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AGREEMENT dated between FIDUCIARY TRUST COMPANY
INTERNATIONAL ("Bank") and ______________________________________ ("Fund")
1. Custody Account. The Bank agrees to establish and maintain (a) a
custody account in the name of the Fund ("Custody Account") for any and all
stocks, shares, bonds, debentures, notes, mortgages or other obligations for
the payment of money and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the same
or evidencing or representing any other rights or interests therein and other
similar property (hereinafter called "Securities") from time to time received
by the Bank or its subcustodian (as defined in the last sentence of Section 3)
for the account of the Fund, and (b) a deposit account in the name of the Fund
("Deposit Account") for any and all cash in any currency received by the Bank
or its subcustodian for the account of the Fund, which cash shall not be
subject to withdrawal by draft or check.
2. Maintenance of Securities. Securities in the Custody Account shall be
held in the country or other jurisdiction as shall be specified from time to
time in Instructions (as defined in Section 9 hereof), provided that such
country or other jurisdiction shall be one in which the principal trading
market for such Securities is located or the country or other jurisdiction in
which such Securities are to be presented for payment or are acquired for the
Custody Account and cash in the Deposit Account shall be credited to an
account in such amounts and in the country or other jurisdiction as shall be
specified from time to time in Instructions, provided that
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such country or other jurisdiction shall be one in which such cash is the
legal currency for the payment of public or private debts.
3. Eligible Subcustodians. The Board of the Fund authorizes the Bank to
hold the Securities in the Custody Account and the cash in the Deposit Account
in custody and deposit accounts, respectively, which have been established by
the Bank with (a) a securities system, (b) one of the Bank's branches, a
branch of a qualified U.S. bank, an eligible foreign custodian or an eligible
foreign securities depository and (c) a subcustodian of an eligible foreign
custodian, that itself is an eligible foreign custodian or an eligible foreign
securities depository with which that subcustodian has entered into an
agreement for the custody of Fund assets; provided, however, that the Board of
the Fund has approved the use of the securities system and the Bank's or its
subcustodian's contract with, such eligible foreign custodian or eligible
foreign securities depository by resolution, and Instructions to such effect
have been provided to the Bank. For purposes of this Agreement, "qualified
U.S. bank." "eligible foreign custodian" and "eligible foreign securities
depository" shall have the meanings provided in Rule 17f-5 under the
Investment Company Act of 1940 as interpreted by the staff of the Securities
and Exchange Commission and a "securities system" shall mean a clearing agency
registered with the Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a securities depository, or
a book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies.
Hereinafter the term "subcustodian" will refer to (a) any securities system,
(b) any branch of a qualified U.S. bank, any eligible foreign custodian or any
eligible foreign securities depository
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with which the Bank has entered into an agreement of the type contemplated
hereunder regarding Securities and/or cash held in or to be acquired for the
Custody Account or the Deposit Account, and (c) any subcustodian of an
eligible foreign custodian with which the eligible foreign custodian has
entered into an agreement like that between the Bank and such eligible foreign
custodian or an eligible foreign securities depository in which the
subcustodians participate.
4. Use of Subcustodian. With respect to Securities and other assets
which are maintained by the Bank in the physical custody of a subcustodian
pursuant to Section 3 (as used in this Section 4, the term "Securities" means
such Securities and other assets):
(a) The Bank will identify on its books as belonging to the Fund any
Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities placed
in its care to be held in an eligible foreign securities depository such
subcustodian will be required by its agreement with the Bank to identify on
its books such Securities as being held for the account of the bank as a
custodian for its customers.
(c) Any Securities in the Custody Account held by a subcustodian of the
Bank will be subject only to the instructions of the Bank or its agents, and
any Securities held in an eligible foreign securities depository for the
account of a subcustodian will be subject only to the instructions of such
subcustodian.
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(d) The Bank will only deposit Securities other than cash in an account
with a subcustodian which includes exclusively the assets held by the Bank for
its customers, and the Bank will cause such account to be designated by such
subcustodian as a special custody account for the exclusive benefit of
customers of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian with
respect to the holding of Securities shall require that (i) the Securities are
not subject to any right, charge, security interest, lien or claim of any kind
in favor of such subcustodian or its creditors except for their safe custody
or administration and (ii) beneficial ownership of such Securities is freely
transferable without the payment of money or value other than for safe custody
or administration; provided, however, that the foregoing shall not apply to
the extent that any of the above-mentioned rights, charges, etc. result from
any compensation or other expenses arising with respect to the safekeeping of
Securities pursuant to such agreement or from any arrangements made by the
Fund with any such subcustodian.
(f) The Bank shall allow independent public accountants of the Fund such
reasonable access to the records of the Bank relating to the Securities held
in the Custody Account as required by such accountants in connection with
their examination of the books and records pertaining to the affairs of the
Fund. The Bank shall, subject to restrictions under applicable law, also
obtain from any subcustodian with which the Bank maintains the physical
possession of any Securities in the Custody Account an undertaking to permit
independent public accountants of the Fund such reasonable access to the
records of such subcustodian as may be required in connection with their
examination of the books and records pertaining to the affairs
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of the Fund. Upon a reasonable request from the Fund, the Bank shall furnish
to the Fund such reports (or portions thereof) of the Bank's external auditors
as relate directly to the Bank's system of internal accounting controls
applicable to the Bank's duties under this Agreement. The Bank shall use its
best efforts to obtain and furnish the Fund with such similar reports as the
Fund may reasonable request with respect to each eligible foreign custodian
and eligible foreign securities depository holding Securities of the Fund.
(g) The Bank will supply to the Fund at least monthly a statement in
respect to any Securities in the Custody Account held by a subcustodian,
including an identification of the entity having possession of the Securities,
and the Bank will send to the Fund an advice or notification of any transfers
of Securities to or from the Custody Account, indicating, as to Securities
acquired for the Fund, the identity of the entity having physical possession
of such Securities. In the absence of the filing in writing with the Bank by
the Fund of exceptions or objections to any such statement within sixty (60)
days of the Fund's receipt of such statement, or within sixty (60) days after
the date that a material defect is reasonable discoverable, the Fund shall be
deemed to have approved such statement, the Bank shall, to the extent
permitted by law, be released, relieved and discharged with respect to all
matters and things set forth in such statement as though such statement had
been settled by the decree of a court of competent jurisdiction in an action
in which the Fund and all persons having any equity interest in the Fund were
parties.
(h) The Bank hereby warrants to the Fund that in the Bank's opinion,
after due inquiry, the established procedures to be followed by each of its
branches, each branch of a qualified
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U.S. bank, each eligible foreign custodian and each eligible foreign
securities depository holding Securities of the Fund pursuant to this
Agreement afford protection for such Securities at least equal to that
afforded by the Bank's established procedures with respect to similar
securities held by the Bank (and its securities depositories) in New York.
(i) The Bank hereby warrants to the Fund that, as of the date of this
Agreement, the Bank is maintaining a Bankers Blanket Bond, and the Bank hereby
agrees to notify the Fund in the event its Bankers Blanket Bond is cancelled
or otherwise lapses.
5. Deposit Account Payments. Subject to the provisions of Section 7, the
Bank shall make, or cause its subcustodians to make, payments of cash credited
to the Deposit Account only:
(a) in connection with the purchase of Securities for the Fund and the
delivery of such securities to, or the crediting of such Securities to, or the
crediting of such Securities to the account of, the Bank or its subcustodian,
each such payment to be made at prices as confirmed by Instructions;
(b) for the purchase or redemption of shares of the capital stock of the
Fund and the delivery to, or crediting to the account of, the Bank or is
subcustodian of such shares to be so purchased or redeemed;
(c) for the payment for the account of the Fund of dividends, interest,
taxes, management
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or supervisory fees, capital distributions or operating expenses;
(d) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in the Custody Account;
(e) for other proper corporate purposes of the Fund; or
(f) upon the termination of the Custody Agreement as hereinafter set
forth.
All payments of cash for a purpose permitted by subsection (a), (b), (c) or
(d) of this Section 5 will be made only upon receipt by the Bank of
Instructions which shall specify the purpose for which the payment is to be
made. In the case of any payment to be made for the purpose permitted by
subsection (e) of the Section 5, the Bank must first receive a certified copy
of a resolution of the Board of the Fund adequately describing such payment,
declaring such purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made. Any payment pursuant to
subsection (f) of this Section 5 will be made in accordance with Section 17.
In the event that any payment made under this Section 5 exceeds the funds
available in the Deposit Account, the Bank may, in its discretion, advance the
Fund an amount equal to such excess and such advance shall be deemed a loan
from the Bank to the Fund, payable on demand, bearing interest at the rate of
interest customarily charged by the Bank on similar loans.
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If the Bank causes the Deposit Account to be credited on the payable
date for interest, dividends or redemptions, the Fund will promptly return to
the Bank any such amount or property so credited upon oral or written
notification that neither the Bank nor its subcustodian can collect such
amount or property in the ordinary course of business. The Bank or its
subcustodian, as the case may be, shall have no duty or obligation to
institute legal proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the collection of such
amount or property beyond its ordinary collection procedures.
6. Custody Account Transactions. Subject to the provisions of Section 7,
Securities in the Custody Account will be transferred, exchanged or delivered
by the Bank or its subcustodians only:
(a) upon sale of such Securities for the Fund and receipt by the Bank or
its subcustodian only of payment therefore, each such payment to be in the
amount confirmed by Instructions from Authorized Persons;
(b) when such 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 of merger, consolidation,
reorganization, recapitalization or readjustment;
(d) upon conversion of such Securities pursuant to their terms into other
Securities;
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(e) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(g) for the purpose of redeeming in kind shares of the capital stock of
the Fund against delivery to the Bank or its subcustodian of such shares to be
so redeemed;
(h) for other proper corporate purposes of the Fund; or
(i) upon the termination of this Custody Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of Securities in the Custody Account
for a purpose permitted by either subsection (a), (b), (c), (d), (e), or (f)
of this Section 6 will be made, except as provided in Section 8, only upon
receipt by the Bank of Instructions which shall specify the purpose of the
transfer, exchange or delivery to be made. In the case of any transfer or
delivery to be made for the purpose permitted by subsection (g) of this
Section 6, the Bank must first receive Instructions from Authorized Persons
specifying the shares held by the Bank of its subcustodian to be so
transferred or delivered and naming the person or persons to whom transfers or
delivery of such shares shall be made. In the case of any transfer, exchange
or delivery to be made for the purpose permitted by subsection (h) of this
Section 6, the Bank must first receive a certified copy of a resolution of the
Board of the Fund adequately describing such
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transfer. exchange or delivery, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made. Any transfer or delivery pursuant to subsection (i)
of this Section 6 will be made in accordance with Section 17.
7. Custody Account Procedures. With respect to any transaction involving
Securities held in or to be acquired for the Custody Account, the Bank shall
cause the Deposit Account to be credited on the contractual settlement date
with the proceeds of any sale or exchange of Securities from the Custody
Account and to be debited on the contractual settlement date for the cost of
Securities purchased or acquired for the Custody Account. The Bank may
reverse any such credit or debit if the transaction with respect to which
such credit or debit was made fails to settle within a reasonable period,
determined by the Bank in its discretion, after the contractual settlement
date, except, that if any Securities delivered pursuant to this Section 7 are
returned by the recipient thereof, the Bank may cause any such credits and
debits to be reversed at any time.
Notwithstanding the preceding paragraph, settlement and payment for
Securities received for, and delivery of Securities out of, the Custody
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
therefore (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.
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8. Actions of the Bank. Until the Bank receives Instruction from
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian, to:
(a) present for payment any Securities in the Custody Account which are
called, redeemed or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation to the extent that
the Bank or subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance with the
provision of Sections 2, 3 and 4 of this Agreement;
(b) in respect of Securities in the Custody Account, execute in the name
of the Fund such ownership and other certificates as may be required to obtain
payments in respect thereof;
(c) exchange interim receipts or temporary Securities in the Custody
Account for definitive Securities;
(d) in respect of trades reported on the Fund's behalf through Depository
Trust Company ("DTC"), accept instruction from DTC (whether in a DTC report or
otherwise) as though they were given by an Authorized Person.
(e) convert monies received with respect to Securities of foreign issue
into United States dollars or any other currency necessary to effect any
transaction involving the Securities whenever it is practicable to do so
through customary banking channels, using any method or agency available,
including, but not limited to, the facilities of the Bank, its subsidiaries,
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affiliates or subcustodians, which shall be entitled to receive compensation
for such services; and
(f) appoint brokers and dealers for any transaction involving the
Securities in the Custody Account in accordance with Section 11(a) of the
Securities and Exchange Act of 1934 and Rule 11a-2-2(T) thereunder, including,
without limitation, affiliates of the Bank or any subcustodian, which brokers
and dealers shall be entitled to receive compensation for their services.
9. Instructions. As used in the Agreement, the term "Instructions"
means instruction of (or on behalf of) the Fund received by the Bank, via
telephone, telex, TWX, facsimile transmission, bank wire or other teleprocess
or electronic instruction system acceptable to the Bank which the Bank
believes in good faith to have been given by two Authorized Persons or which
are transmitted with proper testing or authentication pursuant to terms and
conditions which the Bank may specify.
Any instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing signed by two Authorized Persons (which
confirmation may bear the facsimile signature of such Persons), but the Fund
will hold the Bank harmless for any failure on the part of the Fund or its
agents to send such confirmation in writing, the failure of such confirmation
to conform to the telephone instructions received, and the Bank's failure to
produce such confirmation at any subsequent time. Unless otherwise expressly
provided, all Instructions shall continue in full force and effect until
cancelled or superseded. If the Bank requires test arrangements,
authentication methods or other security devices to be used with respect to
Instructions, any Instructions thereafter shall be given and processed in
accordance with such terms and conditions for the use of such arrangements,
methods or devices as the Bank may put
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into effect and modify from time to time. The Fund shall safeguard and shall
cause its agents, if applicable, to safeguard any testkeys, identification
codes or other security devices which the Bank shall make available to the
Fund or its agents. The Bank may electronically record any instructions given
by telephone, and other telephone discussions, with respect to the Custody
Account.
10. Authorized Persons. As used in the Agreement, the term "Authorized
Person" means such officers or such agents of the Fund as have been designated
by a resolution of the Board of the Fund, a certified copy of which has been
provided to the Bank, to act on behalf of the Fund in the performance of any
acts which Authorized Persons may do under this Agreement,. Such persons
shall continue to be Authorized Persons until such time as the Bank receives
Instruction from Authorized Persons that any such officer, or agent is no
longer an Authorized Person.
11. Nominees. Securities in the Custody Account which are ordinarily
held in registered form may be registered in the name of the Bank's nominee
or, as to any Securities in the possession of an entity other than the Bank,
in the name of such entity's nominee. The Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such Securities,
but not if such liability is a result of such nominee's negligence. The Bank
may without notice to the Fund cause any such Securities to cease to be
registered in the name of any such nominee and to be registered in the name of
the Bank's nominee or held by one of its subcustodians and registered in the
name of such subcustodian's nominee are called for partial redemption by the
issuer of such Security, the Bank may allot, or cause to be allotted, the
called
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portion to the respective beneficial holders of such class of security in any
manner the Bank deems to be fair and equitable.
12. Standard of Care. The Bank shall be responsible for the performance
of only such duties as are set forth herein or contained in Instructions given
to the Bank by Authorized Persons which are not contrary to the provisions of
the Agreement. The Bank will use reasonable care with respect to the
safekeeping of Securities in the Custody Account and cash in the Deposit
Account. The Bank shall be liable to the Fund for any loss which shall occur
as the result of a failure of a subcustodian or an eligible foreign securities
depository engaged by such subcustodian to exercise reasonable care with
respect to the safekeeping of such Securities and other assets to the same
extent that the Bank would be liable to the Fund if the Bank were holding such
Securities and other assets in New York. In the event of any loss to the Fund
by reason of the failure of the Bank or its subcustodian or an eligible
foreign securities depository engaged by such subcustodians to utilize
reasonable care, the Bank shall be liable to the Fund to the extent of the
Fund's damages, to be determined based on the market value of the property
which is the subject of the loss at the date of discovery of such loss and
without reference to any special conditions or circumstances. The Bank shall
be held to the exercise of reasonable care in carrying out this Agreement but
shall be indemnified by, and shall be without liability to, the Fund for any
action authorized by this Agreement taken or omitted by the Bank in good faith
without negligence. The Bank shall be entitled to rely, and may act, on the
prior, written advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action reasonably taken or
omitted in good faith pursuant to such advice. The Bank need not maintain any
insurance for the benefit of the Fund. The Bank shall provide to the Fund, on
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an annual basis, a report stating whether any events have occurred which would
render the arrangements hereunder to cease to be in compliance with the rules
of the Securities and Exchange Commission governing such arrangements and
describing any such event.
All collections of funds or other property paid or distributed in respect
of Securities in the Custody Account shall be made at the risk of the Fund.
The Bank shall have no liability for any loss occasioned by delay in the
actual receipt of notice by the Bank or by its subcustodian or any payment,
redemption or other transaction regarding Securities in the Custody Account in
respect of which the Bank has agreed to take action as provided in Section 8
hereof. The Bank shall not be liable for any action taken in good faith upon
Instruction or upon any certified copy of any resolution and may rely on the
genuineness of any such documents which it may in good faith believe to be
validly executed. The Bank shall not be liable for any loss resulting from,
or caused by, the direction of the Fund to maintain custody of any Securities
or cash in a foreign country including, but not limited to, losses resulting
from nationalization, expropriation, currency restriction, act of war or
terrorism, insurrection, revolution, nuclear fusion, fission or radiation, or
acts of God.
13. Compliance with Securities and Exchange Commission Rules and Orders.
Except to the extent the Bank has specifically agreed pursuant to this
Agreement to comply with a condition of a rule, regulation, interpretation, or
exemptive order promulgated by or under the authority of the Securities and
Exchange Commission, the Fund shall be solely responsible to assure that the
maintenance of Securities and cash under this Agreement complies with any such
rule, regulation, interpretation or exemptive order.
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14. Corporate Action. The Bank or its subcustodian is to forward to
Provident National Bank ("Provident") (or any successor thereto appointed by
the Fund) only such communications relative to the Securities in the Custody
Account as call for voting or the exercise of rights or other specific action
(including material relative to legal proceedings intended to be transmitted
to security holders) to the extent sufficient copies are received by the Bank
or its subcustodian in time for forwarding to each customer. The Bank or its
subcustodian will cause its nominee to execute and deliver to Provident (or
its successor) proxies relating to Securities in the Custody Account
registered in the name of such nominee but without indicating the manner in
which such proxies are to be voted. Proxies relating to bearer Securities
will be delivered in accordance with written instructions from Authorized
Persons.
15. Fees and Expenses. The Fund agrees to pay to the Bank from time to
time such compensation for its services pursuant to the Agreement as may be
mutually agreed upon in writing from time to time. The Fund hereby agrees to
hold the Bank harmless from any liability or loss resulting from any taxes or
other governmental charges, and any expenses related thereto, which may be
imposed or assessed with respect to the Custody Account and also agrees to
hold the Bank, its subcustodian, and their respective nominees harmless from
any liability as a record holder of Securities in the Custody Account. The
Bank is authorized to charge any account of the Fund for such items and the
Bank shall have a lien on Securities in the Custody Account and on cash in the
Deposit Account for any amount owing to the Bank from time to time under this
Agreement.
16. Effectiveness. This Agreement shall be effective on the date first
noted above.
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17. Termination. This Agreement may be terminated by the Fund or the
Bank by 60 days' written notice to the other, sent by registered mail, proved
that any termination by the Fund shall be authorized by a resolution of the
Board of the Fund, a certified copy of which shall accompany such notice of
termination, and provided further, that such resolution shall specify the
names of the persons to whom the Bank shall deliver the Securities in the
Custody Account and to whom the cash in the Deposit Account shall be paid. If
notice of termination is given by the Bank, the Fund shall, within 60 days
following the giving of such notice, deliver to the Bank a certified copy of a
resolution of its Board specifying the names of the persons to whom the Bank
shall deliver such Securities and cash to the persons so specified, after
deducting therefrom any amounts which the Bank determines to be owed to it
under Section 15. If within 60 days following the giving of a notice of
termination by the Bank, the Bank does not receive from the Fund a certified
copy of a resolution of Board specifying the names of the persons to whom the
cash in the Cash Account shall be paid, the Bank, 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
the Agreement, or to Authorized Persons, or may continue to hold such
Securities and cash until a certified copy of one or more resolutions as
aforesaid is delivered to the Bank. The obligations of the parties hereto
regarding the use of reasonable care, indemnities and payment of fees and
expenses shall survive the termination of this Agreement.
18. Notices. Any notice or other communication from the Fund or its
agents to the Bank is to be sent to the office of the Bank at Xxx Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Global Custody Division, or such
other address as may hereafter be given
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to the Fund in accordance with the notice provision hereunder, and any notice
from the Bank to the Fund is to be mailed postage prepaid, addressed to the
Fund at the address appearing below, or as the same may hereafter be changed
on the Bank's records in accordance with notice hereunder from the Fund.
19. 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
any party, but shall bind the respective successors and assigns of the Fund
and the Bank.
20. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
21. Counterpart Execution. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had signed the
same documents. All counterparts shall be construed together and shall
constitute one Agreement.
[__________________________]
By:__________________________________________
Title:________________________________________
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Address for record: 000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
FIDUCIARY TRUST COMPANY
INTERNATIONAL
By:__________________________________________
Title:________________________________________
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[____________________________________]
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear
RE: Amendment to Custody Agreement - Repurchase Agreements
Reference is made to the Custody Agreement between us dated
__________ (the "Agreement"). In order to provide for the short-term
investment of uncommitted cash balanced in your custody account, the
Agreement is hereby amended by deleting any previous provisions
relating to repurchase transactions and adding a new section entitled
"Investment of Uncommitted Cash Balances - Repurchase Agreements" in the
following form:
Investment of Uncommitted Cash Balances - Repurchase Agreements
__________________________________________ has authority to authorize and
hereby authorizes Fiduciary Trust Company International to invest any
uncommitted cash balances held in the Custody Account, in increments
of $1,000 in repurchase transactions ("repos") in accordance with the
Memorandum from Fiduciary Trust Company International to _______________
________________________, dated ________, a copy of which is attached
hereto. Fiduciary Trust Company International is also hereby authorized
to execute as agent for ________________________________________, a
written agreement regarding repos with the entities specified in such
Memorandum. Neither Fiduciary Trust Company International nor any of its
officers, directors, employees or agents shall be liable for any loss or
damage resulting from any action or failure to act relating to such repos,
except when it or any of them have acted negligently, and in any event
neither it nor they shall be liable for any action or failure to act that
is substantially consistent with the attached Memorandum. Fiduciary Trust
Company International shall have no liability for any failure of the Seller
(as defined in the attached Memorandum) to perform any of its obligations
under any repo agreement. ______________________________________, will
indemnify and reimburse Fiduciary Trust Company International for all taxes,
liabilities and expenses incurred in connection with the repos authorized
hereunder (including but not limited to those incurred as a result of
___________________________________________, failure to keep securities
purchased under a repo free of pledges or other transfer obligations).
Except as provided above, the Agreement shall remain unchanged and
in full force and effect. This letter of amendment shall be governed by the
laws of the State of New York.
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If the foregoing meets with your approval, please sign the enclosed
copy of this letter in the space provided and return it to us,
whereupon the Agreement will be amended in accordance with this letter.
Very truly yours,
FIDUCIARY TRUST COMPANY INTERNATIONAL
By____________________________________
Senior Vice President
AGREED
[____________________________________]
By____________________________________
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MEMORANDUM
Date:________________
To: ______________________________________
From: Fiduciary Trust Company International
SUBJECT: Short-Term Investment of Cash in Repurchase Agreements ("Repos")
Introduction
As a service to you, Fiduciary Trust Company International ("Fiduciary"),
if authorized to do so by you, will use its best efforts as your agent to
secure a return on any uncommitted cash balances held in your account by
investing such funds on an overnight (or next business day) basis in
repurchase transactions ("repos") involving securities issued or guaranteed by
the U.S. Government or an agency of the U.S. Government. There will be
no additional fee for this service, and transaction charges will not apply.
For purposes of this Memorandum, a repo is a transaction under a
written agreement between a Seller (as that term is hereinafter defined)
and you, which discloses your identity to the Seller and is signed by
Fiduciary as you agent. Under this agreement, Fiduciary agrees to purchase
securities from the Seller subject to an obligation of the Seller to
repurchase the securities from Fiduciary, an obligation of Fiduciary to
resell them to the Seller, on the next business day, for a price (the
"repurchase price") equal to the sum of the initial purchase price and an
agreed-upon amount of interest. Such initial purchase price will always be
at least 100% of the market value of the purchase securities at the time of
the repo is agreed upon. (In as much as each repo will terminate the
morning of the next business day, the daily xxxx- to-market procedure to
determine whether there is a margin excess or deficit does not apply). The
agreement with the Seller contains provisions protecting each party against
the other's default, and includes a promise by you that the purchased
securities will not be pledged, resold or otherwise transferred to another
person while the repo is outstanding. (A copy of the agreement with the
Seller will be provided to you upon request).
The amount of your funds used to purchase securities in a repo is
referred to in this Memorandum as an amount "invested" in a repo. Your
funds will be invested in repos only in increments of $1,000.
All repos entered into by Fiduciary for you will be entered into with
X.X. Xxxxxx Securities Inc. (the "Seller"). X.X. Xxxxxx
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Securities Inc. is a broker/dealer registered with the SEC and a wholly owned
subsidiary of X.X. Xxxxxx Securities Holdings Inc., a wholly owned subsidiary
of X.X. Xxxxxx & Co. Incorporated. X.X. Xxxxxx & Co. Incorporated has its
principal offices in New York City, has stock that is traded on the New York
Stock Exchange, and files publicly available reports under the Securities
Exchange Act of 1934.
You should note that, as a purchaser of securities in a repo, you
will not (except in certain circumstances if the Seller fails to
repurchase the securities in accordance with a repo agreement) have the
right to retain any interest paid on the purchased securities or the right
to retain, pledge, sell or transfer any of such securities. Accordingly,
you will not benefit from any increase in the market value of the purchased
securities while a repo is outstanding, and the repurchase price for a
repo does not depend upon the interest paid on the purchased securities.
You should also note that all actions of Fiduciary under this Memorandum
with respect to your account are taken by Fiduciary as your agent.
Accordingly, any reference to a repo agreement between Fiduciary and the
Seller means, insofar as such agreement applies to your account, an agreement
between you (acting through Fiduciary) and the Seller, and any right or
obligation of Fiduciary under such repo agreement is your right or
obligation. By authorizing Fiduciary to invest your funds in repos under
the this Memorandum, you authorize Fiduciary, as your agent, to take such
action with respect to the purchased securities (including their subsequent
sale) as it considers appropriate if the Seller should fail to repurchase
the securities in accordance with the relevant repo agreement.
Method of Operation
By authorizing Fiduciary to invest your funds in repos under this
Memorandum, you authorize Fiduciary each day to withdraw, in increments of
$1,000, the uncommitted cash balance from your account with Fiduciary. For
administrative convenience, Fiduciary on each business day invests in a single
repo all of the funds available for such investment from the accounts of all
of its clients purchasing repos. Each client whose funds are invested in such
a repo will have an undivided pro rata interest in the securities purchased in
that repo, and will be entitled to a pro rata share of the repurchase price
for that repo.
By approximately 1:00 p.m. (New York time) on the day a repo is
agreed to, Fiduciary instructs the Federal Reserve Bank of New York (the
"Reserve Bank") (i) to pay the Seller, from a cash account maintained at
the Reserve Bank by Fiduciary (the "Cash Account"), the amount of the
purchase price for that day's repo against receipt into an account
maintained at that Reserve Bank by Fiduciary, as
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agent for its clients ("Repo Account"), of the purchased securities, and (ii)
to deliver the purchased securities back to the Seller on the following
business day against receipt into the Cash Account of the agreed repurchase
price.
The Transfer of the purchased securities into the Repo Account has the
effect of transferring record ownership of the purchased securities to
Fiduciary, as agent for its clients. As result, if the record date for any
interest payable on the purchased securities occurs while the repo is
outstanding, that interest will be paid to Fiduciary. However. under the
repo agreement with the Seller, Fiduciary (as agent for its clients) is
obligated to remit to the Seller any such interest payment promptly upon its
receipt by Fiduciary.
Each increment of $1,000 of your funds invested in a repo will be
reflected in your statement as the purchase of a repo on the day it is
invested. For administrative purposes, each increment of $l,000 is treated
by Fiduciary as being continuously invested in a repo until that $1,000
increment is no longer available for such investment. However, during
that period, one repo is completed and another one commenced each
business day. On each business day's completion of a repo in which your funds
are invested, Fiduciary will credit your account with your share of the profit
generated by such repo.
You may at any time notify Fiduciary that you wish to terminate Fiduciary's
authority to invest the uncommitted cash balance in your account in repos. If
such notice is received by Fiduciary on or before 12:00 noon on a business
day, the termination will take effect on the day the notice is received. If
the notice is received by Fiduciary after 12:00 noon on a business day (or is
received on a day which is not a business day), the termination will take
effect on the following business day.
Risks
With respect to funds invested for you by Fiduciary in a repo with X.X. Xxxxxx
Securities Inc., the Securities Investor Protection Corporation has taken
the position that the provisions of the Securities Investor Protection Act
of 1970 does not provide protection to you with respect to such a repo. An
obligation on the part of X. X. Xxxxxx Securities Inc. to repurchase
securities in any repo is not guaranteed by Fiduciary or by the U.S.
Government or any agency thereof that may be an issuer or guarantor of any
of the purchased securities.
If the Seller fails to repurchase securities in accordance with a repo
agreement, you may suffer losses because of delays and costs in liquidating
the purchased securities. Such delays could result in losses to you if the
market value of the security diminishes before they can be sold. To the
extent that your share of the
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repurchase price for any purchased securities exceeds your share of the amount
obtained upon liquidation of such securities, you would be an unsecured
creditor of the Seller. If a bankruptcy or other insolvency proceeding with
respect to the Seller commenced while a repo was outstanding, there could be a
substantial delay in the liquidation of the purchased securities (during which
time interest may cease to accrue).
