[11/18/93 Draft]
CUSTODY AGREEMENT
AGREEMENT dated as of December 1, 1993, between THE DFA INVESTMENT TRUST
COMPANY (the "Client"), a Delaware business trust, having its principal office
and place of business at 0000 Xxxxx Xxxxxx, 00xx xxxxx, Xxxxx Xxxxxx, Xxxxxxxxxx
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 Client 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) "Authorized Person" shall be deemed to include the President, and
any Vice President, the Secretary, any Assistant Secretary, the Treasurer, any
Assistant Treasurer, or any other person, whether or not any such person is an
officer or employee of the Client, duly authorized by the Board of Trustees of
the Client to give Oral Instructions and Written Instructions on behalf of the
Client and listed in the certification annexed hereto as Appendix A or such
other certification as may be received by the Custodian on behalf of the Client
from time to time;
(b) "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;
(c) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement, other than
Written Instructions, to be given to the Custodian, which is actually received
by the Custodian and signed on behalf of the Client by an officer of the Client;
(d) "Declaration of Trust" shall mean the Agreement and Declaration
of Trust of the Client as executed on September 11, 1992 and as it may be
amended from time to time;
(e) "Depository" shall mean The Depository Trust Company ("DTC") or
any clearing agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, any 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 or clearing agency under the 1940 Act, including pursuant to
rule 17f-5 thereunder, its successor or successors and its nominee or nominees;
(f) "Money Market Security" shall be deemed to include, without
limitation, short-term debt obligations issued or guaranteed as to interest and
principal by the government of the United States or agencies or
instrumentalities thereof, 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;
(g) "Oral Instructions" shall mean any instructions, other than
Written Instructions, actually received by the Custodian from an Authorized
Person or a person reasonably believed by the Custodian to be an Authorized
Person;
(h) "Registration Statement" shall mean the Client's current
registration statement relating to the registration of the Client under the
Investment Company Act of 1940, as amended;
(i) "Series" refers to the Client's Series listed in Appendix C
hereto, and any such other separate and distinct Series as may from time to time
be created and designed by the Client in accordance with the provisions of the
Declaration of Trust and which becomes subject to this Agreement by the mutual
consent of the Client and the Custodian;
(j) "Put Bond" shall mean a bond, the terms of which provide that,
under certain circumstances and during certain time period, the holder of the
bond has the option to sell the bond to the issuer at a mutually agreeable
price;
(k) "Shares" refers to the shares of beneficial interest of each
Series of the Client;
(l) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities and investments, including Money Market Securities, from time to time
owned by each Series;
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(m) "Transfer Agent" shall mean the person that performs the transfer
agent, dividend disbursing agent and shareholder servicing functions for the
Client;
(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 via any system, including transmissions via
personal computer and/or any other electronic means as agreed by the parties,
whereby the receiver of such communication is able to verify through codes or
otherwise with a reasonable degree of certainty the authenticity of the sender
of such communication; and
(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 Client hereby constitutes and appoints the Custodian as
custodian of all the Securities and moneys at the time owned by or in the
possession of the Series during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian for
each Series and agrees to perform the duties thereof as hereinafter set forth.
3. COMPENSATION.
(a) The Client 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 for the existing
Series.
(b) The parties hereto will agree upon the compensation for acting as
custodian for any Series hereafter established and designated, and at the time
that the Custodian commences serving a such for said Series, such agreement
shall be reflected in a Fee Schedule for that Series, dated and signed by an
officer of each party hereto, which shall be attached to Schedule A of this
Agreement.
(c) 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 a duly authorized officer of the Client and a duly authorized
officer of the Custodian.
(d) The Custodian will xxxx the Client for each Series
as soon as practicable after the end of each calendar month, and
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said xxxxxxxx will be detailed in accordance with the Fee
Schedule for each Series.
(e) The Custodian may charge against any moneys held on behalf of the
Client its compensation pursuant to this Agreement. The Custodian shall also be
entitled to charge against moneys held by it the amount of any loss, damage,
liability or expenses incurred, including reasonable counsel fees for which it
shall be entitled to reimbursement under the provisions of this Agreement.
4. CUSTODY OF CASH AND SECURITIES.
(a) RECEIPT AND HOLDING OF ASSETS. The Client will deliver or cause
to be delivered to the Custodian all Securities and moneys owned by the Series
at any time during the period of this Agreement and shall specify the Series to
which the Securities and moneys are to be specifically allocated. The Custodian
will not be responsible for such Securities and moneys until actually received
by it. The Client 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 or
Written Instructions, as to what amounts Securities and moneys of a Series are
to be specifically allocated on the books of the Custodian to such Series;
provided, however, that prior to the deposit of Securities of a Series 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.
(b) ACCOUNTS AND DISBURSEMENTS. The Custodian shall establish and
maintain a separate account for each Series and shall credit to the separate
account of each Series all moneys received by it for the account of such Series
and shall disburse the same only;
(1) In payment of Securities purchased for such Series, as
provided in Section 5 hereof;
(2) In payment of dividends or distributions with respect to the
Shares of such Series, as provided in Section 7 hereof;
(3) In payment of original issue or other taxes with respect to
the Shares of such Series, as provided in Section 8 hereof;
(4) In payment for Shares which have been redeemed by such
Series, as provided in Section 8 hereof;
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(5) Pursuant to Written Instruction, or with respect to Money
Market Securities, Oral Instructions or Written
Instructions, setting forth the name of such Series, 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;
(6) In payment of fees and in reimbursement of the expenses and
liabilities of the custodian attributable to such Series, as
provided in Section 11(h) hereof; and
(7) Upon the receipt of authorized instructions, for the payment
of any expense or liability incurred by the Client or any
Series; including, but not limited to, the following
payments for the account of the Client or any Series:
interest, taxes, management, accounting, transfer agent
and legal fees and operating expenses of the Client or
any Series, whether or not such expenses are, in whole
or in part, to be capitalized or treated as deferred
expenses.
(c) CONFIRMATION AND STATEMENTS. Promptly after the close of
business on each day, the Custodian shall furnish the Client or its duly
delegated agent with confirmations and a summary of all transfers to or from the
account of each Series during said day, such confirmations or accompanying
documentation shall identify the entity, i.e. the Custodian, Subcustodian, or
Depository that has physical possession of such Securities and money of the
Series. In addition, the Custodian shall notify the Client on a timely basis of
any fails with respect to Securities that have occurred during the day. When
securities purchased by a Series 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 or the Depository or the Book-Entry System, the Custodian
shall by book entry or otherwise identify on its own books of account the
quantity of those securities belonging to such Series. At least monthly, the
custodian shall furnish the Client with a detailed statement of the Securities
and moneys held for each Series under this Agreement. The Custodian shall
furnish the Client with such other daily and periodic reports as may be agreed
to by the parties.
(d) REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION. All
Securities held for a Series which are issued or
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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 a Series may be registered in the name of that Series, 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
Client reserves the right to instruct the Custodian as to the method of
registration and safekeeping of the Securities of each Series. The Client
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to registered 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 a Series and
which may from time to time be registered in the name of a Series. Securities
of a Series that are kept by the Custodian in an account with a Depository or
the Book-Entry System shall be kept in accounts that hold only assets belonging
to customers of the Custodian and not in any proprietary account of the
Custodian. The Custodian shall hold all such Securities specifically allocated
to a Series which are not held in the Book-Entry System or the Depository in a
separate account for such Series in the name of such Series physically
segregated at all times from those of any other person or persons.
(e) COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES.
Unless otherwise instructed to the contrary by 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 a Series 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 or
retired, or otherwise become payable. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the
Client or the Series for monitoring or ascertaining any
call, redemption or retirement dates with respect to Put
Bonds which are owned by the Client or the Series and held
by the Custodian or its nominees. Nor shall the Custodian
have any responsibility or liability to the Client or the
Series for any loss by the Client or the Series for any
missed payments or other defaults resulting therefrom;
unless the Custodian received timely notification from the
Client specifying the time, place and
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manner for the presentment of any such Put Bond owned by the
Client for the Series and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes
no liability to the Client or the Series for the accuracy or
completeness of any notification the Custodian may furnish
to the Client 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 including filing such documents as may be
necessary to reclaim foreign withholding taxes paid by the
Series; and
(5) Hold directly, or through the Book-Entry System or the
Depository with respect to securities therein deposited, for
the account of each Series all rights and similar securities
issued with respect to any Securities held by the Custodian
hereunder for each Series.
(f) DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon receipt
of Written Instructions and not otherwise, except for actions required by
subparagraphs 5, 6, 7, and 8 upon Written Instructions or Oral Instructions
confirmed by Written Instructions, the Custodian, directly or through the use of
the Book-Entry System or the Depository, shall:
(1) Execute and delivery or cause to be executed and delivered
to such persons as may be designated in such Written
Instruction proxies, consents, authorizations, and any other
instruments whereby the authority of the Client as owner of
any Securities may be exercised. The Custodian shall
promptly forward to the Client or its duly delegated agent
any and all proxies, proxy statements and similar documents
received by the Custodian which documents relate to
Securities held by any Series of the Client pursuant to
written operating procedures between the parties;
(2) Deliver or cause to be delivered any Securities held for a
series in exchange for
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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 a
Series to any protective committee, reorganization committee
or other person in connection with the reorganization or
sale of assets of any corporation, and receive and hold
under the terms of this Agreement in the separate account
for each Series 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 a
Series and take such other steps as shall be stated in said
Written Instruction to be for the purpose of effectuating
any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Client;
(5) Deliver Securities owned by any Series upon sale of such
Securities for the account of such Series pursuant to
Section 5;
(6) Deliver Securities owned by any Series upon the receipt of
payment in connection with any repurchase agreement related
to such securities entered into by such Series;
(7) Deliver Securities owned by any Series 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 Client or
the Series for monitoring or ascertaining any call,
redemption or retirement dates with respect to the put bonds
which are owned by the Client or the Series and held by the
Custodian or its nominee. Nor shall the Custodian have any
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responsibility or liability to the Client or any Series for
any loss by the Client or the Series for any missed payment
or other default resulting therefrom; unless the Custodian
received timely notification from the Client specifying the
time, place and manner for the presentment of any such put
bond owned by the Client or the Series and held by the
Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Client or the
Series for the accuracy or completeness of any notification
the Custodian may furnish to the Client with respect to Put
Bonds;
(8) Deliver Securities owned by any Series in connection with
any loans of securities made by such Series but only against
receipt of adequate collateral as determined from time to
time by the Client which may be in the form of cash or
obligations issued by or guaranteed the United States
government, its agencies or instrumentalities, or an
irrevocable letter of credit from a bank;
(9) Deliver Securities owned by any Series as security in
connection with any borrowings by such series requiring a
pledge of Series assets, but only against receipt of amounts
borrowed;
(10) Deliver Securities owned by any Series upon receipt of
instructions from such Series 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 Client's
Registration Statement, in satisfaction of requests by
holders of Shares for repurchase or redemption; and
(11) Deliver Securities owned by any Series 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 Client, 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
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persons to whom delivery of such Securities shall be made.
(g) 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 a Series.
5. PURCHASE AND SALE OF INVESTMENT OF THE SERIES.
(a) Promptly after each purchase of Securities for a Series, the
Client shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, Written Instruction, and (ii)
with respect to each purchase of Money Market Securities, either a Written or
Oral Instruction, in either case specifying with respect to each purchase: (1)
the name of the Series to which such Securities are to be specifically
allocated; (2) the name of the issuer and the title of the Securities; (3) the
number of shares or the principal amount purchased and accrued interest, in any;
(4) the date of purchase and settlement; (5) the purchase price per unit; (6)
the total amount payable upon such purchase; and (7) the name of the broker
through whom or the person to whom the sale was made. The Custodian shall
deliver or cause to be delivered the Securities to the broker or other person
designated by the Client upon receipt of the total amount payable to such Series
upon such sale, provided that the same conforms to the total amount payable to
such Series as set forth in such Written or Oral Instruction. Subject to be
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 a Series is permitted to lend Securities
specifically allocated to that Series, within 24 hours after each loan of
Securities, the Client shall deliver to the Custodian Written Instructions
specifying with respect to each such loan: (1) the Series to which the loaned
Securities are specifically allocated; (2) the name of the issuer and the title
of the Securities; (3) the number of shares or the principal amount loaned; (4)
the date of loan and delivery; (5) the total amount to be delivered to the
Custodian, and specifically allocated to such Series against the loan of the
Securities, including the amount of cash collateral and the premium, if any,
separately identified; and (6) the name of the broker, dealer or financial
institution to which the loan was made. It is understood that in connection
with loans of securities the Client may appoint an agent to effect such loans
pursuant to a written agreement, as to which the Custodian might be a party,
providing, inter alia for
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marking collateral to market, the call of such loans and such other terms as may
be agreed upon.
Promptly after each termination of a loan of Securities specifically
allocated to a Series, the Client shall deliver to the Custodian Written
Instruction specifying with respect to each such loan termination and return of
Securities: (1) the name of the Series to which such loaned Securities are
specifically allocated; (2) the name of the issuer and the title of the
Securities to be returned; (3) the number of shares or the principal amount to
be returned; (4) the date of termination; (5) 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 Instructions); and (6) the name
of the broker, dealer or financial institution from which the Securities will be
returned. 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, out of the moneys specifically allocated to such
Series, the total amount payable upon such return of Securities as set forth in
such 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 Client shall furnish to the Custodian the resolution of
the Board of Trustees of the Client certified by the Secretary or Assistant
Secretary (i) authorizing the declaration of dividends with respect to a
Series on a specified periodic basis and authorizing the Custodian to rely on
Oral or Written Instructions specifying the date of the declaration of such
dividend or distribution, the date or 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 dividend or distribution by a
Series, 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 resolution, Oral
Instruction, or Written Instruction, as the case may be, the Custodian shall pay
out the moneys specifically allocated to and held for the account of the
appropriate Series to the Transfer Agent of the Client.
8. SALE AND REDEMPTION OF SHARES OF THE SERIES.
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(a) Whenever the Client shall sell any shares of a
Series, the Client shall deliver or cause to be delivered to the
Custodian Written Instruction duly specifying:
(1) The name of the Series whose Shares were sold;
(2) The number of Shares sold, trade date, and price; and
(3) The amount of money and/or Securities to be received by the
Custodian for the sale of such Shares and specifically
allocated to such Series.
(b) Upon receipt of such money and/or Securities from the Transfer
Agent, the Custodian shall credit such money and/or Securities to the separate
account of the Series specified in the Written Instruction specified in
subparagraph (1) of paragraph (a) of this Section 8.
(c) Upon issuance of any Shares of a series in accordance with the
foregoing provisions of this Section 8, the Custodian shall pay, out of the
moneys specifically allocated and held for the account of such Series, all
original issue or other taxes required to be paid in connection with such
issuance upon the receipt of Written Instruction specifying the amount to be
paid.
(d) Except as provided hereafter, whenever any Shares of a Series are
redeemed, the Client shall cause the Transfer Agent to promptly furnish to the
Custodian written notice, specifying:
(1) The name of the Series whose Shares were redeemed, and if
Securities are to be paid, the Client shall specify which
Securities are to be delivered in redemption of such Shares;
(2) The number of Shares redeemed; and
(3) The amount in cash and/or Securities to be paid for the
Shares redeemed.
(e) Upon receipt from the Transfer Agent of written notice setting
forth the number of Shares of a Series received by the Transfer Agent for
redemption and that such Shares are valid and in good form for redemption, the
Custodian shall make payment and/or deliver to the Transfer Agent out of the
moneys and/or Securities specifically allocated to and held for the account of
the Series specified in subparagraph (1) of paragraph (d) of this
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Section 8 of the total amount specified in the Written Instruction issued
pursuant to paragraph (d) of this Section 8.
9. INDEBTEDNESS.
(a) The Client will cause to be delivered to the Custodian by any bank
from which the Client borrows money for temporary or emergency or other 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 Client against delivery of a stated amount of collateral.
The Client shall promptly deliver to the Custodian Written Instruction stating
with respect to each such borrowing: (1) the name of the Series for which the
borrowing is to be made; (2) the name of the bank; (3) the amount and terms of
the borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Client, or other loan agreement; (4) the
time and date, if known, on which the loan is to be entered into (the "Borrowing
Date"); (5) the date on which the loan becomes due and payable; (6) the total
amount payable to the Client for the separate account of the Series on the
Borrowing Date; (7) 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; and (8) a statement
that such loan is in conformance with the 1940 Act and the Client's Registration
Statement.
(b) Upon receipt of the Written Instruction referred to in
subparagraph (a) above, the Custodian shall deliver on the Borrowing Date the
specified collateral 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
Client from time to time such Securities specifically allocated to such Series
as may be specified in the Written Instruction to collateralize further any
transaction described in this Section 9. The Client 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 Client 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.
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10. PERSONS HAVING ACCESS TO ASSETS OF THE CLIENT.
(a) No Trustee, officer, employee or agent of the Client, and no
officer, director, employee or agent of the Client's investment adviser, shall
have physical access to the assets of the Client held by the Custodian or be
authorized or permitted to withdraw any investments of the Client, nor shall the
Custodian deliver any assets of the Client to any such person. No officer,
director, employee or agent of the Custodian who holds any similar position with
the Client or the investment adviser shall have physical access to the assets of
the Client.
(b) Nothing in this Section 10 shall prohibit any officer, employee
or agent of the Client, or any officer, director, employee or agent of the
investment adviser or sub-adviser to a Series, 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 Client prohibited by
paragraph (a) of this Section 10.
(c) A list of the individual employees of the Custodian duly
authorized by the Custodian to have access to the assets of the Client will be
supplied to the Client from time to time. The Custodian shall advise the Client
of any change in the individuals authorized to have access to the assets of the
Client by written notice to the Client.
11. CONCERNING THE CUSTODIAN.
(a) STANDARD OF CONDUCT. Except as otherwise provided herein,
neither the Custodian nor its nominee shall be liable for any loss or damage,
including reasonable counsel fees, resulting from its action or omission to act
or otherwise, except for any such loss or damage arising out of its own
negligence or willful misconduct. The Custodian may, with respect to questions
of law, apply for and obtain the advice and opinion of counsel to the Client at
the expense of the Client, 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 be liable to the Client for any loss or damage resulting
from the use of the Book-Entry System or the Depository arising by reason of any
negligence, misfeasance or misconduct on the part of the Custodian or any of its
employees or agents.
(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 any
Series, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
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(2) The legality of the sale of any Securities by any Series, 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 dividend
or other distribution of any Series;
(6) The legality of any borrowing for temporary or emergency or
other 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 any Series until the Custodian actually receives and collects
such money directly or by the final crediting of the account representing the
Client's interest in the Book-Entry System or the Depository. The Custodian
shall exercise diligence consistent with industry practice in pursuing payment
on any such instrument, or any dividend, interest or other receivable of the
Client.
(d) AMOUNTS DUE FROM TRANSFER AGENT. Unless the Custodian and the
Dividend and Transfer Agent shall be the same person or an affiliated person of
each other as defined in the 1940 Act, action to effect collection of any amount
due to any Series from the Transfer Agent nor to take any action to effect
payment or distribution by the Transfer Agent of any amount payment 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. The Custodian shall promptly notify the Client
in the event of any such default.
(f) APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The
Custodian may appoint one or more banking institutions, including
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but not limited to banking or other qualified institutions located in foreign
countries, to act as Depository or Depositories or as Sub-Custodian or as Sub-
Custodians of Securities and moneys at any time owned by any Series, upon terms
and conditions specified in a certificate; provided that any such appointment
shall have been approved by a vote of the Board of Trustees of the Client. The
Custodian shall use reasonable case 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 moneys of a
Series by any Foreign Sub-Custodian. The Custodian shall be liable to the
Client for any loss or damage to the Client resulting from the negligence or
willful misconduct of any foreign Sub-Custodian to the same extent that the
Custodian would be liable to the Client if the Custodian were holding such
Securities or money in the Commonwealth of Massachusetts. Notwithstanding, the
Custodian herein agrees to pursue at the expense of the Client, any claim which
the Custodian may assert against any Foreign Sub-Custodian to recover any loss
or damage arising under such arrangement. The Client shall have, at its
election, the right to enforce Custodian's rights against any Sub-Custodian,
agent or Depository for loss, damage or expenses caused the Client or any Series
by such Sub-Custodian, agent or Depository which Custodian may have as a
consequence of any such loss, damage or expenses if and to the extent that the
Client or a Series has not been made whole for any such loss or damage. Any
selection of and form of contract with a Foreign Custodian shall be subject to
approval by the Client that such selection and contract are consistent with the
requirements of Rule 17f-5 (and Rule 17f-4, if applicable) under the 1940 Act,
and the Custodian warrants that such arrangement shall, among other things,
provide that:
(i) the Client will be adequately indemnified and its assets
adequately insured in the event of loss;
(ii) the Client's assets will not be subject to any right,
charge, security interest, lien or claim of any kind in
favor of the eligible Foreign Custodian or Sub-Custodian or
its creditors except for a claim of payment for their safe
custody or administration;
(iii) beneficial ownership of the Client's assets will be freely
transferable without the payment or value other than for
safe custody or administration;
(iv) adequate records will be maintained identifying the assets
as belonging to the Client;
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(v) the Client's independent public accountants will be given
access to those records or confirmation of the contents of
those records;
(vi) the Client will receive periodic reports with respect to
the safekeeping of its assets, including, but not
necessarily limited to, notification of any transfer to or
from the Client's account; and
(vii) only foreign securities within the meaning of Rule 17f-5
shall be held by a Foreign Sub-Custodian.
(g) The Custodian shall use its best efforts to provide the Client
with information described in the "NOTES" to Rule 17f-5 and such other similar
information as the Client may reasonably request to assist its Board of Trustees
to satisfy their obligations under such Rule. In addition, the Custodian shall
use its best efforts to provide the Client with prompt notice of any material
change in information previously provided to the Client pursuant to this
paragraph (g) or any material changes in the facts or circumstances upon which
such information is based.
(h) 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 its for the Client and specifically allocated to a Series are such
as may properly be held by the Client and specifically allocated to such Series
under the provisions of the Declaration of Trust and the Registration Statement.
(i) RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Custodian shall
be entitled to rely upon Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by the Custodian to be
genuine. 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 Client 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 Client 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 Client. The Client agrees
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that the Custodian shall incur no liability to the Client in acting upon Oral
Instructions given to the Custodian hereunder concerning such transactions
provided such instructions reasonably appear to have been received from an
Authorized Person.
(j) INSPECTION OF BOOKS AND RECORDS. The Custodian shall create and
maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Client under the
1940 Act, with particular attention to Section 31 thereof and Rule 3la-1 and
3la-2 thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Client. All
such records shall be the property of the Client and shall be open to inspection
and audit at reasonable times by officers and auditors employed by the Client
and by employees of the Securities and Exchange Commission.
The Custodian shall promptly provide the Client with any report
obtained by the Custodian on the system of internal accounting control of the
Book-Entry System or the Depository and with copies of any report issued by any
regulatory agency concerning its own operations insofar as such report relates
to the performance of its duties as Custodian to the Client and will promptly
furnish the Client with copies of any report prepared by an independent
accountant regarding its system of internal accounting control or that of any
Subcustodian or Depository insofar as such report relates to the performance of
its duties as Custodian to the Client and any similar reports regarding the
Custodian, any Subcustodian or Depository as the Client may reasonably request.
(k) The Custodian agrees to maintain adequate insurance and fidelity
bond coverage for its operation located in New York City, New York.
12. TERM AND TERMINATION.
(a) This Agreement shall become effective after approval by the
Client's Board of Trustees and shall continue in effect from year to year
thereafter subject to the provisions of Section 12(b).
(b) Either of the parties hereto may terminate this Agreement with
respect to any Series by giving to the other party a notice in writing
specifying the date of such termination. In the event such notice is given by
the Custodian, the date of termination shall be not less than 120 days after the
date of receipt of such notice by the Client. In the event such notice is given
by the Client, the date of termination shall be not less than 30 days after the
date of receipt of such notice by the Custodian. In the event such notice is
given by the Client, it
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shall be accompanied by a certified resolution of the Board of Trustees of the
Client, electing to terminate this Agreement with respect to any Series 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 Client shall, on or before the termination date, deliver to
the Custodian a certified resolution of the Board of Trustees of the Client,
designating a successor custodian or custodians. In the absence of such
designation by the Client, the Custodian may designate a successor custodian,
which shall be a person qualified to so act under the 0000 Xxx. If the Client
fails to designate a successor custodian for any Series, the Client shall upon
the date specified in the notice of termination of this Agreement and upon
deliver by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Client) and money and then
owned by such Series 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 Client.
(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 moneys then held by the Custodian and specifically allocated to
the Series specified, after deducting all fees and other amounts for the payment
of reimbursement of which it shall then be entitled with respect to the Series
and otherwise cooperate in the transfer of its duties and responsibilities
hereunder.
(d) In the event that the Custodian terminates this Agreement the
Custodian shall not charge Transaction Fees (as described in Schedule A) to the
Client in connection with the transfer of assets to a successor custodian. In
the event that the Client terminates this Agreement for a reason other than a
breach of the Custodian's covenants under this agreement, including its fees as
set forth in Schedule A, the Client shall pay the Transaction Fees imposed on a
transfer of assets to a successor custodian.
13. MISCELLANEOUS.
(a) Annexed hereto as Appendix A is a certification signed by the
Secretary of the Client setting forth the names and the signatures of the
present Authorized Persons. The Client 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. Until such new certification
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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 Client setting forth the names and the signatures of the
present officers of the Client. The Client 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 Client. 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 the officers 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
Xxxxxxxx Xxxxx, Xxxx Xxxx, Xxxxxx, XXXX XXX, Xxxxxxx, Attn: Xxxx Xxxxxx, or at
such other place as the Custodian may from time to time designated in writing.
(d) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Client, shall be sufficiently given if
addressed to the Chief Administrative Officer of the Client and mailed or
delivered to it at its offices at 0000 Xxxxx Xxxxxx, 0xxx Xxxxx, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000 or at such other place as the Client may from time to time
designate in writing.
(e) Notwithstanding any provision of this Agreement to the contrary,
as long as the Custodian and the Dividend and Transfer Agent shall be the same
person or affiliated persons of each other as defined in the 1940 Act, then
nothing contained in this Agreement shall cause the Client to be liable to the
Custodian for any loss or damage occasioned by information supplied by the
Client to the Custodian if such information was furnished to the Client or based
upon information furnished to the Client by the Dividend and Transfer Agent.
(f) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties.
(g) The 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 Client without the written
consent of the Custodian, or by the Custodian without the written consent of the
Client authorized or approved by a resolution of the Board of
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Trustees of the Client, and any attempted assignment without such written
consent shall be null and void.
(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 effect 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunder duly authorized as of the
date and year first above written.
THE DFA INVESTMENT TRUST COMPANY
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ Xxxxxxx Xxxx
-----------------------------------------
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SCHEDULE A - FEE SCHEDULE
Following is the total fee schedule of Boston Safe Deposit and Trust
Company ("Boston Safe") for global custody services for the Series of The DFA
Investment Trust Company (the "Fund") listed in Appendix C to the Custody
Agreement between Boston Safe and the Fund. The fee schedule will be capped at
these levels for a two year period beginning with the date that Boston Safe
first earns a fee from the Series under this schedule. The fees may be
decreased by Boston Safe. After the first two years, the transaction based fees
will not increase more than 10% in total over the subsequent two year period.
The asset based fees will not increase in the first four years. Fees for any
additional Series are to be negotiated, but should not exceed the rates in this
schedule for assets similar in type and domicile.
Upon termination of the agreement for services, Boston Safe will waive
the Transaction Fees, as listed in the table below, for the transfer of assets
to a successor custodian, if Boston Safe declines to renew the terms of the
agreement or if the agreement is terminated because Boston Safe is seeking an
increase in Transaction Fees in excess of a total of 10% over a two year period.
The fees are all inclusive. They include, but are not limited to the
following services: all costs associated with online communication services to
the administrative agent for the Series, costs associated with maintenance of
demand deposit accounts associated with the Series, all dividend and income
collection, trade affirmation services, tax reclaims, subcustodian processing
charges such as corporation action, reporting, settlements and custody charges
or other out-of-pocket expenses.
Transaction Fee Asset Fee
Country (per buy-sell) (basis pts./yr)
------- --------------- ---------------
DFA International Value
Series
-------------------------
Australia $100 6
Belgium $75 9
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Transaction Fee Asset Fee
Country (per buy-sell) (basis pts./yr)
------- --------------- ---------------
France $ 55 5
Germany $ 45 5
Hong Kong $120 10
Italy $ 75 5
Japan $ 45 5
Netherlands $ 25 6
Singapore $150 15
Spain $ 40 5
Sweden $ 50 7
Switzerland $ 75 6
United Kingdom $ 45 5
Transaction Repair $25
Funds Transfer $25
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APPENDIX C - SERIES
I, Xxxxx X. Xxxxxxx, Secretary of The DFA Investment Trust Company, a
Delaware business trust (the "Client"), do hereby certify that:
The following Series of the Client are subject to this
Agreement:
The DFA International Value Series
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
Secretary
