EXHIBIT 23(g)(5)
SPECIAL CUSTODY ACCOUNT AGREEMENT
(Short Sales)
AGREEMENT (the "Agreement") dated as of __________, 2000, by and among
Custodial Trust Company, in its capacity as custodian hereunder (the "Bank"),
Xxxx Xxxxxxxxx Series Trust, on behalf of its AXA Xxxxxxxxx Global Market
Neutral Fund (collectively, the "Customer"), and Bear, Xxxxxxx Securities Corp.
(the "Broker").
WHEREAS, Broker is a securities broker-dealer and is a member of
several national securities exchanges; and
WHEREAS, Customer desires from time to time to execute various
securities transactions, including short sales (which are permitted by
Customer's investment policies), and in connection therewith has executed
Broker's Customer Agreement which provides for margin transactions; and
WHEREAS, to facilitate Customer's transactions in short sales of
securities, Customer and Broker desire to establish procedures for the
compliance by Broker with the provisions of Regulation T of the Board of
Governors of the Federal Reserve System and other applicable requirements (the
"Margin Rules"); and
WHEREAS, to assist Broker and Customer in complying with the Margin
Rules, Bank is prepared to act as custodian to hold Collateral as defined below.
NOW, THEREFORE, be it agreed as follows:
1. DEFINITIONS
As used herein, the following terms have the following meanings:
(a) "Adequate Margin" in respect of short sales shall mean such
collateral as is adequate in Broker's reasonable judgment under
the Margin Rules and the internal policies of Broker, the latter
of which shall be subject to modification by Broker in its sole
and absolute discretion upon prior notice given orally to
Customer and Bank.
(b) "Advice from Broker" or "Advice" means a written notice sent to
Customer and Bank or transmitted by a facsimile sending device,
except that Advice for initial or additional Collateral or with
respect to Broker's ability to effect a short sale for the
Customer may be given orally. With respect to any short sale or
Closing
Transaction, the Advice from Broker shall mean a standard
confirmation in use by Broker and sent or transmitted to Customer
and Bank. With respect to substitutions or releases of
Collateral, Advice from Broker means a written notice signed by
Broker and sent or transmitted to Customer and Bank. An
authorized agent of Broker will certify to Customer and Bank the
names and signatures of those employees who are authorized to
sign Advice from Broker, which certification may be amended from
time to time. When used herein, the term "Advise" means the act
of sending an Advice from Broker.
(c) "Closing Transaction" is a transaction in which Customer
purchases securities which have been sold short.
(d) "Collateral" shall mean cash or U.S. Government securities or
other marginable securities acceptable to Broker.
(e) "Insolvency" means that (A) an order, judgment or decree has been
entered under the bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law (herein called the "Bankruptcy law")
of any competent jurisdiction adjudicating the Customer
insolvent; or (B) the Customer has petitioned or applied to any
tribunal for, or consented to the appointment of, or taking
possession by, a trustee, receiver, liquidator or similar
official, of the Customer, or commenced a voluntary case under
the Bankruptcy Law of the United States or any proceedings
relating to the Customer under the Bankruptcy Law of any other
competent jurisdiction, whether now or hereinafter in effect; or
(C) any such petition or application has been filed, or any such
proceedings commenced, against the Customer and the Customer by
any act has indicated its approval thereof, consent thereto or
acquiescence therein, or an order for relief has been entered in
an involuntary case under the Bankruptcy Law of the United
States, as now or hereinafter constituted, or an order, judgment
or decree has been entered appointing any such trustee, receiver,
liquidator, or similar official, or approving the petition in any
such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 60 days.
(f) "Instructions from Customer" or "Instructions" means a request,
direction or certification in writing signed by Customer and
delivered to Bank and Broker or transmitted by a facsimile
sending device. An officer of Customer will certify to Bank and
Broker the names and signatures of those persons authorized to
sign the instructions, which certification may be amended from
time to time. When used herein, the term "Instruct" shall mean
the act of sending an Instruction from Customer.
(g) "Receipt of Payment" means receipt by Bank, of (1) a certified or
official bank check or wire transfer to Bank; (2) a written or
telegraphic advice from a
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registered clearing agency that funds have been or will be
credited to the account of Bank; or (3) a transfer of funds from
any of Broker's accounts maintained at Bank.
(h) "Receipt of Securities" means receipt by Bank, of (1) securities
in proper form for transfer; or (2) a written or telegraphic
advice from a registered clearing agency that securities have
been credited to the account of Bank for the Special Custody
Account.
(i) "Special Custody Account" shall have the meaning assigned to that
term in Section 2 hereof.
2. SPECIAL CUSTODY ACCOUNT
(a) OPENING CUSTODY ACCOUNT. Bank shall open an account on its books
entitled "Special Custody Account for Bear, Xxxxxxx Securities
Corp. as Pledgee of Xxxx Xxxxxxxxx Series Trust, for its AXA
Xxxxxxxxx Global Market Neutral Fund" (the "Special Custody
Account") and shall hold therein all securities and similar
property as shall be received and accepted by it therein pursuant
to this Agreement. Customer agrees to instruct Bank in
Instructions from Customer as to cash and specific securities
which Bank is to identify on its books and records as pledged to
Broker as Collateral in the Special Custody Account. Customer
agrees that the value of such cash and securities shall be at
least equal in value to what Broker shall initially and from time
to time Advise Customer in an Advice from Broker is necessary to
constitute Adequate Margin. Such Collateral (i) will be held by
Bank for Broker as agent of Broker, (ii) may be released only in
accordance with the terms of this Agreement, and (iii) except as
required to be released hereunder to Broker, shall not be made
available to Broker or any other person claiming through Broker,
including the creditors of the Broker. In the event Customer
wishes to add another series of Xxxx Xxxxxxxxx Series Trust to
this Agreement, the title of such account shall be appended to
this Agreement as a schedule.
(b) SECURITY INTEREST. Customer hereby grants a continuing security
interest to Broker in the Collateral in the Special Custody
Account. To perfect Broker's security interest, Bank will hold
the Collateral in the Special Custody Account, subject to the
interest therein of Broker as the pledgee and secured party
thereof in accordance with the terms of this Agreement. Such
security interest will terminate at such time as Collateral is
released as provided herein. Bank shall have no responsibility
for the validity or enforceability of such security interest.
(c) CONFIRMATION. Bank will confirm in writing to Broker and Customer
all pledges, releases or substitutions of Collateral and will
supply Broker and Customer with a
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monthly statement of Collateral and transactions in the Special
Custody Account for such month. Bank will also advise Broker upon
request of the kind and amount of Collateral pledged to Broker.
(d) EXCESS COLLATERAL. Upon the request of Customer, Broker shall
Advise Bank and Customer of any excess of Collateral in the
Special Custody Account. Such excess shall at Customer's request
be transferred therefrom upon Advice from Broker. Customer
represents and warrants to Broker that securities included at any
time in the Collateral shall be in good deliverable form (or bank
shall have the unrestricted power to put such securities into
good deliverable form) in accordance with the requirements of
such exchanges as may be the primary market or markets for such
securities.
(e) ACCOUNTS AND RECORDS. Bank will maintain accounts and records for
the Collateral in the Special Custody Account as more fully
described in sub-paragraph 5(a) below. The Collateral shall at
all times remain the property of the Customer subject only to the
extent of the interest and rights therein of Broker as the
pledgee thereof.
3. ORIGINAL AND VARIATION MARGIN ON SHORT SALES
(a) SHORT SALES. From time to time, Customer may place orders with
Broker for the short sale of securities. Prior to the acceptance
of such orders Broker will Advise Customer of Broker's ability to
borrow such securities or other properties and acceptance of
short sale orders will be contingent upon same.
(b) OPEN SHORT SALES BALANCE. Broker shall, based on the closing
market price on each business day, compute the aggregate net
credit or debit balance on Customer's open short sales and advise
Customer and/or Customer's designated agent by 11:00 A.M. New
York time on the next business day (the "Determination Day") of
the amount of the net debit or credit, as the case may be. If a
net debit balance exists on the Determination Day, Customer will
cause an amount equal to such net debit balance to be paid to
Broker by the close of business on the Determination Day. If a
net credit balance exists on the Determination Day, Broker will
pay such credit balance to Customer by the close of business on
the Determination Day. As Customer's open short positions are
marked-to-market each business day, payments will be made by or
to Customer to reflect changes (if any) in the credit or debit
balances. Broker will charge interest on debit balances, and
Broker will pay interest on credit balances. Balances will be
appropriately adjusted when short sales are closed out.
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4. PLACING ORDERS
It is understood and agreed that Customer, when placing with Broker
any order to sell short for Customer's account, will designate the order as such
and hereby authorizes Broker to xxxx such order as being "short", and when
placing with Broker any order to sell long for Customer's account, will
designate the order as such and hereby authorizes Broker to xxxx such order as
being "long". Any sell order which Customer shall designate as being for long
account as above provided is for securities then owned by Customer and, if such
securities are not then deliverable by Broker from any account of Customer, the
placing of such order shall constitute a representation by Customer that it is
impracticable for Customer then to deliver such securities to Broker but that
Customer shall deliver them by the settlement date or as soon as possible
thereafter.
5. RIGHTS AND DUTIES OF THE BANK
(a) GENERALLY. The Bank shall receive and hold in the Special Custody
Account, as custodian upon the terms of this Agreement, all
Collateral deposited and maintained pursuant to the terms of this
Agreement and, except as provided in sub-paragraph 5(b) below,
shall receive and hold all monies and other property paid,
distributed or substituted in respect of such Collateral or
realized on the sale or other disposition of such Collateral;
provided, however, that the Bank shall have no duty to require
any money or securities to be delivered to it or to determine
that the amount and form of assets delivered to it comply with
any applicable requirements. Collateral held in the Special
Custody Account shall be released only in accordance with this
Agreement or as required by applicable law. The Customer warrants
its authority to deposit in such account any money, securities
and other property received by the Bank. The Bank may hold the
securities in the Special Custody Account in bearer, nominee,
book entry, or other form and in a depository or clearing
corporation, with or without indicating that the securities are
held hereunder; provided, however, that all securities held in
the Special Custody Account shall be identified on the Bank's
records as subject to this Agreement and shall be in a form that
permits transfer without additional authorization or consent of
the Customer.
(b) DIVIDENDS AND INTEREST. Any interest, dividends or other
distributions paid with respect to the Collateral held in the
Special Custody Account shall be retained therein as additional
Collateral.
(c) REPORTS. The Bank shall provide Broker and Customer with written
confirmation of each transfer into and out of the Special Custody
Account, in each case as promptly as practical, but in any event
not later than the next business day. The Bank also shall render
to the Broker and the Customer and/or Customer's designated agent
a monthly statement of the Collateral held in the Special Custody
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Account. In addition, the Bank will advise the Broker and the
Customer and/or Customer's designated agent, upon request of the
Broker or Customer, at any time of the type and amount of
Collateral held in the account; provided, however, that the Bank
shall have no responsibility for making any determination as to
the value of such Collateral.
(d) LIMITATION OF BANK'S LIABILITY. The Bank's duties and
responsibilities under this Agreement are as set forth herein.
The Bank shall act only upon receipt of Advice from Broker
regarding release or substitution of Collateral. The Bank shall
not be liable or responsible for anything done, or omitted to be
done by it in good faith and in the absence of negligence and may
rely and shall be protected in acting upon any notice,
instruction or other communication which it reasonably believes
to be genuine and authorized. As between Customer and the Bank,
the terms of the Custodian Agreement entered into thereby shall
apply with respect to the responsibilities of the Bank and any
losses or liabilities of such parties arising out of matters
covered by this Agreement. As between the Bank and Broker, Broker
shall indemnify and hold the Bank harmless with regard to any
losses or liabilities of the Bank (including counsel fees)
imposed on or incurred by the Bank arising out of any action or
omission of the Bank in accordance with any Advice, notice or
instruction of Broker under this Agreement. In matters concerning
or relating to this Agreement, the Bank shall not be responsible
for compliance with any statute or regulation regarding the
establishment or maintenance of margin credit, including but not
limited to Regulations T or X of the Board of Governors of the
Federal Reserve System, or with any rules or regulations of the
Office of the Controller of the Currency (or the Securities and
Exchange Commission). With respect to all securities, however
registered, it is understood that all voting rights and other
rights and powers shall be exercised exclusively by Customer.
Bank's only duty with respect thereto shall be to mail to
Customer any documents received, including proxy statements and
offering circulars, with any proxies for securities registered in
a nominee name executed by such nominee. The Bank shall not be
liable to any party for any acts or omissions of the other
parties to this Agreement.
(e) COMPENSATION. Bank shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to
time be agreed upon in writing between Customer and Bank.
6. DEFAULT
In the event of any failure by Customer to timely comply with any
obligation on Customer's part to be performed or observed under this Agreement
or the Customer Agreement, including, but not limited to, the obligation to
maintain Adequate Margin, or in the event of Customer's Insolvency, Broker may
effect a Closing Transaction or buy-in of any securities of
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which Customer's account may be short, provided that Broker shall first use
reasonable efforts to (i) give notice to Customer specifying such default (which
notice may be by telegraph, facsimile transmission or hand delivery) and (ii)
hold a discussion with Customer regarding such default and Broker's intended
actions in response thereto. Notwithstanding the foregoing, neither notice nor a
discussion shall be required in the event market conditions render same
impracticable in the reasonable discretion of Broker. In the event of any
default as aforesaid, after making a reasonable attempt to give notice to and
hold a discussion with Customer (subject to market conditions as set forth
above), Broker shall also have the right to sell any and all Collateral in the
Special Custody Account and to give Advice to Bank to deliver such Collateral
free of payment to Broker, which Advice shall state that, pursuant to this
Agreement, the condition precedent to Broker's right to receive such Collateral
free of payment has occurred. The Bank will provide immediate telephone notice
to Customer of any receipt by Bank of Advice from Broker to deliver Collateral
free of payment, and shall promptly effect delivery of Collateral to Broker.
Subject to applicable requirements of the New York Uniform Commercial Code, such
sale or purchase may be made according to Broker's judgment and may be made at
Broker's discretion, on the principal exchange or other market for such
securities, or in the event such principal market is closed, in a manner
commercially reasonable for such securities.
7. LIMITATION OF BROKER LIABILITY
Broker shall not be liable for any losses, costs, damages, liabilities
or expenses suffered or incurred by Customer as a result of any transaction
executed hereunder, or any other action taken or not taken by Broker hereunder
for customer's account at customer's direction or otherwise, except to the
extent that such loss, cost, damage, liability or expense is the result of
Broker's own negligence, recklessness, willful misconduct or bad faith. With
respect to all securities in the Special Custody Account, it is understood that
all voting rights and other rights and powers shall be exercised exclusively by
Customer, and that Broker shall have no responsibilities in connection
therewith, whether pertaining to the delivery of proxy statements or offering
circulars or otherwise.
8. CUSTOMER REPRESENTATION
Customer represents and warrants that the Collateral will not be
subject to any other liens or encumbrances other than those granted to the Bank
under the Custodian Agreement.
9. TERMINATION
Any of the parties hereto may terminate this Agreement by 30 days'
notice in writing to the other parties hereto; provided, however, that the
status of any short sales, and of Collateral held at the time of such notice to
margin such short sales shall not be affected by such termination until the
release of such Collateral pursuant to applicable law or regulations or rules of
any self regulatory organization to which the Broker is subject. In the event of
the release of Collateral, the Collateral shall be transferred to Customer.
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10. NOTICE
Written communications hereunder shall be telegraphed, sent by
facsimile transmission or hand delivered as required herein, when another method
of delivery is not specified, may be mailed first class postage prepaid, except
that written notice of termination shall be sent by certified mail, addressed:
(a) if to Bank, to:
Custodial Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President - Trust Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Customer, to:
Xxxx Xxxxxxxxx Series Trust
0 Xxxxxx Xxx, Xxxxxxxx X
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to Broker, to:
Bear, Xxxxxxx Securities Corp.
000 Xxxx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx, Treasurer
Telephone: 000-000-0000
Facsimile: 000-000-0000
11. CONTROLLING LAW
The construction and enforcement of this Agreement shall be subject to
and governed by the laws of the State of New York.
12. LIMITATION OF LIABILITY
To the extent that the trustees of Xxxx Xxxxxxxxx Series Trust are
regarded as entering into this Agreement, they do so only as trustees thereof
and not individually. The obligations
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under this Agreement or Xxxx Xxxxxxxxx Series Trust or AXA Xxxxxxxxx Global
Market Neutral Fund shall not be binding upon any trustee, officer or employee
of Xxxx Xxxxxxxxx Series Trust individually, or upon any holder of shares issued
by Xxxx Xxxxxxxxx Series Trust individually, but shall be binding only upon the
assets and property of AXA Xxxxxxxxx Global Market Neutral Fund. Such trustees,
officers, employees and holders, when acting in such capacities, shall not be
personally liable under this Agreement, and Broker and Bank shall look solely to
the assets and property of AXA Xxxxxxxxx Global Market Neutral Fund for the
performance of this Agreement thereby and for the payment of any claim against
AXA Xxxxxxxxx Global Market Neutral Fund pertaining to this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the day and year first above
written.
XXXX XXXXXXXXX SERIES TRUST
ON BEHALF OF ITS
AXA XXXXXXXXX GLOBAL MARKET NEUTRAL
FUND
By:_____________________________________
Name:
Title:
CUSTODIAL TRUST COMPANY
By:_____________________________________
Name:
Title:
BEAR, XXXXXXX SECURITIES CORP.
By:_____________________________________
Name:
Title:
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