreement
shall apply generally as to matters not expressly covered in this Delegation
Schedule, including dealings with the Eligible Foreign Custodians in the course
of discharge of the Delegate's obligations under the Custodian Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
▇▇▇▇▇ BROTHERS ▇▇▇▇▇▇▇▇ & CO. THE ▇▇▇▇▇▇▇, ▇▇▇▇▇ FUNDS
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------- --------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Partner Title: Co president
Date: 5/6/05 Date: 5/6/05
[LOGO] Investor Services Proposal [BBH LOGO]
April 2005
I. CUSTODY CHARGES
Annual US Asset Charge 0.50 basis points
US Transaction Charge* $8.00
Annual Foreign Asset Charge (EU Markets) 3.00 basis points
Foreign Transaction Charge (EU Markets)** $25.00
Non-automated Instruction Charge $15.00
* Includes DTC, Fed, wires, book transfers, derivatives, repos, commercial
paper, maturity collections, paydowns and cancels & corrects
** Includes 3rd party FX, non-US wires and cancels & corrects
II. ANNUAL ACCOUNT MINIMUM* CHARGES
Custody $20,000
* Minimums do not apply if, on an annual, aggregate / relationship level, the
asset charges exceed the account minimum charges.
III. OUT OF POCKET EXPENSES
Out-of-pocket expenses associated with but not limited to communications,
telephone, telex, fax, postage, forms and supplies, record retention,
retrieval, duplication and destruction, locally mandated charges, stamp
duties, foreign investor registration, commissions, dividend and income
collection, proxy charges, taxes, certificate fees, special handling,
transfer, holding or withdrawal charges, registration fees, market
quotation costs, audit reporting, travel and lodging relating to board
meetings, edgarization and SEC filing, customized software, systems and
legal services and other expenses as agreed to by the parties from time to
time would be additional.
IV. TERM
BBH would be contracted for a term of 3 years.
Approved by:
▇▇▇▇▇▇▇, ▇▇▇▇▇ Funds ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co.
/s/ G. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- --------------------------------
Date: 5/6/05 Date: 5/11/05
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