DRAFT
CUSTODY AGREEMENT
AGREEMENT dated as of XXXXXXXXXXX, 199X, between the EAI SELECT MANAGERS
EQUITY FUND, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), having its principal office and place of business
at 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000, and BOSTON SAFE DEPOSIT
AND TRUST COMPANY (the "Custodian"), a Massachusetts trust company with its
principal place of business at Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Affiliated Person" shall have the meaning of the term within
Section 2(a)3 of the 1940 Act.
(b) "Authorized Person" shall be deemed to include the Chairman of
the Board of Trustees, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Fund, duly authorized by the
Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the certification
annexed hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/Treasury book-
entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(d) "Business Day" shall mean any day on which the Fund, the
Custodian, the Book-Entry System and appropriate clearing corporation(s)
are open for business.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Fund by any two Authorized Persons or any two
officers thereof.
(f) " Declaration of Trust " shall mean the Trust of the Fund dated
September 27, 1995 as the same may be amended from time to time.
(g) "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission
under Section 17(a) of the Securities Exchange Act of 1934, as amended,
its successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be named
in a Certificate authorized to act as a depository under the 1940 Act,
its successor or successors and its nominee or nominees.
(h) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof ("U.S. government securities"), commercial
paper, bank certificates of deposit, bankers' acceptances and short-term
corporate obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such
purchase or sale, and repurchase and reverse repurchase agreements with
respect to any of the foregoing types of securities.
(i) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(j) "Prospectus" shall mean the Fund's current prospectus and
statement of additional information relating to the registration of the
Fund's Shares under the Securities Act of 1933, as amended.
(k) "Shares" refers to shares of common stock, $___ par value per
share, of the Fund.
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodities interests and investments from time to time
owned by the Fund.
(m) "Transfer Agent" shall mean the person which performs the
transfer agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(n) "Written Instructions" shall mean a written communication
actually received by the Custodian from a person reasonably believed by
the Custodian to be an Authorized Person by any system, including,
without limitation, electronic transmissions, facsimile and telex.
(o) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies at the time owned by or in the
possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
1
DRAFT
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee
Schedule annexed hereto as Schedule A and incorporated herein. Such Fee
Schedule does not include out-of-pocket disbursements of the Custodian
for which the Custodian shall be entitled to xxxx separately. Out-of-
pocket disbursements shall include, but shall not be limited to, the
items specified in the Schedule of Out-of-Pocket charges annexed hereto
as Schedule B and incorporated herein, which schedule may be modified by
the Custodian upon not less than thirty days prior written notice to the
Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule A of this Agreement a revised Fee Schedule,
dated and signed by an Authorized Officer or authorized representative of
each party hereto.
(c) The Custodian will xxxx the Fund as soon as practicable after the
end of each calendar month, and said xxxxxxxx will be detailed in
accordance with Schedule A, as amended from time to time. The Fund will
promptly pay to the Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets.
The Fund will deliver or cause to be delivered to the Custodian all
Securities and monies owned by it at any time during the period of this
Agreement. The Custodian will not be responsible for such Securities and
monies until actually received by it. The Fund shall instruct the
Custodian from time to time in its sole discretion, by means of Written
Instructions, or, in connection with the purchase or sale of Money Market
Securities, by means of Oral Instructions confirmed in writing in
accordance with Section 11(i) hereof or Written Instructions, as to the
manner in which and in what amounts Securities and monies are to be
deposited on behalf of the Fund in the Book-Entry System or the
Depository; provided, however, that prior to the deposit of Securities of
the Fund in the Book-Entry System or the Depository, including a deposit
in connection with the settlement of a purchase or sale, the Custodian
shall have received a Certificate specifically approving such deposits by
the Custodian in the Book-Entry System or the Depository. Securities and
monies of the Fund deposited in the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the
Custodian for customers, including but not limited to accounts for which
the Custodian acts in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for the Fund and shall credit to the separate
account all monies received by it for the account of such Fund and shall
disburse the same only:
1. In payment for Securities purchased for the Fund, as
provided in Section 5 hereof;
2. In payment of dividends or distributions with respect to
the Shares, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect
to the Shares, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the
Fund, as provided in Section 8 hereof;
5. Pursuant to Written Instructions setting forth the name
and address of the person to whom the payment is to be made, the
amount to be paid and the purpose for which payment is to be
made, provided that in the event of disbursements pursuant to
this sub-section 4(b)(5), the Fund shall indemnify and hold the
Custodian harmless from any claims or losses arising out of such
disbursements in reliance on such Written Instructions which it,
in good faith, believes to be received from duly Authorized
Persons; or
6. In payment of fees and in reimbursement of the expenses
and liabilities of the Custodian attributable to the Fund, as
provided in Sections 11(h) and 11(j).
(c) Confirmation and Statements. Promptly after the close of
business on each day, the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from the account of
the Fund during said day. Where securities purchased by the Fund are in
a fungible bulk of securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the books of the
Depository or the Book-Entry System, the Custodian shall by book entry or
otherwise identify the quantity of those securities belonging to the
Fund. At least weekly, the Custodian shall furnish the Fund with a
detailed statement of the Securities and monies held for the Fund under
this Agreement.
(d) Registration of Securities and Physical Separation. All
Securities held for the Fund which are issued or issuable only in bearer
form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the
Fund may be registered in the name of the Fund, in the name of the
Custodian, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the
name of the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund reserves the right to
instruct the Custodian as to the method of registration and safekeeping
of the Securities. The Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of its registered
nominee or in the name of the Book-Entry System or the Depository, any
Securities which it may hold for the account of the Fund and which may
from time to time be registered in the name of the Fund. The Custodian
shall hold all such Securities specifically allocated to the Fund which
are not held in the Book-Entry System or the Depository in a separate
account for the Fund in the name of the Fund physically segregated at all
times from those of any other person or persons.
(e) Segregated Accounts. Upon receipt of a Written Instruction the
Custodian will establish segregated accounts on behalf of the Fund to
hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such segregated
accounts only as it shall be directed by subsequent Written Instruction.
(f) Collection of Income and Other Matters Affecting Securities.
Unless otherwise instructed to the contrary by a Written Instruction, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with
respect to all Securities held for the Fund in accordance with this
Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed, retired
or otherwise become payable. Notwithstanding the foregoing, the
Custodian shall have no responsibility to the Fund for monitoring
or ascertaining any call, redemption or retirement dates with
respect to put bonds which are owned by the Fund and held by the
Custodian or its nominees. Nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund
for any missed payments or other defaults resulting therefrom;
unless the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment of any
such put bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes no
liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect
to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the
account of the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for the
Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt
of a Written Instruction and not otherwise, except for subparagraphs 5,
6, 7, and 8 of this section 4(g) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the Book-
Entry System or the Depository, shall:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any
Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for
the Fund in exchange for other Securities or cash issued or paid
in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for
the Fund to any protective committee, reorganization committee or
other person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this
Agreement in the separate account for the Fund such certificates
of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of
the assets specifically allocated to the separate account of the
Fund and take such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the
account of the Fund pursuant to Section 5;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof
or its agent when such Securities are called, redeemed, retired
or otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to the put
bonds which are owned by the Fund and held by the Custodian or
its nominee. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss by the Fund for any missed
payment or other default resulting therefrom; unless the
Custodian received timely notification from the Fund specifying
the time, place and manner for the presentment of any such put
bond owned by the Fund and held by the Custodian or its nominee.
The Custodian shall not be responsible and assumes no liability
to the Fund for the accuracy or completeness of any notification
the Custodian may furnish to the Fund with respect to put bonds;
8. Deliver Securities for delivery in connection with any
loans of Securities made by the Fund but only against receipt of
adequate collateral as agreed upon from time to time by the
Custodian and the Fund which may be in the form of cash or U.S.
government securities or a letter of credit;
9. Deliver Securities for delivery as security in connection
with any borrowings by the Fund requiring a pledge of Fund
assets, but only against receipt of amounts borrowed;
10. Deliver Securities upon receipt of Written Instructions
from the Fund for delivery to the Transfer Agent or to the
holders of Shares in connection with distributions in kind, as
may be described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities as collateral in connection with short
sales by the Fund of common stock for which the Fund owns the
stock or owns preferred stocks or debt securities convertible or
exchangeable, without payment or further consideration, into
shares of the common stock sold short;
12. Deliver Securities for any purpose expressly permitted by
and in accordance with procedures described in the Fund's
Prospectus; and
13. Deliver Securities for any other proper business purpose,
but only upon receipt of, in addition to Written Instructions, a
certified copy of a resolution of the Board of Trustees signed by
an Authorized Person and certified by the Secretary of the Fund,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is
hereby authorized to endorse and collect all checks, drafts or other
orders for the payment of money received by the Custodian for the account
of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Written Instruction,
and (ii) with respect to each purchase of Money Market Securities, either
a Written Instruction or Oral Instruction, in either case specifying with
respect to each purchase: (1) the name of the issuer and the title of
the Securities; (2) the number of shares or the principal amount
purchased and accrued interest, if any; (3) the date of purchase and
settlement; (4) the purchase price per unit; (5) the total amount payable
upon such purchase; (6) the name of the person from whom or the broker
through whom the purchase was made, if any; (7) whether or not such
purchase is to be settled through the Book-Entry System or the
Depository; and (8) whether the Securities purchased are to be deposited
in the Book-Entry System or the Depository. The Custodian shall receive
the Securities purchased by or for the Fund and upon receipt of
Securities shall pay out of the monies held for the account of the Fund
the total amount payable upon such purchase, provided that the same
conforms to the total amount payable as set forth in such Written or Oral
Instruction.
(b) Promptly after each sale of Securities of the Fund, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written Instruction,
and (ii) with respect to each sale of Money Market Securities, either
Written Instruction or Oral Instructions, in either case specifying with
respect to such sale: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or principal amount sold, and
accrued interest, if any; (3) the date of sale; (4) the sale price per
unit; (5) the total amount payable to the Fund upon such sale; (6) the
name of the broker through whom or the person to whom the sale was made;
and (7) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to be
delivered the Securities to the broker or other person designated by the
Fund upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable to the Fund
as set forth in such Written or Oral Instruction. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of the Declaration of Trust
and as disclosed in its Prospectus to lend securities, within 24 hours
after each loan of Securities, the Fund shall deliver to the Custodian a
Written Instruction specifying with respect to each such loan: (a) the
name of the issuer and the title of the Securities; (b) the number of
shares or the principal amount loaned; (c) the date of loan and delivery;
(d) the total amount to be delivered to the Custodian, and specifically
allocated against the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately identified; (e) the
name of the broker, dealer or financial institution to which the loan was
made; and (f) whether the Securities loaned are to be delivered through
the Book-Entry System or the Depository.
Promptly after each termination of a loan of Securities, the Fund
shall deliver to the Custodian a Written Instruction specifying with
respect to each such loan termination and return of Securities: (a) the
name of the issuer and the title of the Securities to be returned; (b)
the number of shares or the principal amount to be returned; (c) the date
of termination; (d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any offsetting
credits as described in said Written Instruction); (e) the name of the
broker, dealer or financial institution from which the Securities will be
returned; and (f) whether such return is to be effected through the Book-
Entry System or the Depository. The Custodian shall receive all
Securities returned from the broker, dealer or financial institution to
which such Securities were loaned and upon receipt thereof shall pay the
total amount payable upon such return of Securities as set forth in the
Written Instruction. Securities returned to the Custodian shall be held
as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the vote of the Board of
Trustees of the Fund certified by the Secretary (i) authorizing the
declaration of distributions on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such distribution, the date of
payment thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per share to the
shareholders of record as of the record date and the total amount payable
to the Transfer Agent on the payment date, or (ii) setting forth the date
of declaration of any distribution by the Fund, the date of payment
thereof, the record date as of which shareholders entitled to payment
shall be determined, the amount payable per share to the shareholders of
record as of the record date and the total amount payable to the Transfer
Agent on the payment date.
(b) Upon the payment date specified in such vote, Oral Instructions
or Written Instructions, as the case may be, the Custodian shall pay out
the total amount payable to the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver
or cause to be delivered to the Custodian a Written Instruction duly
specifying:
1. The number of Shares sold, trade date, and price; and
2. The amount of money to be received by the Custodian for
the sale of such Shares.
The Custodian understands and agrees that Written Instructions
may be furnished subsequent to the purchase of Shares and that the
information contained therein will be derived from the sales of Shares as
reported to the Fund by the Transfer Agent.
(b) Upon receipt of money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Fund.
(c) Upon issuance of any Shares in accordance with the foregoing
provisions of this Section 8, the Custodian shall pay all original issue
or other taxes required to be paid in connection with such issuance upon
the receipt of a Written Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed,
the Fund shall cause the Transfer Agent to promptly furnish to the
Custodian Written Instructions, specifying:
1. The number of Shares redeemed; and
2. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information contained
in such Written Instructions will be derived from the redemption of
Shares as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares received by the Transfer Agent for redemption and that
such Shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent of the total amount specified in
a Written Instruction issued pursuant to paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Fund,
the Custodian, unless otherwise instructed by a Written Instruction
shall, upon receipt of advice from the Fund or its agent stating that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check
redemption privilege out of the monies specifically allocated to the Fund
in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for temporary
administrative or emergency purposes using Securities as collateral for
such borrowings, a notice or undertaking in the form currently employed
by any such bank setting forth the amount which such bank will loan to
the Fund against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian Written Instructions stating with
respect to each such borrowing: (1) the name of the bank; (2) the amount
and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note, duly endorsed by the Fund, or
other loan agreement; (3) the time and date, if known, on which the loan
is to be entered into (the "borrowing date"); (4) the date on which the
loan becomes due and payable; (5) the total amount payable to the Fund on
the borrowing date; (6) the market value of Securities to be delivered as
collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular
Securities; (7) whether the Custodian is to deliver such collateral
through the Book-Entry System or the Depository; and (8) a statement that
such loan is in conformance with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the borrowing date
the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount payable as
set forth in the Written Instruction. The Custodian may, at the option
of the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank
by virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the Fund from
time to time such Securities as may be specified in Written Instruction
to collateralize further any transaction described in this Section 9.
The Fund shall cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall receive from
time to time such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in Written Instruction all of the
information required by this Section 9, the Custodian shall not be under
any obligation to deliver any Securities. Collateral returned to the
Custodian shall be held hereunder as it was prior to being used as
collateral.
10. Persons Having Access to Assets of the Fund.
(a) No trustee or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any sub-investment
adviser of the Fund, or of the Fund's administrator, shall have physical
access to the assets of the Fund held by the Custodian or be authorized
or permitted to withdraw any investments of the Fund, nor shall the
Custodian deliver any assets of the Fund to any such person. No officer,
director, employee or agent of the Custodian who holds any similar
position with the Fund's investment adviser, with any sub-investment
adviser of the Fund or with the Fund's administrator shall have access to
the assets of the Fund.
(b) Nothing in this Section 10 shall prohibit any duly authorized
officer, employee or agent of the Fund, or any duly authorized officer,
director, employee or agent of the investment adviser, of any sub-
investment adviser of the Fund or of the Fund's administrator, from
giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or
access to assets of the Fund prohibited by paragraph (a) of this Section
10.
11. Concerning the Custodian.
(a) Standard of Conduct. Notwithstanding any other provision of this
Agreement, neither the Custodian nor its nominee shall be liable for any
loss or damage, including counsel fees, resulting from its action or
omission to act or otherwise, except for any such loss or damage arising
out of the gross negligence or willful misconduct of the Custodian or any
of its employees, sub-custodians or agents. The Custodian may, after
obtaining the Fund's permission, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in
conformity with such advice or opinion. The Custodian shall not be
liable to the Fund for any loss or damage resulting from the use of the
Book-Entry System or the Depository.
(b) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to inquire
into, and shall not be liable for:
1. The validity of the issue of any Securities purchased by
the Fund, the legality of the purchase thereof, or the propriety
of the amount paid therefor;
2. The legality of the sale of any Securities by the Fund or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of the Fund;
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custodian actually
receives and collects such money directly or by the final crediting of
the account representing the Fund's interest in the Book-Entry System or
the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount due to the Fund from the Transfer Agent nor to take any action to
effect payment or distribution by the Transfer Agent of any amount paid
by the Custodian to the Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be
under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in
default, or if payment is refused after due demand or presentation,
unless and until (a) it shall be directed to take such action by a
Certificate and (b) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such
action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may,
after obtaining the Fund's consent, appoint one or more banking
institutions, including but not limited to banking institutions located
in foreign countries, to act as Depository or Depositories or as sub-
custodian or as sub-custodians of Securities and monies at any time owned
by the Fund. The Custodian shall use reasonable care in selecting a
Depository and/or sub-custodian located in a country other than the
United States ("Foreign Sub-Custodian"), and shall oversee the
maintenance of any Securities or monies of the Fund by any Foreign Sub-
Custodian. In addition, the Custodian shall hold the Fund harmless from,
and indemnify the Fund against, any loss that occurs as a result of the
failure of any Foreign Sub-Custodian to exercise reasonable care with
respect to the safekeeping of Securities and monies of the Fund.
Notwithstanding the generality of the foregoing, however, the Custodian
shall not be liable for any losses resulting from or caused by events or
circumstances beyond its reasonable control, including, but not limited
to, losses resulting from nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar
action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or
other charges affecting the Fund's property; or acts of war, terrorism,
insurrection or revolution; or any other similar act or event beyond the
Custodian's control.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Fund are such as may properly be held
by the Fund under the provisions of the Declaration of Trust and the
Prospectus.
(h) Compensation of the Custodian. The Custodian shall be entitled
to receive, and the Fund agrees to pay to the Custodian, such
compensation as may be agreed upon from time to time between the
Custodian and the Fund. The Custodian may, after presentation to and
approval by the Fund, charge against any monies held on behalf of the
Fund pursuant to this Agreement such compensation and any expenses
incurred by the Custodian in the performance of its duties pursuant to
this Agreement. The Custodian may, after presentation to and approval by
the Fund, charge against any money held on behalf of the Fund pursuant to
this Agreement the amount of any loss, damage, liability or expense
incurred with respect to the Fund, including counsel fees, for which it
shall be entitled to reimbursement under the provisions of this
Agreement.
The expenses which the Custodian may charge against such account
include, but are not limited to, the expenses of sub-custodians and
foreign branches of the Custodian incurred in settling transactions
outside of Boston, Massachusetts or New York City, New York involving the
purchase and sale of Securities.
(i) Reliance on Certificates and Instructions. The Custodian shall
be entitled to rely upon any Certificate, notice or other instrument in
writing received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or Authorized
Person of the Fund. The Custodian shall be entitled to rely upon any
Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and
reasonably believed by the Custodian to be genuine and to be given by an
Authorized Person. The Fund agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral Instructions
in such manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by the close of
business on the same day that such Oral Instructions are given to the
Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur
no liability to the Fund in acting upon Oral Instructions given to the
Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from a duly
Authorized Person.
(j) Overdraft Facility and Security for Payment. In the event that
the Custodian is directed by Written Instruction (or Oral Instructions
confirmed in writing in accordance with Section 11(i) hereof) to make any
payment or transfer of monies on behalf of the Fund for which there would
be, at the close of business on the date of such payment or transfer,
insufficient monies held by the Custodian on behalf of the Fund, the
Custodian may, after obtaining the Fund's agreement, provide an overdraft
(an "Overdraft") to the Fund in an amount sufficient to allow the
completion of such payment or transfer. Any Overdraft provided
hereunder: (a) shall be payable on the next Business Day, unless
otherwise agreed by the Fund and the Custodian; and (b) shall accrue
interest from the date of the Overdraft to the date of payment in full by
the Fund at a rate agreed upon in writing, from time to time, by the
Custodian and the Fund. The Custodian and the Fund acknowledge that the
purpose of such Overdraft is to temporarily finance the purchase of
Securities for prompt delivery in accordance with the terms hereof, to
meet unanticipated or unusual redemption, to allow the settlement of
foreign exchange contracts or to meet other emergency expenses not
reasonably foreseeable by the Fund. The Custodian shall promptly notify
the Fund in writing (an "Overdraft Notice") of any Overdraft by facsimile
transmission or in such other manner as the Fund and the Custodian may
agree in writing. Solely to secure payment of any Overdraft, the Fund
hereby grants to the Custodian a continuing security interest in and
right of setoff against the Securities and cash in the Fund's account
from time to time in the full amount of such Overdraft. Should the Fund
fail to pay promptly any amounts owed hereunder, the Custodian shall be
entitled to use available cash in the Fund's account and to liquidate
Securities in the account as is necessary to meet the Fund's obligations
under the Overdraft. In any such case, and without limiting the
foregoing, the Custodian shall be entitled to take such other actions(s)
or exercise such other options, powers and rights as the Custodian now or
hereafter has as a secured creditor under the Massachusetts Uniform
Commercial Code or any other applicable law.
(k) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Fund and by the appropriate
employees of the Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by
the Custodian on the system of internal accounting control of the Book-
Entry System or the Depository and with such reports on its own systems
of internal accounting control as the Fund may reasonably request from
time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter
until such time as this Agreement may be terminated in accordance with
the provisions hereof.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than 60 days after the date of
receipt of such notice. In the event such notice is given by the Fund,
it shall be accompanied by a certified vote of the Board of Trustees of
the Fund, electing to terminate this Agreement and designating a
successor custodian or custodians, which shall be a person qualified to
so act under the 1940 Act.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Custodian a
certified vote of the Board of Trustees of the Fund, designating a
successor custodian or custodians. If the Fund fails to designate a
successor custodian, the Fund shall upon the date specified in the notice
of termination of this Agreement and upon the delivery by the Custodian
of all Securities (other than Securities held in the Book-Entry System
which cannot be delivered to the Fund) and monies then owned by the Fund,
be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of
this Section 12, this Agreement shall terminate to the extent specified
in such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian on behalf of the Fund, after deducting all fees, expenses and
other amounts , subject to Section 11 (h), for the payment or
reimbursement of which it shall then be entitled.
13. Limitation of Liability.
The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund, individually, but are binding only upon
the assets and property of the Fund, as provided in the Declaration of
Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Fund, and signed by an authorized officer of the
Fund, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them or any shareholder of the Fund individually or to
impose any liability on any of them or any shareholder of the Fund
personally, but shall bind only the assets and property of the Fund as
provided in the Declaration of Trust.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Custodian
a new certification in similar form in the event that any such present
Authorized Person ceases to be such an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons as set
forth in the last delivered certification.
(b) Annexed hereto as Appendix B is a certification signed by the
Secretary of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the
Custodian a new certification in similar form in the event any such
present officer ceases to be an officer of the Fund or in the event that
other or additional officers are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected
in acting under the provisions of this Agreement upon the signature of an
officer as set forth in the last delivered certification.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at its
offices at Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or at such
other place as the Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000 or at such other place as
the Fund may from time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same
formality as this Agreement, (i) authorized, or ratified and approved by
a vote of the Board of Trustees of the Fund, including a majority of the
members of the Board of Trustees of the Fund who are not "interested
persons" of the Fund (as defined in the 1940 Act), or (ii) authorized, or
ratified and approved by such other procedures as may be permitted or
required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without
the written consent of the Custodian, or by the Custodian without the
written consent of the Fund authorized or approved by a vote of the Board
of Trustees of the Fund and any attempted assignment without such written
consent shall be null and void. Nothing in this Agreement shall give or
be construed to give or confer upon any third party any rights hereunder.
(g) The Fund represents that a copy of the Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
(h) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(i) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
(j) This agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
2
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective representatives duly authorized as of the
day and year first above written.
EAI SELECT MANAGERS EQUITY FUND
By:
Name:
Title:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
Name:
Title:
3
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APPENDIX A
XXXXXXXXXXXX, the Secretary, of the EAI Select Managers Equity Fund, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Oral Instructions and Written Instructions on behalf of the Fund and
the specimen signatures set forth opposite there respective names are their
true and correct signatures:
Name Signature
Secretary
Dated:
4
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APPENDIX B
XXXXXXXXXXXXXXXX, the Secretary of the EAI Select Managers Equity Fund, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position
and qualified therefor in conformity with the Fund's Declaration of Trust and
the specimen signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
Chairman of the Board
President
Treasurer
Secretary
Vice President and
Investment Officer
Vice President and
Investment Officer
Secretary
Dated:
5
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SCHEDULE A
BOSTON SAFE DEPOSIT AND TRUST COMPANY
CUSTODY FEE SCHEDULE
OUR PROPOSAL INCLUDES:
Safekeeping of Assets held by the Funds
Settlement of Portfolio Transactions
Corporate Action Processing
Income Collection
Daily, Weekly, and Monthly Reporting
1. ACCOUNT MANAGEMENT CHARGES
$650 per account, per month
Plus a per security holding charge of $1.00, per month.
II. TRANSACTION CHARGES
DTC and Fed book Entry $8.00 per trade
PTC $12.50 per trade
U.S. Physical $30.00 per trade
Paydowns $5.00 per paydown
Futures Transactions $25.00 per trade
Margin Variation Wire $15.00 per wire
Options round-trip$40.00
Wire Transfer $5.00 per wire
III. OUT-OF-POCKET EXPENSES
All reasonable Out-of-Pocket expenses to include, but not limited
to, such items as telephone, wire charges, courier services, etc.
IV. MINIMUM FEE
A minimum fee of $10,000 per account per annum.
6
DRAFT
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of
each month all out-of-pocket expenses reasonably incurred in connection with
the assets of the Fund.
