CUSTODY ADMINISTRATION AND AGENCY AGREEMENT
This Agreement, dated as of the 30th day of
November, 1995 made by and between DEM, Inc. (the
"Company"), a corporation duly organized under the laws of
the state of Maryland and operating as a closed-end
management investment company registered under the
Investment Company Act of 1940, as amended, and Fund/Plan
Services, Inc. ("Fund/Plan"), a corporation duly organized
and existing under the laws of the State of Delaware
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, the Company desires to retain Fund/Plan
to perform certain custody administration services on behalf
of the Company; and
WHEREAS, the Company desires that Fund/Plan act as
its agent for the specific purpose of taking receipt of, and
making payment for, custody services performed on the
Company's behalf by UMB Bank, N.A. pursuant to an agreement
between UMB Bank, N.A. and the Company; and
WHEREAS, Fund/Plan is willing to serve in such
capacity and perform such functions upon the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the premises
and mutual covenants contained herein and for good and
valuable consideration, the receipt and sufficiency of which
hereby acknowledged, the Parties hereto, intending to be
legally bound, do hereby agree as follows:
APPOINTMENT OF FUND/PLAN AS AGENT
Section 1. The Company hereby appoints Fund/Plan
as an agent of the Company, and Fund/Plan hereby accepts
such appointment, for the limited purpose of: (i) accepting
invoices charged to the Company for custody services
performed by UMB Bank, N.A. on the Company's behalf, and
(ii) remitting payment to UMB Bank, N.A. for such services
performed in amounts as set forth in Schedule "A" attached
hereto.
CUSTODY ADMINISTRATION SERVICES
Section 2. As Custody Administrator, Fund/Plan
shall:
a) coordinate and process portfolio trades
through terminal links with UMB Bank, N.A.
b) input and verify portfolio trades
c) monitor pending and failed security trades
d) coordinate communications between brokers and
banks to resolve any operational problems
e) advise the Company of any corporate action
information, address and follow up on any
dividend or interest discrepancies
f) process the Company's expenses
g) interface with the accounting services
provider and the transfer agent to research
and resolve custody cash problems
h) provide daily and monthly reports
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TERM and FEES
Section 3.
(a) The term of this Agreement shall be for a
period of two (2) years commencing on the date on which the
Company's registration statement is declared effective by
the U.S. Securities and Exchange Commission ("Effective
Date") and shall continue thereafter on a year to year term
subject to termination by either Party as set forth below.
(b) After the initial term of this Agreement, the
Company or Fund/Plan may give written notice to the other of
the termination of this Agreement, such termination to take
effect at the time specified in the notice, which date shall
not be less than one hundred twenty (120) days after the
date of receipt of such notice. Upon the effective
termination date, the Company shall pay to Fund/Plan such
compensation as may be due as of the date of termination and
shall likewise reimburse Fund/Plan for any out-of-pocket
expenses and disbursements reasonably incurred by Fund/Plan
to such date.
(c) If a successor to any of Fund/Plan's duties
or responsibilities under this Agreement is designated by
the Company by written notice to Fund/Plan in connection
with the termination of this Agreement, Fund/Plan shall
promptly upon such termination and at the expense of the
Company, transfer all required records and shall cooperate
in the transfer of such duties and responsibilities.
(d) The Company agrees to pay Fund/Plan
compensation for its
services and to reimburse it for expenses at the rates and
amounts as set forth in Schedule
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"A" attached hereto, and as shall be set forth in any
amendments to such Schedule "A" approved by the Company and
Fund/Plan. The Company agrees and understands that
Fund/Plan's compensation be comprised of two components,
payable on a monthly basis, as follows:
(i) a fixed fee for each series of shares of
the Company ("Series"), together with an asset based fee
which the Company hereby authorizes Fund/Plan to collect by
debiting the Company's custody account for invoices which
are rendered for the services performed for the applicable
function. The invoices for the services performed will be
sent to the Company after such debiting with the indication
that payment has been made; and
(ii) reimbursement of any out-of-pocket
expenses paid by Fund/Plan on behalf of the Company, which
out-of-pocket expenses will be billed to the Company within
the first ten calendar days of the month following the month
in which such out-of-pocket expenses were incurred. The
Company agrees to reimburse Fund/Plan for such expenses
within ten calendar days of receipt of such xxxx.
For the purpose of determining fees payable to
Fund/Plan, the value of a Series' net assets shall be
computed at the times and in the manner specified in the
Company's Prospectus and Statement of Additional Information
then in effect.
During the term of this Agreement, should the
Company seek services or functions in addition to those
stated, a written amendment to this Agreement specifying
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the additional services and corresponding compensation shall
be executed by both Fund/Plan and the Company.
GENERAL PROVISIONS
Section 4.
(a) Fund/Plan, its directors, officers,
employees, shareholders and agents shall only be liable for
any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the performance
of this Agreement that results from willful misfeasance, bad
faith, gross negligence or reckless disregard on the part of
Fund/Plan in the performance of its obligations and duties
under this Agreement.
(b) Any person, even though also a director,
officer, employee, shareholder or agent of Fund/Plan, who
may be or become an officer, trustee, employee, or agent of
the Company, shall be deemed, when rendering services to
such entity or acting on any business of the Company (other
than services or business in connection with Fund/Plan's
duties hereunder), to be rendering such services to or
acting solely for the Company and not as a director,
officer, employee, shareholder or agent of, or one under the
control or direction of Fund/Plan even though that person is
being paid salary by Fund/Plan.
(c) Notwithstanding any other provision of this
Agreement, the Company shall indemnify and hold harmless
Fund/Plan, its directors, officers, employees, shareholders
and agents from and against any and all claims, demands,
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expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which Fund/Plan may
sustain or incur or which may be asserted against Fund/Plan
by any person by reason of, or as a result of (i) any action
taken or omitted to be taken by Fund/Plan in good faith
hereunder or (ii) any action taken or omitted to be taken by
Fund/Plan in connection with its appointment under this
Agreement, which action or omission was taken in good faith
in reliance upon any law, act, regulation or interpretation
of the same even though the same may thereafter have been
altered, changed, amended, or repealed. Indemnification
under this subparagraph, however, shall not apply to actions
or omissions of Fund/Plan or its directors, officers,
employees, shareholders, or agents in cases of its or their
willful misfeasance, bad faith, gross negligence or reckless
disregard of its or their duties hereunder.
(d) Fund/Plan shall give written notice to the
Company within thirty (30) business days of receipt by
Fund/Plan of a written assertion or claim of any threatened
or pending legal proceeding which may be subject to this
indemnification. The failure to notify the Company of such
written assertion or claim shall not, however, operate in
any manner whatsoever to relieve the Company of any
liability arising under this Section or otherwise, except to
the extent that failure to give notice prejudices the
Company.
(e) For any legal proceeding giving rise to this
indemnification, the Company shall be entitled to defend or
prosecute any claim in the name of Fund/Plan at its own
expense and through counsel of its own choosing if it gives
written notice to
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Fund/Plan within thirty (30) business days of receiving
notice of such claim. Notwithstanding the foregoing,
Fund/Plan may participate in the litigation at its own
expense through counsel of its own choosing. In the event
the Company chooses to defend or prosecute such claim, the
parties shall cooperate in the defense or prosecution
thereof and shall furnish such records and other information
as are reasonably necessary.
(f) The Company shall not settle any claim under
(d) and (e) above without Fund/Plan's express written
consent, which consent shall not be unreasonably withheld.
Fund/Plan shall not settle any such claim under (d) and (e)
above without the Company's express written consent which
likewise shall not be unreasonably withheld.
Section 5. This Agreement may be amended from
time to time by a supplemental agreement executed by the
Company and Fund/Plan.
Section 6. Except as otherwise provided in this
Agreement, any notice or other communication required by or
permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or
sent by first class mail, postage prepaid, to the respective
parties as follows:
If to DEM, Inc.: Fund/Plan:
DEM, Inc. Fund/Plan Services, Inc.
The World Trade Center - Baltimore 0 Xxxx Xxx
Xxxxxx
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx Xxxxxxxxxxxx, XX
00000
Attention: Xxxxxx X. Xxxxxxx, Xx. Attention:
Xxxxxxx X. Xxxxx,
President President
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Section 7. The Company represents and warrants to
Fund/Plan that the execution and delivery of this Agreement
by the undersigned officers of the Company has been duly and
validly authorized by resolution of the Board of Directors
of the Company.
Section 8. This Agreement may be executed in two
or more counterparts, each of which when so executed shall
be deemed to be an original, but such counterparts shall
together constitute but one and the same instrument.
Section 9. This Agreement shall extend to and
shall be binding upon the Parties and their respective
successors and assigns; provided, however, that this
Agreement shall not be assignable by the Company without the
written consent of Fund/Plan or by Fund/Plan without the
written consent of the Company, authorized or approved by a
resolution of their respective Board of Directors.
Section 10. This Agreement shall be governed by
the laws of the Commonwealth of Pennsylvania and the venue
of any action arising under this Agreement shall be
Xxxxxxxxxx County, Commonwealth of Pennsylvania.
Section 11. No provision of this Agreement may be
amended or modified, in any manner except in writing,
properly authorized and executed by Fund/Plan and the
Company.
Section 12. If any part, term or provision of
this Agreement is held by any court to be illegal, in
conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be
affected, and the rights and obligations
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of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or
provision held to be illegal or invalid provided that the
basic Agreement is not thereby substantially impaired.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement, consisting in its entirety of six
typewritten pages, together with Schedule "A" to be signed
by their duly authorized officers, as of the day and year
first above written.
DEM, Inc. Fund/Plan Services, Inc.
/s/ XXXXXX X. XXXXXXX, XX. /s/ XXXXXXX X. XXXXX
By: Xxxxxx X. Xxxxxxx, Xx., President
By: Xxxxxxx X. Xxxxx, President
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SCHEDULE "A"
CUSTODY AGENCY AND ADMINISTRATION FEE SCHEDULE
FOR
DEM, INC.
I. Annual Custody Fee Schedule per portfolio (1/12th
payable monthly): Subject to a minimum monthly fee of
$400, Custody Agency and Administration Fees shall be
calculated as of the last business day of the month and
payable monthly, in arrears, at the following annual
rates:
.0002 On the First $ 30
Million of Net Assets
.00015 On the Next $ 70 Million of
Net Assets
.0001 Over $100 Million of
Net Assets
II. Custody Domestic Securities Transactions Charge
Book Entry DTC, Federal Book Entry
$14.00
NOW Accounts $ 2.00
Physical Securities, Physical GNMA's, Options,
RIC's $24.50
Mortgage Backed Securities - Principal Pay Down
Per Pool $11.00
Wire Charge $
8.00
* A transaction includes Buys, Sells, Maturities
or free security movement.
III. When Issued, Securities Lending, Options, Futures:
Should any of these investment vehicles require a
separate segregated custody account, a fee of $250
per account per month will apply.
OUT-OF-POCKET EXPENSES
DEM, Inc. will reimburse Fund/Plan monthly for all out-of-
pocket expenses, including telephone, postage,
telecommunications, special reports, record retention and
copying and sending materials to independent accountants for
off-site audits.
ADDITIONAL SERVICES
To the extent DEM, Inc. commences using investment
techniques such as Futures, Security Lending, Short Sales,
Interest Rate Swaps, Futures, Leveraging, Precious Metals
and foreign securities, additional fees will apply.
Activities of a non-recurring nature such as fund
consolidations, mergers, or reorganizations will be subject
to negotiation. To the extent DEM, Inc. should decide to
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issue multiple/separate classes of shares, additional fees
will apply. Any enhanced services, programming requests or
reports will be quoted upon request.
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