Exhibit j
RYDEX CAPITAL PARTNERS SPHINX FUND
FORM OF CUSTODIAN AGREEMENT
AGREEMENT dated as of _______, 2003 between Forum Trust, LLC (the
"Custodian"), a limited liability company organized under the laws of the State
of Maine doing business as a nondepository trust company, and Rydex Capital
Partners SPhinX Fund, a business trust organized under the laws of the State of
Delaware (the "Customer").
WHEREAS, the Customer is non-diversified, closed-end management
investment company that is registered under the Investment Company Act of 1940,
as amended ("1940 Act") and offers shares representing an interest in a separate
portfolio of Securities and Cash (each as hereinafter defined) (the
"Portfolio"); and
WHEREAS, Custodian has entered into a certain Master Subcustodian
Agreement with Deutsche Bank, as successor-in-interest to Bankers Trust, dated
as of April 20, 1999 (the "Master Subcustodian Agreement") under which Deutsche
Bank provides certain sub-custody services to Custodian; and
WHEREAS, Customer wishes to retain Custodian to provide certain
custodial services to Customer for the benefit of the Portfolio, and Custodian
is willing to provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN. Customer, on behalf of the Portfolio,
hereby employs Custodian as custodian of all assets of the Portfolio that are
delivered to and accepted by Custodian or any Subcustodian (as that term is
defined in Section 4) (the "Property") pursuant to the terms and conditions set
forth herein. For purposes of this Agreement, "delivery" of Property shall
include the acquisition by Customer of a security entitlement (as that term is
defined in the New York Uniform Commercial Code ("UCC")). Without limitation,
such Property shall include stocks and other equity interests of every type,
evidences of indebtedness, derivatives (including , but not limited to, options,
shares of ETFs, swaps, futures contracts, forward contracts and options on
futures contracts) other instruments representing same or rights or obligations
to receive, purchase, deliver or sell same and other non-cash investment
property of the Portfolio ("Securities") and cash from any source and in United
States ("U.S.") dollars ("Cash"), provided that Custodian shall have the right,
in its sole discretion, to refuse to accept as Property any property of the
Portfolio that Custodian considers not to be appropriate or in proper form for
deposit for any reason. Custodian shall not be responsible for any property of
the Portfolio held or received by Customer or others and not delivered to
Custodian or any Subcustodian.
2. MAINTENANCE OF SECURITIES AND CASH AT CUSTODIAN AND SUBCUSTODIAN
LOCATIONS. Pursuant to Instructions (as hereinafter defined in Section 15),
Customer shall direct Custodian to
settle Securities transactions and maintain Cash and cash equivalents in such
amounts reasonably necessary to effect Customer's transactions in such
Securities.
3. CUSTODY ACCOUNT. Custodian agrees to establish and maintain one or
more custody accounts on its books each in the name of Customer on behalf of the
Portfolio (each, an "Account") for any and all Property from time to time
received and accepted by Custodian or any Subcustodian for the account of the
Portfolio. Customer, on behalf of the Portfolio, (i) acknowledges its
responsibility as a principal for all of its obligations to Custodian arising
under or in connection with this Agreement, notwithstanding, that it may be
acting on behalf of other persons, and (ii) warrants its authority to deposit in
the appropriate Account any Property received from Customer by Custodian or a
Subcustodian and to give, and authorize others to give, instructions relative
thereto. Custodian may deliver securities of the same class in place of those
deposited in the Account.
Custodian shall hold, keep safe and protect as custodian for each
Account all Property in such Account and, to the extent such Property
constitutes "financial assets" as defined in the UCC, shall maintain those
financial assets in such Account as security entitlements in favor of the
Portfolio. All transactions, including, but not limited to, foreign exchange
transactions, involving the Property shall be executed or settled solely in
accordance with Instructions (which shall specifically reference the Account for
which such transaction is being settled), except that until Custodian receives
Instructions to the contrary, Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account that are
called, redeemed or retired or otherwise become payable and
all coupons and other income items that call for payment upon
presentation to the extent that Custodian or Subcustodian is
actually aware of such opportunities and hold the cash
received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for Custodian to
take timely action, no action shall be taken with respect
thereto;
(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for Custodian to take
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timely action or if actual notice of such actions was received
too late to seek Instructions, sell in the discretion of
Custodian (which sale Customer hereby authorizes Custodian to
make) such rights entitlement or fractional interest and
credit the Account with the net proceeds of such sale;
(e) execute in Customer's name for an Account, whenever Custodian
deems it appropriate, such ownership and other certificates as
may be required to obtain the payment of income from the
Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
Custodian shall notify Customer of the amount of the shortfall
and Customer may, or may cause the Portfolio to, at its
option, deposit additional Cash in such Account or take steps
to have sufficient Cash available. Customer, on behalf of the
Portfolio, agrees, when and if requested by Custodian and
required in connection with the payment of any such taxes, to
cooperate with Custodian in furnishing information, executing
documents or otherwise;
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of Custodian or any
Subcustodian; and
(h) in the event of any loss of Securities or Cash, use its best
efforts to ascertain the circumstances relating to such loss
and promptly report the same to Customer.
4. SUBCUSTODIANS AND SECURITIES SYSTEMS. Customer authorizes and
instructs Custodian to maintain the Property in each Account directly in one of
its U.S. branches or indirectly through custody accounts that have been
established by Custodian with the following other securities intermediaries: (a)
another U.S. bank or trust company (including Deutsche Bank pursuant to the
Master Subcustodian Agreement) or branch thereof located in the U.S. that is
itself qualified under the 1940 Act, to act as custodian, or a non-U.S. branch
of Custodian or of any U.S. Subcustodian (individually, a "Subcustodian"), or
(b) a U.S. securities depository or clearing agency or system in which Custodian
or a U.S. Subcustodian participates (individually, a "Securities System")
provided that in each case in which a U.S. Subcustodian or Securities System is
employed, Custodian shall notify Customer of the appointment of such U.S.
Subcustodian or Securities System.
Upon receipt of Instructions from Customer, Custodian agrees to cease
the employment of any Subcustodian or Securities System with respect to
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or securities system in accordance with the provisions of this Section. In
addition, Custodian may, at any time in its discretion, upon written
notification to Customer, terminate the employment of any Subcustodian or
Securities System.
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5. USE OF SUBCUSTODIAN. With respect to Property in an Account
that is maintained by Custodian through a Subcustodian employed pursuant to
Section 4:
(a) Custodian will identify on its books as belonging to Customer
on behalf of the Portfolio, any Property maintained through
such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of Custodian or its agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of Custodian.
6. USE OF SECURITIES SYSTEM. With respect to Property in the
Account(s) that is maintained by Custodian or any Subcustodian through a
Securities System employed pursuant to Section 4:
(a) Custodian shall, and the Subcustodian will be required by its
agreement with Custodian to, identify on its books such
Property as being maintained for the account of Custodian or
Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the
account of Custodian or a Subcustodian will be subject only to
the instructions of Custodian or such Subcustodian, as the
case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of Custodian
or Subcustodian, as the case may be, unless precluded by
applicable law, rule, or regulation.
(d) Custodian shall provide Customer with any report obtained by
Custodian or Subcustodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System.
7. AGENTS. Custodian may at any time or times in its sole
discretion appoint (or remove), as its agent to carry out such of the provisions
of this Agreement as Custodian may from time to time direct, any other U.S. bank
or trust company that is itself qualified under the 1940 Act to act as
custodian, including Deutsche Bank; provided, however, that the appointment of
any agent shall not relieve Custodian of its responsibilities or liabilities
hereunder. Custodian shall provide reasonable notice to Customer of the
appointment or removal of any agent.
8. RECORDS, OWNERSHIP OF PROPERTY, STATEMENTS, OPINIONS OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
(a) The ownership of the Property, whether maintained directly by
Custodian or indirectly through a Subcustodian or a Securities
System as authorized herein, shall be clearly
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recorded on Custodian's books as belonging to the appropriate
Account and not to the Custodian. Custodian shall keep
accurate and detailed accounts of all investments, receipts,
disbursements and other transactions for each Account. All
accounts, books and records of Custodian relating thereto
shall be open to inspection and audit at all reasonable times
during normal business hours by any person designated by
Customer. All such accounts shall be maintained and preserved
in the form reasonably requested by Customer. Custodian will
supply to Customer from time to time, as mutually agreed upon,
a statement in respect to any Property in an Account
maintained by Custodian or by a Subcustodian. In the absence
of the filing in writing with Custodian by Customer of
exceptions or objections to any such statement within sixty
(60) days of the mailing thereof, Customer shall be deemed to
have approved such statement and in such case or upon written
approval of Customer of any such statement, such statement
shall be presumed to be for all purposes correct with respect
to all information set forth therein.
(b) Custodian shall take all reasonable action as Customer may
request to obtain from year to year favorable opinions from
Customer's independent certified public accountants with
respect to Custodian's activities hereunder in connection with
the preparation of Customer's registration statement on Form
N-2 and Customer's Form N-SAR or other periodic reports to the
Securities and Exchange Commission ("SEC") and with respect to
any other requirements of the SEC.
(c) At the request of Customer, Custodian shall deliver, and shall
cause the Subcustodians to deliver, to Customer a written
report prepared by Custodian's independent certified public
accountants with respect to the services provided by Custodian
under this Agreement, including, without limitation,
Custodian's accounting system, internal accounting control and
procedures for safeguarding Cash and Securities, including
Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably
be required by Customer and as may reasonably be obtained by
Custodian.
(d) Customer may elect to participate in any of the electronic
on-line service and communications systems offered by
Custodian or a Subcustodian that can provide Customer, on a
daily basis, with the ability to view on-line or to print in
hard copy various reports of Account activity and of
Securities and/or Cash being held in any Account. To the
extent that such service shall include market values of
Securities in an Account, Customer hereby acknowledges that
Custodian or such Subcustodian now obtains and may in the
future obtain information on such values from outside sources
that Custodian or such Subcustodian considers to be reliable,
and Customer agrees that Custodian and such Subcustodian (i)
does not verify or represent or warrant either the reliability
of such service nor the accuracy or completeness of any such
information furnished or obtained by or through such service
and (ii) shall be subject to the standard of care set forth in
Section 16 of this Agreement in selecting and utilizing such
service or furnishing any information derived therefrom.
9. HOLDING OF SECURITIES, NOMINEES, ETC. Securities in an Account
that are maintained by Custodian or any Subcustodian may be held directly by
such entity in the name of Customer or in bearer form or maintained, on behalf
of the Portfolio, in Custodian's or Subcustodian's name or
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in the name of Custodian's or Subcustodian's nominee. Securities that are
maintained through a Subcustodian or which are eligible for deposit in a
Securities System as provided above may be maintained with the Subcustodian or
the Securities System in an account for Custodian's or Subcustodian's customers,
unless prohibited by law, rule, or regulation. Custodian or Subcustodian, as the
case may be, may combine certificates representing Securities held in an Account
with certificates of the same issue held by Custodian or Subcustodian as
fiduciary or as a custodian. In the event that any Securities in the name of
Custodian or its nominee or held by a Subcustodian and registered in the name of
such Subcustodian or its nominee are called for partial redemption by the issuer
of such Security, Custodian may, subject to the rules or regulations pertaining
to allocation of any Securities System in which such Securities have been
deposited, allot, or cause to be allotted, the called portion of the respective
beneficial holders of such class of security in any manner Custodian deems to be
fair and equitable. Securities maintained with a Securities System shall be
maintained subject to the rules of that Securities System governing the rights
and obligations among the Securities System and its participants.
10. PROXIES, ETC. With respect to any proxies, notices, reports or
other communications pertaining to any of the Securities in any Account,
Custodian shall perform such services and only such services as are (i) set
forth in Section 3 of this Agreement, (ii) described in the applicable Service
Standards, and (iii) as may otherwise be agreed upon between Custodian and
Customer the ("Proxy Service"). The liability and responsibility of Custodian in
connection with the Proxy Service referred to in the immediately preceding
sentence shall be as set forth in the description of the Proxy Service and as
may be agreed upon by Custodian and Customer in connection with the furnishing
of any such additional service and shall not be affected by any other term of
this Agreement. Neither Custodian nor its nominees or agents shall vote upon or
in respect of any of the Securities in an Account, execute any form of proxy to
vote thereon, or give any consent or take any action (except as provided in
Section 3) with respect thereto except upon the receipt of Instructions.
11. SEGREGATED ACCOUNT. To assist Customer in complying with the
requirements of the 1940 Act and the rules and regulations thereunder, Custodian
shall, upon receipt of Instructions, establish and maintain a segregated account
or accounts on its books for and on behalf of the Portfolio.
12. SETTLEMENT PROCEDURES. Securities will be transferred,
exchanged or delivered by Custodian or a Subcustodian upon receipt by Custodian
of Instructions that include all information required by Custodian. Settlement
and payment for Securities received for an Account and delivery of Securities
out of such Account may be effected in accordance with the customary or
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering Securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such Securities from such
purchaser or dealer, as such practices and procedures may be modified or
supplemented in accordance with the standard operating procedures of Custodian
in effect from time to time for that jurisdiction or market, provided that such
procedures are not unreasonable when compared to customary procedures with
respect to such jurisdiction or market. Custodian shall not be liable for any
loss which results from
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effecting transactions in accordance with the customary or established
securities trading or securities processing practices and procedures in the
applicable jurisdiction or market.
Custodian or a Subcustodian may settle purchases and sales against, or
credit income to, an Account, and Custodian may, at its sole option upon written
notice to Customer, reverse such credits or debits to the appropriate Account in
the event that the transaction does not settle, or the income is not received in
a timely manner, and Customer agrees to hold Custodian harmless from any losses
that may result therefrom. With respect to the activities of Deutsche Bank as
Subcustodian under the Master Subcustodian Agreement, such credits and
reversals, if any, shall be on a contractual basis, as outlined in the Deutsche
Bank Service Standards, as described below and provided to Customer by
Custodian.
The applicable Service Standards mean the Policies and Standards
Manual, and any other documents issued by the Custodian, Deutsche Bank and other
Subcustodians from time to time specifying the procedures for communicating with
a customer, the terms of any additional services to be provided to a customer,
and such other matters as may be agreed between the parties time to time. Copies
of the current Service Standards have been delivered to Customer and notice of
any amendments thereto shall also be promptly provided to the Customer.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement,
Custodian or a Subcustodian shall not be required to comply
with any Instructions to settle the purchase of any Securities
for the Account unless there are sufficient immediately
available funds in the relevant currency in the Account,
PROVIDED THAT, if, after all expenses, debits and withdrawals
of Cash in the relevant currency ("Debits") applicable to the
Account have been made and if after all Conditional Credits,
as defined below, applicable to the Account have become final
entries as set forth in (c) below, the amount of immediately
available funds of the relevant currency in such Account is at
least equal to the aggregate purchase price of all securities
for which Custodian has received Instructions to settle on
that date ("Settlement Date"), Custodian, upon settlement,
shall credit the Securities to the Account by making a final
entry on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable
to the Account have been made, the amount of immediately
available funds in a given currency in such Account are less
than the aggregate purchase price in such currency of all
securities for which Custodian has received Instructions to
settle on any Settlement Date, Custodian, upon settlement, may
credit the securities to the Account by making a conditional
entry on its books and records ("Conditional Credit"), pending
receipt of sufficient immediately available funds in the
relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have
been made, immediately available funds in the relevant
currency at least equal to the aggregate purchase price in
such currency of all securities subject to a Conditional
Credit on a Settlement Date are deposited into the Account,
Custodian shall make the Conditional Credit a final entry on
its books and records. In such case, Customer shall be liable
to
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Custodian only for late charges at a rate that Custodian
customarily charges for similar extensions of credit.
(d) If (i) within a reasonable time from the posting of a
Conditional Credit, immediately available funds at least equal
to the resultant Debit on a Settlement Date are not deposited
in the Account, or (ii) any Proceeding (as defined below)
shall occur, Custodian may sell such of the Securities subject
to the Conditional Credit as it selects in its sole discretion
and shall apply the net proceeds of such sale to cover such
Debit, including related late charges, and any remaining
proceeds shall be credited to the Account. If such proceeds
are insufficient to satisfy such Debit in full, Customer shall
continue to be liable to Custodian for any shortfall.
Custodian shall make the Conditional Credit a final entry on
its books as to the Securities not required to be sold to
satisfy such Debit. Pending payment in full by Customer of the
purchase price for Securities subject to a Conditional Credit,
and Custodian's making a Conditional Credit a final entry on
its books, and, unless consented to by Custodian, Customer
shall have no right to give further Instructions in respect of
Securities subject to a Conditional Credit. Custodian shall
have the sole discretion to determine which Securities shall
be deemed to have been paid for by Customer out of funds
available in the Account. Any such Conditional Credit may be
reversed (and any corresponding Debit shall be canceled) by
Custodian unless and until Custodian makes a final entry on
its books crediting such Securities to the Account. The term
"Proceeding" shall mean any insolvency, bankruptcy,
receivership, reorganization or similar proceeding relating to
Customer, whether voluntary or involuntary.
(e) Customer agrees that it will not use the Account to facilitate
the purchase of securities without sufficient funds in the
Account (which funds shall not include the expected proceeds
of the sale of the purchased securities).
14. PERMITTED TRANSACTIONS. Except as otherwise provided herein,
Customer and Custodian agree that transactions will be effected pursuant to this
Agreement only upon Instructions in accordance with Section 15 (but subject to
Section 3) and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at
prices as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or
readjustment.
(d) Upon conversion of Securities pursuant to their terms into
other securities.
(e) Upon exercise of subscription, purchase or other similar
rights represented by Securities.
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(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by Customer requiring a
pledge of Securities, but only against receipt of amounts
borrowed or in order to satisfy requirements for additional or
substitute collateral.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect
any restrictions applicable to Customer.
(i) For the purpose of redeeming shares of the capital stock of
Customer against delivery of the shares to be redeemed to
Custodian, a Subcustodian or Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of Customer
against delivery of the shares to be redeemed to Custodian, a
Subcustodian or Customer's transfer agent.
(k) For delivery in accordance with the provisions of any
agreement among Customer, on behalf of the Portfolio, the
Portfolio's investment adviser and a broker-dealer registered
under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc., relating to
compliance with the rules of The Options Clearing Corporation,
the Commodities Futures Trading Commission or of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by Customer.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be
released only upon payment to Custodian of monies for the
premium due and a receipt for the Securities which are to be
held in escrow. Upon exercise of the option, or at expiration,
Custodian will receive the Securities previously deposited
from broker. Custodian will act strictly in accordance with
Instructions in the delivery of Securities to be held in
escrow and will have no responsibility or liability for any
such Securities which are not returned promptly when due other
than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to
facilitate security trading or receipt of income from
Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section
21.
(o) For other proper purposes.
15. INSTRUCTIONS. The term "Instructions" means instructions from
Customer in respect of any of Custodian's duties hereunder that have been
received by Custodian at its address set forth in Section 22 below (i) in
writing (including, without limitation, facsimile transmission) or by
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tested telex signed or given by such one or more person or persons as Customer
shall have from time to time authorized in writing to give the particular class
of Instructions in question and whose name and (if applicable) signature and
office address have been filed with Custodian; or (ii) which have been
transmitted electronically through an electronic on-line service and
communications system offered by Custodian or other electronic instruction
system acceptable to Custodian; or (iii) a telephonic or oral communication by
one or more persons as Customer shall have from time to time authorized to give
the particular class of Instructions in question and whose name has been filed
with Custodian; or (iv) upon receipt of such other form of instructions as
Customer may from time to time authorize in writing and which Custodian has
agreed in writing to accept. Instructions in the form of oral communications
shall be confirmed by Customer by tested telex or writing in the manner set
forth in clause (i) above, but the lack of such confirmation shall in no way
affect any action taken by Custodian in reliance upon such oral instructions
prior to Custodian's receipt of such confirmation. Instructions may relate to
specific transactions or to types or classes of transactions, and may be in the
form of standing instructions.
Custodian shall have the right to assume in the absence of notice to
the contrary from Customer that any person whose name is on file with Custodian
pursuant to this Section has been authorized by Customer to give the
Instructions in question and that such authorization has not been revoked.
Custodian may act upon and conclusively rely on, without any liability to
Customer or any other person or entity for any losses resulting therefrom, any
Instructions reasonably believed by it to be furnished by the proper person or
persons as provided above.
16. STANDARD OF CARE. Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to Custodian that are not contrary to the provisions of this
Agreement. Custodian will use reasonable care and diligence with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care and diligence,
Custodian shall not be responsible for the title, validity or genuineness of any
Property or other property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon, and may conclusively rely on, without liability for any loss resulting
therefrom, any notice, request, consent, certificate or other instrument
reasonably believed by it to be genuine and to be signed or furnished by the
proper party or parties, including, without limitation, Instructions unless
Custodian acted with willful malfeasance or with bad faith, or was negligent,
with respect to such action or omission ("Standard of Care"). Custodian shall be
indemnified by Customer for any losses, damages, costs and expenses (including,
without limitation, reasonable fees and expenses of counsel) incurred by
Custodian and arising out of action taken or omitted by Custodian hereunder or
under any Instructions, unless Custodian acted with willful malfeasance or with
bad faith, or was negligent, with respect to such action or omission. Custodian
shall be liable to Customer for any act or omission to act of any Subcustodian
to the same extent as if Custodian committed such act or omission itself. With
respect to a Securities System, Custodian shall only be responsible or liable
for losses arising from employment of such Securities System caused by
Custodian's own failure to exercise reasonable care in selecting such Securities
System; provided that in the event of any such loss, Custodian shall take all
reasonable steps to enforce such claims as it may have against the Securities
System to protect the interests of Customer.
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In the event of any loss to Customer by reason of the breach by
Custodian or any Subcustodian of Custodian's Standard of Care, Custodian shall
be liable to Customer to the extent of Customer's actual damages at the time
such loss was discovered (including, without limitation, reasonable fees and
expenses of counsel) without reference to any special conditions or
circumstances. In no event shall Custodian be liable for any consequential or
special damages.
Custodian shall be entitled to rely, and may act, on advice of counsel
(who may be counsel for Custodian or Customer) on all matters and shall be
without liability for any action reasonably taken or omitted in good faith
pursuant to such advice, PROVIDED that with respect to the performance of any
action or omission of any action upon such advice, the Custodian shall be
required to conform to the provisions of this Agreement, including the Standard
of Care set forth in this Section 16.
In the event Customer subscribes to an electronic on-line service and
communications system offered by Custodian, Customer shall be fully responsible
for the security of its connecting terminal, access thereto and the proper and
authorized use thereof and the initiation and application of continuing
effective safeguards with respect thereto and agrees to defend and indemnify
Custodian and hold Custodian harmless from and against any and all losses,
damages, costs and expenses (including the fees and expenses of counsel)
incurred by Custodian as a result of any improper or unauthorized use of such
terminal by Customer or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of Customer, provided,
Custodian has acted in accordance with the Standard of Care set forth in this
Section 16.
Unless Custodian or any Subcustodian breaches the Custodian's standard
of care, Custodian shall have no liability for any loss occasioned by delay in
the actual receipt of notice by Custodian or by a Subcustodian of any payment,
redemption or other transaction regarding Securities in each Account in respect
of which Custodian has agreed to take action as provided in Section 3 hereof.
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether DE JURE or DE FACTO),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
reasonable control of Custodian; hurricane, cyclone, earthquake, volcanic
eruption, nuclear fusion, fission or radioactivity, or other acts of God.
Custodian shall have no liability in respect of any loss, damage or
expense suffered by Customer, insofar as such loss, damage or expense arises
from the performance of Custodian's duties hereunder by reason of Custodian's
reliance upon records that were maintained for Customer by entities other than
Custodian prior to Custodian's employment under this Agreement.
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17. INVESTMENT LIMITATIONS AND LEGAL OR CONTRACTUAL RESTRICTIONS OR
REGULATIONS. Neither Custodian nor any Subcustodians shall be liable to Customer
or the Portfolio, and Customer agrees to indemnify Custodian, all Subcustodians
and their nominees, for any loss, damage or expense suffered or incurred by
Custodian, any Subcustodian or their nominees arising out of any violation of
any investment restriction or other restriction or limitation applicable to
Customer or the Portfolio pursuant to any contract or any law or regulation.
18. FEES AND EXPENSES. Customer agrees to pay to Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and Custodian's reasonable
out-of-pocket or incidental expenses in connection with the performance of this
Agreement, including (but without limitation) reasonable legal fees as described
herein and/or deemed necessary in the judgment of Custodian to keep safe or
protect the Property in the Account. The initial fee schedule is attached hereto
as Exhibit A. Such fees will not be abated by, nor shall Custodian be required
to account for, any profits or commissions received by Custodian in connection
with its provision of custody services under this agreement. Customer hereby
agrees to hold Custodian harmless from any liability or loss resulting from any
taxes or other governmental charges, and any expense related thereto, which may
be imposed, or assessed with respect to any Property in an Account and also
agree to hold Custodian, its Subcustodians, and their respective nominees
harmless from any liability as a record holder of Property in such Account.
Custodian is authorized to charge the applicable Account for such items, and
Custodian shall have a lien on the Property in the applicable Account for any
amount payable to Custodian under this Agreement, including but not limited to
amounts payable pursuant to Section 13 and pursuant to indemnities granted by
Customer under this Agreement.
19. TAX RECLAIMS. With respect to withholding taxes deducted and which
may be deducted from any income received from any Property in an Account,
Custodian shall perform such services with respect thereto as are described in
the applicable Service Standards and shall in connection therewith be subject to
the standard of care set forth in such Service Standards. Such standard of care
shall not be affected by any other term of this Agreement.
20. AMENDMENT, MODIFICATIONS, ETC. No provision of this Agreement may
be amended, modified or waived except in a writing signed by the parties hereto
(except that Exhibit A may be amended as provided for therein). In addition, if
Custodian has engaged Deutsche Bank to act as a Subcustodian with respect to any
Property, any amendment to Sections 8(c), 8(d), 16, 17, 24, 27 and 28 of this
Agreement shall require the written consent of Deutsche Bank. No waiver of any
provision hereto shall be deemed a continuing waiver unless it is so designated.
No failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise thereof or
the exercise of any other power or right.
21. TERMINATION.
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(a) This Agreement may be terminated by Customer or Custodian by
ninety (90) days' written notice to the other; PROVIDED that
notice by Customer shall specify the names of the persons to
whom Custodian shall deliver the Securities in each Account
and to whom the Cash in such Account shall be paid. If notice
of termination is given by Custodian, Customer shall, within
ninety (90) days following the giving of such notice, deliver
to Custodian a written notice specifying the names of the
persons to whom Custodian shall deliver the Securities in each
Account and to whom the Cash in such Account shall be paid. In
either case, Custodian will deliver such Property to the
persons so specified, after deducting therefrom any amounts
that Custodian determines to be owed to it hereunder. In
addition, Custodian may in its discretion withhold from such
delivery such Property as may be necessary to settle
transactions pending at the time of such delivery. Customer
grants to Custodian a lien and right of setoff against the
Account and all Property held therein from time to time in the
full amount of the foregoing obligations. If within ninety
(90) days following the giving of a notice of termination by
Custodian, Custodian does not receive the aforementioned
written notice specifying the names of the persons to whom
Custodian shall deliver the Securities in each Account and to
whom the Cash in such Account shall be paid, Custodian, at its
election, may deliver such Securities and pay such Cash to a
bank or trust company doing business in the State of New York
to be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash
until a written notice as aforesaid is delivered to Custodian,
provided that from and after the ninetieth day Custodian's
obligations shall be limited to safekeeping.
(b) Sections 16, 17, 18, 27 and 30 shall survive the termination
of this Agreement as to the Portfolio.
22. NOTICES. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
23. SEVERAL OBLIGATIONS OF THE PORTFOLIO. With respect to any
obligations of Customer on behalf of the Portfolio and each of its related
Accounts arising out of this Agreement, Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though Customer
had separately contracted with Custodian by separate written instrument with
respect to the Portfolio and its related Accounts.
24. SECURITY FOR PAYMENT. To secure payment of all obligations due
hereunder, Customer hereby grants to Custodian a continuing security interest in
and right of setoff against each Account and all Property held therein from time
to time in the full amount of such obligations; PROVIDED THAT, if there is more
than one Account and the obligations secured pursuant to this Section can be
allocated to a specific Account, such security interest and right of setoff will
be limited to Property held for that Account only. Should Customer fail to pay
promptly any amounts owed hereunder, Custodian shall be entitled to use
available Cash in the Account or applicable Account,
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as the case may be, and to dispose of Securities in the Account or such
applicable Account as is necessary. In any such case and without limiting the
foregoing, Custodian shall be entitled to take such other actions or exercise
such other options, powers and rights as Custodian now or hereafter has as a
secured creditor under the UCC or any other applicable law, including, without
limitation, granting to any Subcustodian a security interest in such Accounts on
terms similar to those set forth in this Section 24.
25. REPRESENTATIONS AND WARRANTIES.
(a) Customer hereby represents and warrants to Custodian that:
(i) the employment of Custodian and the allocation of
fees, expenses and other charges to any Account as
herein provided, is not prohibited by law or any
governing documents or contracts to which it is
subject;
(ii) the terms of this Agreement do not violate any
obligation by which Customer is bound, whether
arising by contract, operation of law or otherwise;
(iii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Customer and the Portfolio in
accordance with its terms; and
(iv) it will deliver to Custodian a duly executed
Secretary's Certificate in the form of Exhibit B
hereto or such other evidence of such authorization
as Custodian may reasonably require, whether by way
of a certified resolution or otherwise.
(b) Custodian hereby represents and warrants to Customer that:
(i) the terms of this Agreement do not violate any
obligation by which Custodian is bound, whether
arising by contract, operation of law or otherwise;
(ii) this Agreement has been duly authorized by
appropriate action and when executed and delivered
will be binding upon Custodian in accordance with its
terms;
(iii) it will deliver to Customer such evidence of such
authorization as Customer may reasonably require,
whether by way of a certified resolution or
otherwise; and
(iv) it is qualified as a custodian under Section 26(a) of
the 1940 Act and that it will remain so qualified or
upon ceasing to be so qualified shall promptly notify
Customer in writing.
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26. GOVERNING LAW AND SUCCESSORS AND ASSIGNS. This Agreement shall
be governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of Customer and
Custodian.
27. THIRD-PARTY BENEFICIARY. Customer hereby acknowledges and
agrees that with respect to the Accounts:
(a) As an inducement to Deutsche Bank or any alternate master
Subcustodian to act as a master Subcustodian, Customer
authorizes the Custodian to bind the Customer to (i) those
terms of the Master Subcustodian Agreement, including Section
23 thereof and (ii) those terms of any agreement between
Custodian and any alternate master Subcustodian, that will, in
each case, obligate the Customer to pay obligations of the
Portfolio for Property custodied pursuant to the Master
Subcustodian Agreement or such subcustodian agreement with any
alternate master Subcustodian, as applicable.
(b) Deutsche Bank and any alternate master Subcustodian may rely,
as fully as if it were a party hereto and named as "Custodian"
herein, on the representations, warranties, covenants and
indemnities of Customer set forth in Sections 8(d), 16, 17, 24
and 28 of this Agreement.
28. REPRESENTATIVE CAPACITY AND BINDING OBLIGATION. A copy of the
Declaration of Trust of Customer is on file with the Secretary of State of the
State of Delaware (and a copy of the Trust Instrument of Customer is on file
with Customer's secretary). Notice is hereby given that this Agreement is not
executed on behalf of the Trustees of Customer as individuals, and the
obligations of this Agreement are not binding upon any of the Trustees, officers
or shareholders of Customer individually but are binding only upon the assets
and property of the Portfolio.
Custodian agrees that no shareholder, trustee or officer of Customer
may be held personally liable or responsible for any obligations of Customer
arising out of this Agreement.
29. SUBMISSION TO JURISDICTION. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of Xxx Xxxx, Xxxxx xx Xxx Xxxx, Xxxxxx Xxxxxx of America,
and Custodian and Customer each irrevocably submits to the non-exclusive
jurisdiction of any such court in any such suit, action or proceeding and
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any such suit, action or proceeding
brought in such a court and any claim that such suit, action or proceeding was
brought in an inconvenient forum.
30. CONFIDENTIALITY. The parties hereto agree that each shall
treat confidentially the terms and conditions of this Agreement and all
information provided by each party to the other regarding its business and
operations. All confidential information provided by a party hereto shall be
used by any other party hereto solely for the purpose of rendering services
pursuant to this Agreement and, except as may be required in carrying out this
Agreement, shall not be disclosed to any third party without the prior consent
of such providing party. The foregoing shall not be
-15-
applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required or requested to be disclosed by any bank or other
regulatory examiner of Custodian, Customer, or any Subcustodian, any auditor of
the parties hereto, by judicial or administrative process or otherwise by
applicable law or regulation.
31. SEVERABILITY. If any provision of this Agreement is determined to
be invalid or unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
32. ENTIRE AGREEMENT. This Agreement together with its Exhibits,
contains the entire agreement between the parties relating to the subject matter
hereof and supersedes any oral statements and prior writings with respect
thereto.
33. HEADINGS. The headings of the sections hereof are included for
convenience of reference only and do not form a part of this Agreement.
34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
FORUM TRUST, LLC
By:
--------------------------------
Name: Xxxx X. Xxxxxx
Title: President
RYDEX CAPITAL PARTNERS SPHINX FUND
By:
--------------------------------
Name:
-----------------------------
Title:
----------------------------
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CUSTODIAN AGREEMENT
EXHIBIT A
_____________ __, 2003
FEE SCHEDULE
This Exhibit A shall be amended upon delivery by Custodian of a new Exhibit A to
Customer and acceptance thereof by Customer and shall be effective as of the
date of acceptance by Customer or a date agreed upon between Custodian and
Customer.
No fee shall be payable hereunder during any period in which Customer invests
all (or substantially all) of its investment assets in book-entry hedge funds.
Fees, as mutual agreed between Custodian and Customer shall be charged with
respect to the custody of securities held by Customer other than book-entry
hedge funds.
- B1 -
3. NOTES
The standard custody service includes: (i) asset safekeeping, (ii)
trade settlement, (iii) income collection, (iv) corporate action
processing (including proxy voting) and (v) tax reclaims (where
applicable.)
Services cover only domestic accounts (I.E., U.S. assets only) and
utilize actual settlement and are subject to the guidelines indicated
in the Deutsche Bank POLICIES AND STANDARDS manual.
All domestic receipts and tax reclaim refunds are credited to client
accounts net of agent's collection fees (where applicable).
Foreign Exchange transactions conducted outside Deutsche Bank will be
charged $50 per wire transfer.
Out-of-pocket expenses are borne by Customer. Out-of-pocket expenses
include, but are not limited to, stamp charges, duties, application
and/or registration fees incurred outside of the United States, the
cost of building and/or setting up an interface with your (1)
investment managers, or (2) other vendors, as well as postage and legal
fees. These charges are passed on at cost.
- B2 -
CUSTODIAN AGREEMENT
EXHIBIT B
FORM OF SECRETARY'S CERTIFICATE
I, [Name], hereby certify that I am the Secretary of _____________, a
[business trust] organized under the laws of the ________ of _____________ (the
"Company"), and as such I am duly authorized to, and do hereby, certify that:
1. ORGANIZATIONAL DOCUMENTS. The Company's organizational documents,
and all amendments thereto, have been filed with the appropriate governmental
officials of _____________, the Company continues to be in existence and is in
good standing, and no action has been taken to repeal such organizational
documents, the same being in full force and effect on the date hereof.
2. BYLAWS. The Company's Bylaws have been duly adopted and no action
has been taken to repeal such Bylaws, the same being in full force and effect.
3. RESOLUTIONS. Resolutions have been duly adopted on behalf of the
Company, which resolutions (i) have not in any way been revoked or rescinded,
(ii) have been in full force and effect since their adoption, to and including
the date hereof, and are now in full force and effect, and (iii) are the only
corporate proceedings of the Company now in force relating to or affecting the
matters referred to therein, including, without limitation, confirming that the
Company is duly authorized to enter into a certain custody agreement with Forum
Trust, LLC (the "Agreement"), and that certain designated officers, including
those identified in paragraph 4 of this Certificate, are authorized to execute
said Agreement on behalf of the Company, in conformity with the requirements of
the Company's organizational documents, Bylaws, and other pertinent documents to
which the Company may be bound.
4. INCUMBENCY. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Company holding those offices
set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind the Company, as a legal matter,
with respect to all matters pertaining to the Agreement, and to execute and
deliver said Agreement on behalf of the Company, and the signatures set forth
opposite the respective names and titles of said officers are their true,
authentic signatures:
Name Title Signature
---- ----- ---------
[Name] [Position] ______________________________
[Name] [Position] ______________________________
[Name] [Position] ______________________________
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IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of _____,
19__.
Rydex Capital Partners SphinX Fund
By:
-------------------------------
Name:
-----------------------------
Title: Secretary
I, [Name of Confirming Officer], [Title] of the Company, hereby certify
that on this ___ day of ________, 19__, [Name of Secretary] is the duly elected
Secretary of the Company and that the signature above is his genuine signature.
Rydex Capital Partners SphinX Fund
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
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