Exhibit 99.(G)(9)
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of April 18, 2005, between ICON FUNDS, an open-end
management investment company organized under the laws of the State of
Massachusetts and registered with the Commission under the Investment Company
Act of 1940 ("1940 Act") (the "Trust"), and XXXXX BROTHERS XXXXXXXX & CO., a
limited partnership formed under the laws of the State of New York (BBH&CO. or
the CUSTODIAN),
W I T N E S S E T H:
WHEREAS, the Trust, on behalf of each of the Funds listed on Exhibit A
hereto as the same may be amended from time to time (each a "Fund" and
collectively, the "Funds"), wishes to employ BBH&Co. to act as custodian for
each Fund and to provide related services, all as provided herein, and BBH&Co.
is willing to accept such employment, subject to the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Trust and BBH&Co. hereby agree, as follows:
1. APPOINTMENT
1.1 APPOINTMENT OF CUSTODIAN. The Trust hereby appoints BBH&Co. as the
Trust's custodian upon the terms and conditions set forth in this Agreement, and
BBH&Co. hereby accepts such appointment. All cash, securities and other property
of the Trust delivered to the Custodian or its agents or Subcustodians
("Investments") shall be dealt with as provided in this Agreement. The duties of
the Custodian with respect to the Trust's Investments shall be only as set forth
expressly in this Agreement which duties are generally comprised of safekeeping
and various administrative duties that will be performed in accordance with
Instructions (defined below) and as reasonably required to effect Instructions.
1.2 APPOINTMENT AS FOREIGN CUSTODY MANAGER. The Trust hereby appoints
BBH&Co. as a Foreign Custody Manager to perform the responsibilities set forth
or in accordance with the 17f-5 Delegation Schedule attached hereto as Exhibit A
and BBH&Co. hereby accepts such appointment as Foreign Custody Manager of the
Trust.
2. DEFINITIONS. The following defined terms will have the respective meanings
set forth below.
2.1 ADVANCE(S) shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include, without
limitation, amounts due to the Custodian as the principal counterparty to any
foreign exchange transaction with the Trust as described in Section 8.4.2
hereof, or paid to third parties for
account of the Trust or in discharge of any expense, tax or other item payable
by the Trust.
2.2 AGENCY ACCOUNT(S) shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 8.1
hereof.
2.3 AGENT(S) shall have the meaning set forth in the last sentence of
Section 7 hereof.
2.4 APPLICABLE LAW shall mean with respect to each jurisdiction, all (a)
laws, statutes, treaties, regulations, guidelines (or their equivalents); (b)
orders, interpretations licenses and permits; and (c) judgments, decrees,
injunctions writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
2.5 AUTHORIZED PERSON(S) shall mean any person or entity authorized to
give Instructions on behalf of the Trust in accordance with Section 5.1 hereof.
2.6 BOOK-ENTRY AGENT(S) shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar entitlement
to Investments, including without limitation a transfer agent or registrar.
2.7 CLEARING CORPORATION shall mean any entity or system established for
purposes of providing securities settlement and movement and associated
functions for a given market.
2.8 DELEGATION SCHEDULE shall mean any separate schedule entered into
between the Custodian and the Trust or its authorized representative with
respect to certain matters concerning the appointment and administration of
Subcustodians delegated to the Custodian pursuant to Rule 17f-5.
2.9 ELECTRONIC AND ONLINE SERVICES SCHEDULE shall mean any separate
agreement entered into between the Custodian and the Trust or its authorized
representative with respect to certain matters concerning certain electronic and
online services as described therein and as may be made available from time to
time by the Custodian to the Trust.
2.10 ELECTRONIC REPORTS shall mean any reports prepared by the Custodian
and remitted to the Trust or its authorized representative via the internet or
electronic mail.
2.11 FOREIGN CUSTODY MANAGER shall mean the Trust's foreign custody
manager appointed pursuant to Rule 17f-5 of the 1940 Act.
2.12 FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given
by Section 2(a)(50) of the 1940 Act.
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2.13 TRUSTS TRANSFER SERVICES SCHEDULE shall mean any separate schedule
entered into between the Custodian and the Trust or its authorized
representative with respect to certain matters concerning the processing of
payment orders from Principal Accounts of the Trust.
2.14 GLOBAL CUSTODY NETWORK LISTING shall mean the Countries and
Subcustodians approved for Investments in non-U.S. Markets.
2.15 INSTRUCTION(S) shall have the meaning assigned in Section 5 hereof.
2.16 INVESTMENT ADVISER shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Trust's Investments.
2.17 INVESTMENT(S) shall mean any investment asset of the Trust,
including without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets.
2.18 MARGIN ACCOUNT shall have the meaning set forth in Section 7.4
hereof.
2.19 PRINCIPAL ACCOUNT(S) shall mean deposit accounts of the Trust
carried on the books of BBH&Co. as principal in accordance with Section 8.1
hereof.
2.20 SAFEKEEPING ACCOUNT shall mean an account established on the books
of the Custodian or any Subcustodian for purposes of segregating the interests
of a Fund (or clients of the Custodian or Subcustodian) from the assets of the
Custodian or any Subcustodian.
2.21 SECURITIES DEPOSITORY shall mean a central or book entry system or
agency established under Applicable Law for purposes of recording the ownership
and/or entitlement to investment securities for a given market that, if a
foreign Securities Depository, meets the definitional requirements of Rule 17f-7
under the 1940 Act.
2.22 SUBCUSTODIAN(S) shall mean each foreign bank appointed by the
Custodian pursuant to Section 9 hereof, but shall not include Securities
Depositories.
2.23 TRI-PARTY AGREEMENT shall have the meaning set forth in Section 7.4
hereof.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRUST. The Trust hereby
represents, warrants and covenants each of the following:
3.1 This Agreement has been, and at the time of delivery of each
Instruction such Instruction will have been, duly authorized, executed and
delivered by the Trust. This Agreement does not violate any
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Applicable Law or conflict with or constitute a default under the Trust's
registration statement, including prospectuses, or other agreements, judgments,
orders or decrees to which the Trust is a party or by which it or the Funds'
Investments is bound.
3.2 By providing an Instruction with respect to the first acquisition of
an Investment in a jurisdiction other than the United States of America, the
Trust shall be deemed to have confirmed to the Custodian that the Trust has (a)
assessed and accepted all material Country or Sovereign Risks as defined in
Section 10 and accepted responsibility for their occurrence, (b) made all
determinations required to be made by the Trust under the 1940 Act, and (iii)
appropriately and adequately disclosed to its shareholders, other investors and
all persons who have rights in or to such Investments, all material investment
risks, including those relating to the custody and settlement infrastructure or
the servicing of securities in such jurisdiction.
3.3 Each party shall safeguard and be responsible for the safekeeping of
any testkeys, identification codes, passwords, other security devices or
statements of account with which the Custodian provides it. In furtherance and
not limitation of the foregoing, in the event the Trust utilizes any on-line
service offered by the Custodian, the Trust and the Custodian shall be fully
responsible for the security of each party's connecting terminal, access thereto
and the proper and authorized use thereof and the initiation and application of
continuing effective safeguards in respect thereof. Additionally, if the Trust
uses any on-line or similar communications service made available by the
Custodian, the Trust shall be solely responsible for ensuring the security of
its access to the service and for the use of the service, and shall only attempt
to access the service and the Custodian's computer systems as directed by the
Custodian. If the Custodian provides any computer software to the Trust relating
to the services described in this Agreement, the Trust will only use the
software for the purposes for which the Custodian provided the software to the
Trust, and will abide by the license agreement accompanying the software and any
other security policies which the Custodian provides to the Trust.
4. REPRESENTATION AND WARRANTY OF BBH&CO. BBH&Co. hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered by
BBH&Co. and does not and will not violate any Applicable Law or conflict with or
constitute a default under BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound.
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5. INSTRUCTIONS. Unless otherwise explicitly indicated herein, the Custodian
shall perform its duties pursuant to Instructions. As used herein, the term
INSTRUCTION shall mean a directive initiated by the Trust, acting directly or
through its board of trustees, officers or other Authorized Persons, which
directive shall conform to the requirements of this Section 5.
5.1 AUTHORIZED PERSONS. For purposes hereof, an AUTHORIZED PERSON shall
be a person or entity authorized to give Instructions for or on behalf of the
Trust as designated in writing by a Trust officer, to include, without
limitation, a Fund's Investment Adviser or Foreign Custody Manager. Authorized
Persons are authorized to give Instructions by written notices to the Custodian
or otherwise in accordance with procedures delivered to and acknowledged by the
Custodian. The Custodian may treat any Authorized Person as having full
authority of the Trust to issue Instructions hereunder unless the notice of
authorization contains explicit limitations as to said authority. The Custodian
shall be entitled to rely upon the authority of Authorized Persons until it
receives appropriate written notice from a Trust officer to the contrary.
5.2 FORM OF INSTRUCTION. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Trust from time to time unless the Trust shall elect to
transmit such Instruction in accordance with Subsections 5.2.1 through 5.2.3 of
this Section.
5.2.1 TRUST DESIGNATED SECURED-TRANSMISSION METHOD. Instructions may
be transmitted through a secured or tested electro-mechanical means
identified by the Trust or by an Authorized Person entitled to give
Instruction and acknowledged and accepted by the Custodian; it being
understood that such acknowledgment shall authorize the Custodian to
receive and process such means of delivery but shall not represent a
judgment by the Custodian as to the reasonableness or security of the
method determined by the Authorized Person.
5.2.2 WRITTEN INSTRUCTIONS. Instructions may be transmitted in a
writing that bears the manual signature of Authorized Persons.
5.2.3 OTHER FORMS OF INSTRUCTION. Instructions may also be
transmitted by another means determined by the Trust or Authorized Persons
and acknowledged and accepted by the Custodian (subject to the same limits
as to acknowledgements as is contained in Subsection 5.2.1, above)
including Instructions given orally or by SWIFT, telex or telefax (whether
tested or untested).
When an Instruction is given by means established under Subsections 5.2.1
through 5.2.3 above, it shall be the responsibility of the Custodian to use
reasonable care to adhere to any security or other procedures established in
writing between the Custodian and the Authorized Person with respect to such
means of Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. With respect to telefax instructions, the parties agree and
acknowledge that receipt of legible instructions cannot be assured, that the
Custodian cannot verify that authorized signatures on telefax instructions are
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original or properly affixed, and that the Custodian shall not be liable for
losses or expenses incurred through actions taken in reliance on inaccurately
stated, illegible or unauthorized telefax instructions. The provisions of
Section 4A of the Uniform Commercial Code shall apply to Funds Transfers
performed in accordance with Instructions. The Funds Transfer Services Schedule
and the Electronic and Online Services Schedule to this Agreement shall each
comprise a designation of form of a means of delivering Instructions for
purposes of this Section 5.2.
5.3 COMPLETENESS AND CONTENTS OF INSTRUCTIONS. The Authorized Person
shall be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition or disposition or other dealing in the
Trust's Investments and upon any delivery and transfer of any Investment or
moneys, the person initiating such Instruction shall give the Custodian an
Instruction with appropriate detail, including, without limitation:
5.3.1 The transaction date and the date and location of settlement;
5.3.2 The specification of the type of transaction;
5.3.3 A description of the Investments or moneys in question,
including, as appropriate, quantity, price per unit, amount of money to be
received or delivered and currency information. Where an Instruction is
communicated by electronic means, or otherwise where an Instruction
contains an identifying number such as a CUSIP, SEDOL or ISIN number, the
Custodian shall be entitled to rely on such number as controlling
notwithstanding any inconsistency contained in such Instruction,
particularly with respect to Investment description; and
5.3.4 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete, the Custodian shall give prompt notice of such determination to the
Trust, and the Trust shall thereupon amend or otherwise reform such Instruction.
In such event, the Custodian shall have no obligation to take any action in
response to the Instruction initially delivered until the redelivery of an
amended or reformed Instruction.
5.4 TIMELINESS OF INSTRUCTIONS. In giving an Instruction, the Trust
shall take into consideration delays which may occur due to the involvement of a
Subcustodian or agent, differences in time zones, and other factors particular
to a given market, exchange or issuer. When the Custodian has established
specific timing requirements or deadlines with respect to particular classes of
Instruction, or when an Instruction is received by the Custodian at such a time
that it could not reasonably be expected to have acted on such instruction due
to time zone differences or other factors beyond its reasonable control, the
execution of any Instruction received by the Custodian after such deadline or at
such time (including any modification or revocation of a previous Instruction)
shall be at the risk of the Trust.
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6. SAFEKEEPING OF FUND ASSETS. The Custodian shall hold Investments delivered
to it or Subcustodians for the Fund's in accordance with the provisions of this
Section. The Custodian shall not be responsible for (a) the safekeeping of
Investments not delivered or that are not caused to be issued to it or its
Subcustodians; or, (b) pre-existing faults or defects in Investments that are
delivered to the Custodian, or its Subcustodians. The Custodian is hereby
authorized to hold with itself or a Subcustodian, and to record in one or more
accounts, all Investments delivered to and accepted by the Custodian, any
Subcustodian or their respective agents pursuant to an Instruction or in
consequence of any corporate action. The Custodian shall hold Investments for
the account of a Fund and shall segregate Investments from assets belonging to
the Custodian (physically, where Investments are held in certificate form) and
shall cause its Subcustodians to segregate Investments from assets belonging to
the Subcustodian in an account held for a Fund or in an account maintained by
the Subcustodian generally for non-proprietary assets of the Custodian. In the
absence of proper Instructions accompanied by a certified resolution of the
Board authorizing the specific transaction, BBH&Co. shall have no power or
authority to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose
of Investments, except in accordance with this Agreement.
6.1 USE OF SECURITIES DEPOSITORIES. The Custodian may deposit and
maintain Investments in any Securities Depository, either directly or through
one or more Subcustodians appointed by the Custodian. Investments held in a
Securities Depository shall be held (a) subject to the agreement, rules,
statement of terms and conditions or other document or conditions effective
between the Securities Depository and the Custodian or the Subcustodian, as the
case may be, and (b) in an account for a Fund or in bulk segregation in an
account maintained for the non-proprietary assets of the entity holding such
Investments in the Depository. If market practice or the rules and regulations
of the Securities Depository prevent the Custodian, the Subcustodian or (any
agent of either) from holding its client assets in such a separate account, the
Custodian, the Subcustodian or other agent shall as appropriate segregate such
Investments for benefit of the Funds or for benefit of clients of the Custodian
generally on its own books.
6.2 CERTIFICATED ASSETS. Investments which are certificated may be held
in registered or bearer form: (a) in the Custodian's vault; (b) in the vault of
a Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities Depository;
all in accordance with customary market practice in the jurisdiction in which
any Investments are held.
6.3 REGISTERED ASSETS. Investments which are registered may be
registered in the name of the Custodian, a
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Subcustodian, or in the name of a Fund or a nominee for any of the foregoing,
and may be held in any manner set forth in Section 6.2 above with or without any
identification of fiduciary capacity in such registration.
6.4 BOOK ENTRY ASSETS. Investments which are represented by book-entry
may be so held in an account maintained by the Book-entry Agent on behalf of the
Custodian, a Subcustodian or another agent of the Custodian, or a Securities
Depository.
6.5 REPLACEMENT OF LOST INVESTMENTS. In the event of a loss of
Investments for which the Custodian is responsible under the terms of this
Agreement, the Custodian shall replace such Investment, or in the event that
such replacement cannot be effected, the Custodian shall pay to the Fund the
fair market value of such Investment based on the last available price as of the
close of business in the relevant market on the date that a claim was first made
to the Custodian with respect to such loss, or, if less, such other amount as
shall be agreed by the parties as the date for settlement.
7. ADMINISTRATIVE DUTIES OF THE CUSTODIAN. The Custodian shall perform
the following administrative duties with respect to Investments of a Fund.
7.1 PURCHASE OF INVESTMENTS. Pursuant to Instruction, Investments
purchased for the account of a Fund shall be paid for (a) against delivery
thereof to the Custodian or a Subcustodian, as the case may be, either directly
or through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
7.2 SALE OF INVESTMENTS. Pursuant to Instruction, Investments sold for
the account of a Fund shall be delivered (a) against payment therefor in cash,
by check or by bank wire transfer, (b) by credit to the account of the Custodian
or the applicable Subcustodian, as the case may be, with a Clearing Corporation
or a Securities Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in accordance with an
Instruction, Applicable Law, generally accepted trade practices, or the terms of
the instrument representing such Investment.
7.3 DELIVERY AND RECEIPT IN CONNECTION WITH BORROWINGS OF A FUND OR
OTHER COLLATERAL AND MARGIN REQUIREMENTS. Pursuant to Instruction, the Custodian
may deliver or receive Investments or cash of a Fund in connection with
borrowings or loans by a Fund and other collateral and margin requirements.
7.4 FUTURES AND OPTIONS. If, pursuant to an Instruction, the Custodian
shall become a party to an
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agreement with the Trust and/or Fund and a futures commission merchant regarding
margin (TRI-PARTY AGREEMENT), the Custodian shall (a) receive and retain, to the
extent the same are provided to the Custodian, confirmations or other documents
evidencing the purchase or sale by a Fund of exchange-traded futures contracts
and commodity options, (b) when required by such Tri-Party Agreement, deposit
and maintain in an account opened pursuant to such Agreement (MARGIN ACCOUNT),
segregated either physically or by book-entry in a Securities Depository for the
benefit of any futures commission merchant, such Investments as a Fund shall
have designated as initial, maintenance or variation "margin" deposits or other
collateral intended to secure the Fund's performance of its obligations under
the terms of any exchange-traded futures contracts and commodity options; and
(c) thereafter pay, release or transfer Investments into or out of the margin
account in accordance with the provisions of such Agreement. Alternatively, the
Custodian may deliver Investments, in accordance with an Instruction, to a
futures commission merchant for purposes of margin requirements in accordance
with Rule 17f-6. The Custodian shall in no event be responsible for the acts and
omissions of any futures commission merchant to whom Investments are delivered
pursuant to this Section; for the sufficiency of Investments held in any Margin
Account; or, for the performance of any terms of any exchange-traded futures
contracts and commodity options.
7.5 CONTRACTUAL OBLIGATIONS AND SIMILAR INVESTMENTS. From time to time,
a Fund's Investments may include Investments that are not ownership interests as
may be represented by certificate (whether registered or bearer), by entry in a
Securities Depository or by book entry agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If a Fund shall at any
time acquire such Investments, including without limitation deposit obligations,
loan participations, repurchase agreements and derivative arrangements, the
Custodian shall (a) receive and retain, to the extent the same are provided to
the Custodian, confirmations or other documents evidencing the arrangement; and
(b) perform on the Fund's account in accordance with the terms of the applicable
arrangement, but only to the extent directed to do so by Instruction. The
Custodian shall have no responsibility for agreements running to the Trust or a
Fund as to which it is not a party other than to retain, to the extent the same
are provided to the Custodian, documents or copies of documents evidencing the
arrangement and, in accordance with Instruction, to include such arrangements in
reports made to the Trust.
7.6 EXCHANGE OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian shall: (a) exchange securities held for the account of a Fund for
other securities in connection with any reorganization, recapitalization,
conversion, split-up, change of par value of shares or similar event, and (b)
deposit any such securities in accordance
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with the terms of any reorganization or protective plan.
7.7 SURRENDER OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of an entity allowable under Section
6.3 above; and (c) for a different number of certificates or instruments
representing the same number of shares or the same principal amount of
indebtedness.
7.8 RIGHTS, WARRANTS, ETC. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for purposes of
exercising such rights or selling such securities, and (b) deposit securities in
response to any invitation for the tender thereof.
7.9 MANDATORY CORPORATE ACTIONS. Unless otherwise directed by
Instruction, the Custodian shall: (a) comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions or similar rights of
securities ownership affecting securities held on a Fund's account and promptly
notify the Fund of such action; and (b) collect all stock dividends, rights and
other items of like nature with respect to such securities.
7.10 INCOME COLLECTION. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to a Fund with respect to
Investments and promptly credit the amount collected to a Principal or Agency
Account; provided, however, that the Custodian shall not be responsible for: (a)
the collection of amounts due and payable with respect to Investments that are
in default; or (b) the collection of cash or share entitlements with respect to
Investments that are not registered in the name of the Custodian or its
Subcustodians. The Custodian is hereby authorized to endorse and deliver any
instrument required to be so endorsed and delivered to effect collection of any
amount due and payable to the Fund with respect to Investments.
7.11 OWNERSHIP CERTIFICATES AND DISCLOSURE OF THE TRUST'S INTEREST. The
Custodian is hereby authorized to execute on behalf of the Trust ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Trust with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
With respect to securities issued in the United States of America, the
Custodian / / may /X/ may not release the identity of the Trust or a Fund
to an issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and the Trust. IF NO BOX IS CHECKED, THE
CUSTODIAN SHALL RELEASE SUCH INFORMATION UNTIL IT RECEIVES CONTRARY
INSTRUCTIONS FROM THE TRUST. With respect to securities issued outside of
the United States of America, information shall be released in accordance
with law or custom of the particular country in which such security is
located.
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7.12 PROXY MATERIALS. The Custodian shall deliver, or cause to be
delivered, to the Trust or its designated agent proxy forms, notices of meeting,
and any other notices or announcements materially affecting or relating to
Investments received by the Custodian or any nominee.
7.13. TAXES. The Custodian shall, where applicable, assist the Trust in
the reclamation of taxes withheld on dividends and interest payments received by
a Fund. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the advice of counsel
and upon information and advice regarding a Fund's tax status that is received
from or on behalf of the Fund without duty of separate inquiry.
7.14 OTHER DEALINGS. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
The Custodian shall attend to all nondiscretionary details in connection
with the sale or purchase or other administration of Investments, except as
otherwise directed by an Instruction, and may make payments to itself or others
for minor expenses of administering Investments under this Agreement; provided
that the Trust shall have the right to request an accounting with respect to
such expenses.
In fulfilling the duties set forth in Sections 7.6 through 7.10 above, the
Custodian shall provide to the Company all material information pertaining to a
corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Information relative to any pending corporate action made available
to the Company via any of the services described in the Electronic and Online
Services Schedule shall constitute the delivery of such information by the
Custodian hereunder. Any advance credit of cash or shares expected to be
received as a result of any corporate action shall be subject to actual
collection and may, when the Custodian deems collection unlikely, be reversed by
the Custodian.
The Custodian may at any time or times in its discretion appoint (and may
at any time remove) agents (other than Subcustodians) to carry out some or all
of the administrative provisions of this Agreement (AGENTS), provided, however,
that the appointment of such agent shall not relieve the Custodian of its
administrative
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obligations under this Agreement.
8. CASH ACCOUNTS, DEPOSITS AND MONEY MOVEMENTS. Subject to the terms and
conditions set forth in this Section 8, the Trust hereby authorizes the
Custodian to open and maintain, with itself or with Subcustodians, cash accounts
in United States Dollars, in such other currencies as are the currencies of the
countries in which the Trust maintains Investments or in such other currencies
as the Trust shall from time to time request by Instruction.
8.1 TYPES OF CASH ACCOUNTS. Cash accounts opened on the books of the
Custodian (PRINCIPAL ACCOUNTS) shall be opened in the name of each Fund. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 8 and the liability provisions contained
in Section 10.2. Cash accounts opened on the books of a Subcustodian may be
opened in the name of a Fund or the Custodian or in the name of the Custodian
for its customers generally (AGENCY ACCOUNTS). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Fund. Accordingly, the Custodian shall be responsible for exercising reasonable
care in the administration of such accounts but shall not be liable for their
repayment in the event such Subcustodian, by reason of its bankruptcy,
insolvency or otherwise, fails to make repayment.
8.2 PAYMENTS AND CREDITS WITH RESPECT TO THE CASH ACCOUNTS. The
Custodian shall make payments from or deposits to any of said accounts in the
course of carrying out its administrative duties, including but not limited to
income collection with respect to the Funds' Investments, and otherwise in
accordance with Instructions. The Custodian and its Subcustodians shall be
required to credit amounts to the cash accounts only when moneys are actually
received in cleared funds in accordance with banking practice in the country and
currency of deposit. Any credit made to any Principal or Agency Account before
actual receipt of cleared funds shall be provisional and may be reversed by the
Custodian in the event such payment is not actually collected. Unless otherwise
specifically agreed in writing by the Custodian or any Subcustodian, all
deposits shall be payable only at the branch of the Custodian or Subcustodian
where the deposit is made or carried.
8.3 CURRENCY AND RELATED RISKS. Each Fund bears risks of holding or
transacting in any currency, including any xxxx to market exposure associated
with a foreign exchange transaction undertaken with the Custodian. The Custodian
shall not be liable for any loss or damage arising from the applicability of any
law or regulation now or hereafter in effect, or from the occurrence of any
event, which may delay or affect the transferability, convertibility or
availability of any currency in the country (a) in which such Principal or
Agency Accounts are maintained or (b) in which such currency is issued, and in
no event shall the Custodian be obligated to
12
make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected by
any such law, regulation or event. Without limiting the generality of the
foregoing, neither the Custodian nor any Subcustodian shall be required to repay
any deposit made at a foreign branch of either the Custodian or Subcustodian if
such branch cannot repay the deposit due to a cause for which the Custodian
would not be responsible in accordance with the terms of Section 9 of this
Agreement unless the Custodian or such Subcustodian expressly agrees in writing
to repay the deposit under such circumstances. All currency transactions in any
account opened pursuant to this Agreement are subject to exchange control
regulations of the United States and of the country where such currency is the
lawful currency or where the account is maintained. Any taxes, costs, charges or
fees imposed on the convertibility of a currency held by the Trust shall be for
the account of the Trust.
8.4 FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
account of a Fund with such currency brokers or banking institutions, including
Subcustodians, as the Trust may direct pursuant to Instructions. The Custodian
may act as principal in any foreign exchange transaction with the Trust in
accordance with Section 8.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
8.4.1 THIRD PARTY FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall
process foreign exchange transactions (including without limitation
contracts, futures, options, and options on futures), where any third party
acts as principal counterparty to a Fund on the same basis it performs
duties as agent for the Fund with respect to any other of the Fund's
Investments. Accordingly the Custodian shall only be responsible for
delivering or receiving currency on behalf of the Fund in respect of such
contracts pursuant to Instructions. The Custodian shall not be responsible
for the failure of any counterparty (including any Subcustodian) in such
agency transaction to perform its obligations thereunder. The Custodian (a)
shall transmit cash and Instructions to and from the currency broker or
banking institution with which a foreign exchange contract or option has
been executed pursuant hereto, (b) may make free outgoing payments of cash
in the form of Dollars or foreign currency without receiving confirmation
of a foreign exchange contract or option or confirmation that the
countervalue currency completing the foreign exchange contract has been
delivered or received or that the option has been delivered or received,
and (c) shall hold all confirmations, certificates and other documents and
agreements received by the Custodian and evidencing or relating to such
foreign exchange transactions in safekeeping. The Fund accepts full
responsibility for its use of third-party foreign exchange dealers and for
execution of said foreign exchange contracts and options and understands
that the Fund shall be responsible for any and all costs and interest
charges which may be incurred by the Fund or the Custodian as a result of
the failure or delay of third parties to deliver foreign exchange.
8.4.2 FOREIGN EXCHANGE WITH THE CUSTODIAN AS PRINCIPAL. The
Custodian may
13
undertake foreign exchange transactions with a Fund as principal as the
Custodian and the Fund may agree from time to time. In such event, the
foreign exchange transaction will be performed in accordance with the
particular agreement of the parties, or in the event a principal foreign
exchange transaction is initiated by Instruction in the absence of specific
agreement, such transaction will be performed in accordance with the usual
commercial terms of the Custodian. In the event that the Fund defaults on
the settlement of any such foreign exchange transaction with the Custodian,
the Fund shall be liable for contracted currency of the transaction
together with any xxxx to market exposure associated with the replacement
purchase of the contracted currency undertaken with the Custodian.
8.5 DELAYS. If no event of Force Majeure shall have occurred and be
continuing and in the event that a delay shall have been caused by the
negligence or willful misconduct of the Custodian in carrying out an Instruction
to credit or transfer cash, the Custodian shall be liable to the Trust: (a) with
respect to Principal Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Custodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected; and,
(b) with respect to Agency Accounts, for interest to be calculated at the rate
customarily paid on such deposit and currency by the Subcustodian on overnight
deposits at the time the delay occurs for the period from the day when the
transfer should have been effected until the day it is in fact effected. The
Custodian shall not be liable for delays in carrying out such Instructions to
transfer cash which are not due to the Custodian's own negligence or willful
misconduct.
8.6 ADVANCES. If, for any reason in the conduct of its safekeeping
duties pursuant to Section 6 hereof or its administration of the Trust's assets
pursuant to Section 7 hereof, the Custodian or any Subcustodian advances monies
to facilitate settlement or otherwise for benefit of a Fund (whether or not any
Principal or Agency Account shall be overdrawn either during, or at the end of,
any Business Day), the Trust hereby does:
8.6.1 acknowledge that a Fund shall have no right or title to any
Investments purchased with such Advance save a right to receive such
Investments upon: (a) the debit of the Principal or Agency Account; or, (b)
if such debit would produce an overdraft in such account, other
reimbursement of the associated Advance;
8.6.2 grant to the Custodian a security interest in all Investments;
and,
8.6.3 agree that the Custodian may secure the resulting Advance by
perfecting a security interest in all Investments under Applicable Law.
Neither the Custodian nor any Subcustodian shall be obligated to advance
monies to the a Fund other than pursuant to a written line of credit
arrangement, and in the event that such Advance occurs, any transaction giving
rise to an Advance shall be for the account and risk of the Fund and shall not
be deemed to be a transaction
14
undertaken by the Custodian for its own account and risk. If such Advance shall
have been made by a Subcustodian or any other person, the Custodian may assign
the security interest and any other rights granted to the Custodian hereunder to
such Subcustodian or other person. If the Fund shall fail to repay when due the
principal balance of an Advance and accrued and unpaid interest thereon, the
Custodian or its assignee, as the case may be, shall be entitled to utilize the
available cash balance in any Agency or Principal Account and to dispose of any
Investments to the extent necessary to recover payment of all principal of, and
interest on, such Advance in full. The Custodian may assign any rights it has
hereunder to a Subcustodian or third party. Any security interest in Investments
taken hereunder shall be treated as financial assets credited to securities
accounts under Articles 8 and 9 of the Uniform Commercial Code (1997).
Accordingly, the Custodian shall have the rights and benefits of a secured
creditor that is a securities intermediary under such Articles 8 and 9.
8.7 INTEGRATED ACCOUNT. For purposes hereof, deposits of a particular
Fund maintained in all Principal Accounts (whether or not denominated in
Dollars) shall collectively constitute a single and indivisible current account
with respect to such Fund's obligations to the Custodian, or its assignee, and
balances in such Principal Accounts shall be available for satisfaction of the
Fund's obligations under this Section 8. The Custodian shall further have a
right of offset against the balances of such Fund in any Agency Account
maintained hereunder to the extent that the aggregate of all Principal Accounts
is overdrawn.
9. SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Subject to the provisions
hereinafter set forth in this Section 9, the Trust hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf of the Funds and
to appoint from time to time and to utilize Subcustodians. With respect to
securities and funds held by a Subcustodian, either directly or indirectly
(including by a Securities Depository or Clearing Corporation), notwithstanding
any provisions of this Agreement to the contrary, payment for securities
purchased and delivery of securities sold may be made prior to receipt of
securities or payment, respectively, and securities or payment may be received
in a form, in accordance with (a) governmental regulations, (b) rules of
Securities Depositories and clearing agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
9.1 DOMESTIC SUBCUSTODIANS AND SECURITIES DEPOSITORIES. The Custodian
may deposit and/or maintain, either directly or through one or more agents
appointed by the Custodian, Investments of the Funds in any Securities
15
Depository in the United States, including The Depository Trust Company,
provided such Depository meets applicable requirements of the Federal Reserve
Bank or of the Securities and Exchange Commission. The Custodian may, at any
time and from time to time, appoint any bank as defined in Section 2(a)(5) of
the 1940 Act meeting the requirements of a custodian under Section 17(f) of the
1940 Act and the rules and regulations thereunder, to act on behalf of the Fund
as a Subcustodian for purposes of holding Investments of the Fund in the United
States.
9.2 FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Unless instructed
otherwise by the Trust, the Custodian may deposit and/or maintain non-U.S.
Investments of a Fund in any non-U.S. Securities Depository provided such
Securities Depository meets the requirements of an "eligible securities
depository" under Rule 17f-7 promulgated under the 1940 Act, or any successor
rule or regulation ("Rule 17f-7") or which by order of the Securities and
Exchange Commission is exempted therefrom. Prior to the time that securities are
placed with such depository, but subject to the provisions of Section 9.2.4
below, the Custodian shall have prepared an assessment of the custody risks
associated with maintaining assets with the Securities Depository and shall have
established a system to monitor such risks on a continuing basis in accordance
with subsection 9.2.3 of this Section. Additionally, the Custodian may, at any
time and from time to time, appoint (a) any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under Rule 17f-5 or
which by order of the Securities and Exchange Commission is exempted therefrom,
or (b) any bank as defined in Section 2(a)(5) of the 1940 Act meeting the
requirements of a custodian under Section 17(f) of the 1940 Act and the rules
and regulations thereunder, to act on behalf of a Fund as a Subcustodian for
purposes of holding Investments of a Fund outside the United States. Such
appointment of foreign Subcustodians shall be subject to approval of the Trust
in accordance with Subsections 9.2.1 and 9.2.2 hereof, and use of non-U.S.
Securities Depositories shall be subject to the terms of Subsections 9.2.3 and
9.2.4 hereof. An Instruction to open an account in a given country shall
comprise authorization of the Custodian to hold assets in such country in
accordance with the terms of this Agreement. The Custodian shall not be required
to make independent inquiry as to the authorization of the Trust to invest in
such country.
9.2.1 BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and except to
the extent that the Board has delegated to and the Custodian has accepted
delegation of review of certain matters concerning the appointment of
Subcustodians pursuant to Subsection 9.2.2, the Custodian shall, prior to
the appointment of any Subcustodian for purposes of holding Investments of
the Trust outside the United States, obtain written confirmation of the
approval of the Board of Trustees or Directors of the Trust with respect to
(a) the identity of a Subcustodian, and (b) the Subcustodian agreement
which shall govern such appointment, such approval to be signed by an
Authorized
16
Person.
9.2.2 DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From time to
time, the Custodian may agree to perform certain reviews of Subcustodians
and of Subcustodian Contracts as delegate of the Trust's Board. In such
event, the Custodian's duties and obligations with respect to this
delegated review will be performed in accordance with the terms of the
attached 17f-5 Delegation Schedule to this Agreement.
9.2.3 MONITORING AND RISK ASSESSMENT OF SECURITIES DEPOSITORIES.
Prior to the placement of any assets of a Fund with a non-U.S. Securities
Depository, the Custodian: (a) shall provide to the Trust or its authorized
representative an assessment of the custody risks associated with
maintaining assets within such Securities Depository; and (b) shall have
established a system to monitor the custody risks associated with
maintaining assets with such Securities Depository on a continuing basis
and to promptly notify the Trust or its Investment Adviser of any material
changes in such risk. In performing its duties under this subsection, the
Custodian shall use reasonable care and may rely on such reasonable sources
of information as may be available including but not limited to: (i)
published ratings; (ii) information supplied by a Subcustodian that is a
participant in such Securities Depository; (iii) industry surveys or
publications; (iv) information supplied by the depository itself, by its
auditors (internal or external) or by the relevant Foreign Financial
Regulatory Authority. It is acknowledged that information procured through
some or all of these sources may not be independently verifiable by the
Custodian and that direct access to Securities Depositories is limited
under most circumstances. Accordingly, the Custodian shall not be
responsible for errors or omissions in its duties hereunder provided that
it has performed its monitoring and assessment duties with reasonable care.
The risk assessment shall be provided to the Trust or its Investment
Advisor by such means as the Custodian shall reasonably establish. Advices
of material change in such assessment may be provided by the Custodian in
the manner established as customary between the Trust and the Custodian for
transmission of material market information.
9.3 RESPONSIBILITY FOR SUBCUSTODIANS. The Custodian shall be liable to
the Trust for any loss or damage to the Trust caused by or resulting from the
acts or omissions of any Subcustodian to the extent that such acts or omissions
would be deemed to be negligence, gross negligence or willful misconduct in
accordance with the terms of the relevant subcustodian agreement under the laws,
circumstances and practices prevailing in the place where the act or omission
occurred.
9.4 NEW COUNTRIES. The Trust shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Subcustodian is authorized to act in order that the
Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event,
however, the Custodian is unable to establish such arrangements prior to the
time such investment is to be acquired, the Custodian is authorized to designate
at its discretion a local safekeeping agent, and the use of such local
safekeeping agent shall be at the sole risk of the Trust, and accordingly the
Custodian shall be responsible to the Trust for the actions of such agent if and
only to the extent the Custodian shall have recovered
17
from such agent for any damages caused the Trust by such agent.
10. RESPONSIBILITY OF THE CUSTODIAN. In performing its duties and obligations
hereunder, the Custodian shall use reasonable care under the facts and
circumstances prevailing in the market where performance is effected. Subject to
the specific provisions of this Section, the Custodian shall be liable for any
direct damage incurred by a Fund in consequence of the Custodian's negligence,
bad faith or willful misconduct. In no event shall the Custodian be liable
hereunder for any special, indirect, punitive or consequential damages arising
out of, pursuant to or in connection with this Agreement even if the Custodian
has been advised of the possibility of such damages. It is agreed that the
Custodian shall have no duty to assess the risks inherent in a Fund's
Investments or to provide investment advice with respect to such Investments and
that the Fund as principal shall bear any risks attendant to particular
Investments such as failure of counterparty or issuer.
10.1 LIMITATIONS OF PERFORMANCE. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not liable
hereunder for any loss or damage in association with such failure to perform,
for or in consequence of the following causes:
10.1.1 FORCE MAJEURE. FORCE MAJEURE shall mean any circumstance or
event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other agent of the Custodian or the Subcustodian,
including any event caused by, arising out of or involving (a) an act of
God, (b) accident, fire, water damage or explosion, (c) any computer,
system or other equipment failure or malfunction caused by any computer
virus or the malfunction or failure of any communications medium, (d) any
interruption of the power supply or other utility service, (e) any strike
or other work stoppage, whether partial or total, (f) any delay or
disruption resulting from or reflecting the occurrence of any Sovereign
Risk, (g) any disruption of, or suspension of trading in, the securities,
commodities or foreign exchange markets, whether or not resulting from or
reflecting the occurrence of any Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not resulting
from or reflecting the occurrence of any Sovereign Risk, or (i) any other
cause similarly beyond the reasonable control of the Custodian.
10.1.2 COUNTRY RISK. COUNTRY RISK shall mean, with respect to the
acquisition, ownership, settlement or custody of Investments in a
jurisdiction, all risks relating to, or arising in consequence of, systemic
and markets factors affecting the acquisition, payment for or ownership of
Investments including (a) the prevalence of crime and corruption, (b) the
inaccuracy or unreliability of business and financial information, (c) the
instability or volatility of banking and financial systems, or the absence
or inadequacy of an infrastructure to support such systems, (d) custody and
settlement infrastructure of the market in which such Investments are
transacted and held, (e) the acts, omissions and operation of any
Securities Depository, (f) the risk of the bankruptcy or insolvency of
banking agents, counterparties to cash and securities transactions,
registrars or transfer agents, and (g) the existence of market conditions
which prevent the orderly execution or settlement of transactions or which
affect the value of assets.
18
10.1.3 SOVEREIGN RISK. SOVEREIGN RISK shall mean, in respect of any
jurisdiction, including the United States of America, where Investments is
acquired or held hereunder or under a Subcustody Agreement, (a) any act of
war, terrorism, riot, insurrection or civil commotion, (b) the imposition
of any investment, repatriation or exchange control restrictions by any
Governmental Authority, (c) the confiscation, expropriation or
nationalization of any Investments by any Governmental Authority, whether
de facto or de jure, (d) any devaluation or revaluation of the currency,
(e) the imposition of taxes, levies or other charges affecting Investments,
(f) any change in the Applicable Law, or (g) any other economic or
political risk incurred or experienced.
10.2. LIMITATIONS ON LIABILITY. The Custodian shall not be liable for any
loss, claim, damage or other liability arising from the following causes:
10.2.1 FAILURE OF THIRD PARTIES. The failure of any third party
including: (a) any issuer of Investments or book-entry or other agent of
and issuer; (b) any counterparty with respect to any Investment, including
any issuer of exchange-traded or other futures, option, derivative or
commodities contract; (c) failure of an Investment Adviser, foreign custody
manager or other agent of the Trust; or (d) failure of other third parties
similarly beyond the control or choice of the Custodian.
10.2.2 INFORMATION SOURCES. The Custodian may rely upon information
received from issuers of Investments or agents of such issuers, information
received from Subcustodians and from other commercially reasonable sources
such as commercial data bases and the like, but shall not be responsible
for specific inaccuracies in such information, provided that the Custodian
has relied upon such information in good faith, or for the failure of any
commercially reasonable information provider.
10.2.3 RELIANCE ON INSTRUCTION. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such action
conflicts with, or is contrary to any provision of, the Trust's declaration
of trust, certificate of incorporation or by-laws, Applicable Law, or
actions by the trustees, directors or shareholders of the Trust.
10.2.4 RESTRICTED SECURITIES. The limitations inherent in the
rights, transferability or similar investment characteristics of a given
Investment of the Trust.
11. INDEMNIFICATION. The Trust hereby indemnifies the Custodian and each
Subcustodian, and their respective agents, nominees and the partners, employees,
officers and directors ("Indemnified Parties"), and agrees to hold each of them
harmless from and against all claims and liabilities, including counsel fees and
taxes, incurred or assessed against any of them arising directly or indirectly
from any action or thing the Custodian takes or does or omits to take or do (i)
at the request or on the direction of or in reliance on the advice of the Trust
given in accordance with the terms of this Agreement, or (ii) upon Instructions,
provided however, that an Indemnified Party shall not be indemnified against any
such liability arising out of Indemnified Party's own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties under this
Agreement.
BBH&Co. similarly agrees to indemnify and hold harmless the Trust from
all liabilities and expenses arising directly from BBH&Co. or its nominee's or
Subcustodian's willful misfeasance, bad faith, gross negligence
19
or reckless disregard in performing its duties under this Agreement.
In order that the indemnification provisions contained herein shall apply,
however, it is understood that if in any case a party may be asked to indemnify
or hold the other party harmless, the indemnifying party shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnified party will use all reasonable
care to identify and notify the indemnifying party promptly concerning any
situation which presents or appears likely to present the probability of such a
claim for indemnification against the indemnifying party, but failure to do so
in good faith shall not affect the rights hereunder except to the extent the
indemnifying party is materially prejudiced thereby. As to any matter eligible
for indemnification, an indemnified party shall act reasonably and in accordance
with good faith business judgment and shall not effect any settlement or confess
judgment without the consent of the indemnifying party, which consent shall not
be withheld or delayed unreasonably.
The indemnifying party shall be entitled to participate at its own expense
or, if it so elects, to assume the defense of any suit brought to enforce any
claims subject to this indemnity provision. If the indemnifying party elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by it and reasonably satisfactory to the indemnified party. In the event
that the indemnifying party elects to assume the defense of any suit and retain
counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. An indemnifying party shall not effect any
settlement without the consent of the indemnified party (which shall not be
withheld or delayed unreasonably by the indemnified party) unless such
settlement imposes no liability, responsibility or other obligation upon the
indemnified party and relieves it of all fault. If the indemnifying party does
not elect to assume the defense of suit, it will reimburse the indemnified party
for the reasonable fees and expenses of any counsel retained by the indemnified
party.
12. REPORTS AND RECORDS. The Custodian shall:
12.1 create and maintain records relating to the performance of its
obligations under this Agreement;
12.2 make available to the Trust, its auditors, agents and employees,
during regular business hours of the Custodian, upon reasonable request and
during normal business hours of the Custodian, all records maintained by the
Custodian pursuant to Section 12.1 above, subject, however, to all reasonable
security requirements of the Custodian then applicable to the records of its
custody customers generally; and
12.3 make available to the Trust all Electronic Reports.
20
The Trust shall examine all records, howsoever produced or
transmitted, promptly upon receipt thereof and notify the Custodian promptly of
any discrepancy or error therein. Unless the Trust delivers written notice of
any such discrepancy or error within a reasonable time after its receipt
thereof, such records shall be deemed to be true and accurate. It is understood
that the Custodian now obtains and will in the future obtain information on the
value of assets from outside sources which may be utilized in certain reports
made available to the Trust. The Custodian deems such sources to be reliable but
it is acknowledged and agreed that the Custodian does not verify nor represent
nor warrant as to the accuracy or completeness of such information and
accordingly shall be without liability in selecting and using such sources and
furnishing such information.
13. MISCELLANEOUS.
13.1 PROXIES, ETC. The Trust will promptly execute and deliver, upon
request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
13.2 ENTIRE AGREEMENT. Except as specifically provided herein, this
Agreement constitutes the entire agreement between the Trust and the Custodian
with respect to the subject matter hereof. Accordingly, this Agreement
supersedes any custody agreement or other oral or written agreements heretofore
in effect between the Trust and the Custodian with respect to the custody of the
Fund's Investments.
13.3 WAIVER, AMENDMENT, AND ASSIGNMENT. No provision of this Agreement
may be waived, amended or modified, and no addendum to this Agreement shall be
or become effective, or be waived, amended or modified, except by an instrument
in writing executed by the party against which enforcement of such waiver,
amendment or modification is sought; provided, however, that an Instruction
shall, whether or not such Instruction shall constitute a waiver, amendment or
modification for purposes hereof, be deemed to have been accepted by the
Custodian when it commences actions pursuant thereto or in accordance therewith.
This Agreement shall be binding upon and shall inure to the benefit of the
Custodian and the Trust and their successors and assignees, provided that the
Trust may not assign this Agreement without the prior written consent of the
Custodian.
13.4 GOVERNING LAW, JURISDICTION AND VENUE. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF
MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE
PARTIES HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF
21
THE STATE OF MASSACHUSETTS. THE TRUST IRREVOCABLY WAIVES ANY OBJECTION IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING IN ANY
OF THE AFORESAID COURTS AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
13.5 NOTICES. Notices and other writings contemplated by this Agreement,
other than Instructions, shall be delivered (a) by hand, (b) by first class
registered or certified mail, postage prepaid, return receipt requested, (c) by
a nationally recognized overnight courier, or (d) by facsimile transmission,
provided that any notice or other writing sent by facsimile transmission shall
also be mailed, postage prepaid, to the party to whom such notice is addressed.
All such notices shall be addressed, as follows:
If to the Trust:
ICON Funds.
0000 XXX Xxxxxxxxx, 00xx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Attn: Legal Department
Telephone: (000) 000-0000
Facsimile (000) 000-0000
If to the Custodian:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address as the Trust or the Custodian may have designated in
writing to the other.
13.6 HEADINGS. Paragraph headings included herein are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.
13.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
the Trust and the Custodian.
13.8 CONFIDENTIALITY. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of
22
rendering or obtaining services pursuant to this Agreement and, except as may be
required in carrying out this Agreement, shall not be disclosed to any third
party without the prior consent of such providing party. The foregoing shall not
be applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required to be disclosed by or to any bank examiner of the
Custodian or any Subcustodian, any Regulatory Authority, any auditor of the
parties hereto, or by judicial or administrative process or otherwise by
Applicable Law.
13.9 COUNSEL. In fulfilling its duties hereunder, the Custodian shall be
entitled to receive and act upon the advice of (i) counsel regularly retained by
the Custodian in respect of such matters, (ii) counsel for the Trust or (iii)
such counsel as the Trust and the Custodian may agree upon, with respect to all
matters, and the Custodian shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
13.10 CONFLICT. Nothing contained in this Agreement shall prevent the
Custodian and its associates from (i) dealing as a principal or an intermediary
in the sale, purchase or loan of the Funds' Investments to, or from the
Custodian or its associates; (ii) acting as a custodian, a subcustodian, a
trustee, an agent, securities dealer, an investment manager or in any other
capacity for any other client whose interests may be adverse to the interest of
the Funds; or (iii) buying, holding, lending, and dealing in any way in any
assets for the benefit of its own account, or for the account of any other
client whose interests may be adverse to the Funds notwithstanding that the same
or similar assets may be held or dealt in by, or for the account of the Fund by
the Custodian. The Trust hereby voluntarily consents to, and waives any
potential conflict of interest between the Custodian and/or its associates and
the Trust, and agrees that:
(a) the Custodian's and/or its associates' engagement in any
such transaction shall not disqualify the Custodian from
continuing to perform as the custodian of the Trust under
this Agreement;
(b) the Custodian and/or its associates shall not be liable to
account to the Trust for any profits or benefits made or
derived by or in connection with any such transaction; and
(c) the Trust shall use all reasonable efforts to disclose this
provision, among other provisions in this Agreement, to its
shareholders.
14. COMPENSATION. The Trust agrees to pay to the Custodian (a) a fee in
an amount set forth in Exhibit B, as amended from time to time, and (b) all
out-of-pocket expenses incurred by the Custodian, including the fees and
23
expenses of all Subcustodians, and payable from time to time. Amounts payable by
the Trust under and pursuant to this Section 15 shall be payable by wire
transfer to the Custodian at BBH&Co. in New York, New York.
15. TERMINATION. This Agreement may be terminated by either party in accordance
with the provisions of this Section. The provisions of this Agreement and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
15.1 TERM, NOTICE AND EFFECT. This Agreement shall have an initial term
of five (5) years from the date hereof. Thereafter, this Agreement shall
automatically renew for successive one (1) year periods unless either party
terminates this Agreement by written notice effective no sooner than
seventy-five (75) days following the date that notice to such effect shall be
delivered to the other party at its address set forth in Section 12.5 hereof.
Notwithstanding the foregoing provisions, either party may terminate this
Agreement at any time upon thirty (30) days written notice to the other party in
the event that the either party is adjudged bankrupt or insolvent, or there
shall be commenced against such party a case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect.
15.2 SUCCESSOR CUSTODIAN. In the event of the appointment of a successor
custodian, it is agreed that the Investments of the Funds held by the Custodian
or any Subcustodian shall be delivered to the successor custodian in accordance
with reasonable Instructions. The Custodian agrees to cooperate with the Trust
in the execution of documents and performance of other actions necessary or
desirable in order to facilitate the succession of the new custodian. If no
successor custodian shall be appointed, the Custodian shall in like manner
transfer the Funds' Investments in accordance with Instructions.
15.3 DELAYED SUCCESSION. If no Instruction has been given as of the
effective date of termination, Custodian may at any time on or after such
termination date and upon ten (10) consecutive calendar days written notice to
the Trust either (a) deliver the Investments of the Funds held hereunder to the
Trust at the address designated for receipt of notices hereunder; or (b) deliver
any investments held hereunder to a bank or trust company having a
capitalization of $2,000,000 USD equivalent and operating under the Applicable
law of the jurisdiction where such Investments are located, such delivery to be
at the risk of the Funds. In the event that Investments or moneys of the Funds
remain in the custody of the Custodian or its Subcustodians after the date of
termination owing to the failure of the Trust to issue Instructions with respect
to their disposition or owing to the fact that such
24
disposition could not be accomplished in accordance with such Instructions
despite diligent efforts of the Custodian, the Custodian shall be entitled to
compensation for its services with respect to such Investments and moneys during
such period as the Custodian or its Subcustodians retain possession of such
items and the provisions of this Agreement shall remain in full force and effect
until disposition in accordance with this Section is accomplished.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document.
XXXXX BROTHERS XXXXXXXX & CO. ICON FUNDS
By: By:
-------------------------- --------------------------
Name: Name: Xxxxx X. Xxxxxxxx
Title: Title: President
Date: Date:
25
FUNDS TRANSFER SERVICES SCHEDULE TO CUSTODIAN AGREEMENT
1. EXECUTION OF PAYMENT ORDERS. Xxxxx Brothers Xxxxxxxx & Co. (the CUSTODIAN)
is hereby instructed by ICON Funds (the COMPANY) to execute each payment order,
whether denominated in United States dollars or other applicable currencies,
received by the Custodian in the Company's name as sender and authorized and
confirmed by an Authorized Person as defined in a Custodian Agreement dated as
of _____________, 2005 by and between the Custodian and the Company, as amended
or restated from time thereafter (the AGREEMENT), provided that the Company has
sufficient available funds on deposit in a Principal Account as defined in the
Agreement and provided that the order (i) is received by the Custodian in the
manner specified in this Funds Transfer Services Schedule or any amendment
hereafter; (ii) complies with any written instructions and restrictions of the
Company as set forth in this Funds Transfer Services Schedule or any amendment
hereafter; (iii) is authorized by the Company or is verified by the Custodian in
compliance with a security procedure set forth in Paragraph 2 below for
verifying the authenticity of a funds transfer communication sent to the
Custodian in the name of the Company or for the detection of errors set forth in
any such communication; and (iv) contains sufficient data to enable the
Custodian to process such transfer.
2. SECURITY PROCEDURE. The Company hereby elects to use the procedure selected
below as its security procedure (the SECURITY PROCEDURE). The Security Procedure
will be used by the Custodian to verify the authenticity of a payment order or a
communication amending or canceling a payment order. The Custodian will act on
instructions received provided the instruction is authenticated by the Security
Procedure. The Company agrees and acknowledges in connection with (i) the size,
type and frequency of payment orders normally issued or expected to be issued by
the Company to the Custodian, (ii) all of the security procedures offered to the
Company by the Custodian, and (iii) the usual security procedures used by
customers and receiving banks similarly situated, that authentication through
the Security Procedure shall be deemed commercially reasonable for the
authentication of all payment orders submitted to the Custodian. The Company
hereby elects (PLEASE CHOOSE ONE) the following Security Procedure as described
below:
/ / BIDS AND BIDS WORLDVIEW PAYMENT PRODUCTS. BIDS and BIDS Worldview
Payment Products, are on-line payment order authorization facilities
with built-in authentication procedures. The Custodian and the Company
shall each be responsible for maintaining the confidentiality of
passwords or other codes to be used by them in connection with BIDS.
The Custodian will act on instructions received through BIDS without
duty of further confirmation unless the Company notifies the Custodian
that its password is not secure.
/ / SWIFT. The Custodian and the Company shall comply with SWIFT's
authentication procedures. The Custodian will act on instructions
received via SWIFT provided the instruction is authenticated by the
SWIFT system.
/ / TESTED TELEX. The Custodian will accept payment orders sent by
tested telex, provided the test key matches the algorithmic key the
Custodian and Company have agreed to use.
/ / COMPUTER TRANSMISSION. The Custodian is able to accept transmissions
sent from the Company's computer facilities to the Custodian's
computer facilities provided such transmissions are encrypted and
digitally certified or are otherwise authenticated in a reasonable
manner based on available technology. Such procedures shall be
established in an operating protocol between the Custodian and the
Company.
/X/ TELEFAX INSTRUCTIONS. A payment order transmitted to the Custodian
by telefax transmission shall transmitted by the Company to a
telephone number specified from time to time by the Custodian for such
purposes. If it detects no discrepancies, the Custodian will then
either:
1. If the telefax requests a repetitive payment order, the
Custodian may call the Company at its last known telephone
number, request to speak to the Company or Authorized
Person, and confirm the authorization and the details of the
payment order (a CALLBACK); or
2. If the telefax requests a non-repetitive order, the
Custodian will perform a Callback.
26
All faxes must be accompanied by a fax cover sheet which indicates the
sender's name, company name, telephone number, fax number, number of
pages, and number of transactions or instructions attached.
/ / TELEPHONIC. A telephonic payment order shall be called into the
Custodian at the telephone number designated from time to time by the
Custodian for that purpose. The caller shall identify herself/himself
as an Authorized Person. The Custodian shall obtain the payment order
data from the caller. The Custodian shall then:
1. If a telephonic repetitive payment order, the Custodian may
perform a Callback; or
2. If a telephonic non-repetitive payment order, the Custodian
will perform a Callback.
In the event the Company chooses a procedure which is not a Security Procedure
as described above, the Company agrees to be bound by any payment order (whether
or not authorized) issued in its name and accepted by the Custodian in
compliance with the procedure selected by the Company.
3. REJECTION OF PAYMENT ORDERS. The Custodian shall give the Company timely
notice of the Custodian's rejection of a payment order. Such notice may be given
in writing or orally by telephone, each of which is hereby deemed commercially
reasonable. In the event the Custodian fails to execute a properly executable
payment order and fails to give the Company notice of the Custodian's
non-execution, the Custodian shall be liable only for the Company's actual
damages and only to the extent that such damages are recoverable under UCC 4A
(as defined in Paragraph 7 below). Notwithstanding anything in this Funds
Transfer Services Schedule and the Agreement to the contrary, the Custodian
shall in no event be liable for any consequential or special damages under this
Funds Transfer Services Schedule, whether or not such damages relate to services
covered by UCC 4A, even if the Custodian has been advised of the possibility of
such damages. Whenever compensation in the form of interest is payable by the
Custodian to the Company pursuant to this Funds Transfer Services Schedule, such
compensation will be payable as specified in UCC 4A.
4. CANCELLATION OF PAYMENT ORDERS. The Company may cancel a payment order
but the Custodian shall have no liability for the Custodian's failure to act on
a cancellation instruction unless the Custodian has received such cancellation
instruction at a time and in a manner affording the Custodian reasonable
opportunity to act prior to the Custodian's execution of the order. Any
cancellation shall be sent and confirmed in the manner set forth in Paragraph 2
above.
5. RESPONSIBILITY FOR THE DETECTION OF ERRORS AND UNAUTHORIZED PAYMENT
ORDERS. Except as may be provided, the Custodian is not responsible for
detecting any Company error contained in any payment order sent by the Company
to the Custodian. In the event that the Company's payment order to the Custodian
either (i) identifies the beneficiary by both a name and an identifying or bank
account number and the name and number identify different persons or entities,
or (ii) identifies any bank by both a name and an identifying number and the
number identifies a person or entity different from the bank identified by name,
execution of the payment order, payment to the beneficiary, cancellation of the
payment order or actions taken by any bank in respect of such payment order may
be made solely on the basis of the number. The Custodian shall not be liable for
interest on the amount of any payment order that was not authorized or was
erroneously executed unless the Company so notifies the Custodian within thirty
(30) business days following the Company's receipt of notice that such payment
order had been processed. If a payment order in the name of the Company and
accepted by the Custodian was not authorized by the Company, the liability of
the parties will be governed by the applicable provisions of UCC 4A.
6. LAWS AND REGULATIONS. The rights and obligations of the Custodian and the
Company with respect to any payment order executed pursuant to this Funds
Transfer Services Schedule will be governed by any applicable laws, regulations,
circulars and funds transfer system rules, the laws and regulations of the
United States of America and of other relevant countries including exchange
control regulations and limitations on dealings or other sanctions, and
including without limitation those sanctions imposed under the law of the United
States of America by the Office of Foreign Assets Control. Any taxes, fines,
costs, charges or fees imposed by relevant authorities on such transactions
shall be for the account of the Company.
27
7. MISCELLANEOUS. All accounts opened by the Company or its authorized
agents at the Custodian subsequent to the date hereof shall be governed by this
Funds Transfer Schedule. All terms used in this Funds Transfer Services Schedule
shall have the meaning set forth in Article 4A of the Uniform Commercial Code as
currently in effect in the State of New York (UCC 4A) unless otherwise set forth
herein. The terms and conditions of this Funds Transfer Services Schedule are in
addition to, and do not modify or otherwise affect, the terms and conditions of
the Agreement and any other agreement or arrangement between the parties hereto.
8. INDEMNIFICATION. The Custodian does not recommend the sending of
instructions by telefax or telephonic means as provided in Paragraph 2. BY
ELECTING TO SEND INSTRUCTIONS BY TELEFAX OR TELEPHONIC MEANS, THE COMPANY AGREES
TO INDEMNIFY THE CUSTODIAN AND ITS PARTNERS, OFFICERS AND EMPLOYEES FOR ALL
LOSSES THEREFROM.
The Custodian will perform a Callback if instructions are sent by telefax or
telephonic means as provided in Paragraph 2 above.
The undersigned acknowledges that (I/we) have received a copy of this document
Accepted and agreed:
XXXXX BROTHERS XXXXXXXX & CO. ICON FUNDS
By: By:
-------------------------- --------------------------
Name: Name:
Title: Title:
Date: Date:
28
ELECTRONIC AND ON-LINE SERVICES
SCHEDULE
This Electronic and On-Line Services Schedule (this SCHEDULE) to a Custodian
Agreement dated as of _____________________(as amended from time to time
hereafter, the AGREEMENT) by and between Xxxxx Brothers Xxxxxxxx & Co. (WE, US
OUR) and ICON Funds (YOU, YOUR), provides general provisions governing your use
of and access to the Services (as hereinafter defined) provided to you by us via
the Internet (at xxx.xxxxx.xxx OR SUCH OTHER URL AS WE MAY INSTRUCT YOU TO USE
TO ACCESS OUR PRODUCTS) and via a direct dial-up connection between your
computer and our computers, as of ________________, _____, 2005 (the EFFECTIVE
DATE). Use of the Services constitutes acceptance of the terms and conditions of
this Schedule, any Appendices hereto, the Terms and Conditions posted on our web
site, and any terms and conditions specifically governing a particular Service
or our other products, which may be set forth in the Agreement or in a separate
related agreement (collectively, the RELATED AGREEMENTS).
1. GENERAL TERMS.
You will be granted access to our suite of online products, which may
include, but shall not be limited to the following services via the
Internet or dial-up connection (each separate service is a SERVICE;
collectively referred to as the SERVICES):
1.1. BIDS(R) and BIDS WorldView, a system for effectuating securities and
fund trade instruction and execution, processing and handling
instructions, and for the input and retrieval of other information;
1.2. F/X WorldView, a system for executing foreign exchange trades;
1.3. Fund WorldView, a system for receiving fund and prospectus
information;
1.4. BBHCOnnect, a system for placing securities trade instructions and
following the status and detail of trades;
1.5. ActionView(SM), a system for receiving certain corporate action
information;
1.6. Risk View, an interactive portfolio risk analysis tool; and
1.7. Such other services as we shall from time to time offer.
2. SECURITY / PASSWORDS.
2.1. A digital certificate and/or an encryption key may be required to
access certain Services. You may apply for a digital certificate
and/or an encryption key by following the procedures set forth at
xxxx://xxx.xxx.xxx/xxxxx/. You also will need an identification code
(ID) and password(s) (PASSWORD) to access the Services.
2.2. You agree to safeguard your digital certificate and/or encryption key,
ID, and Password and not to give or make available, intentionally or
otherwise, your digital certificate, ID, and/or Password to any
unauthorized person. You must immediately notify us in writing if you
believe that your digital certificate and/or encryption key, Password,
or ID has been compromised or if you suspect unauthorized access to
your account by means of the Services or otherwise, or when a person
to whom a digital certificate and/or an encryption key, Password, or
ID has been assigned leaves or is no longer permitted to access the
Services.
2.3. We will not be responsible for any breach of security, or for any
unauthorized trading or theft by any third party, caused by your
failure (be it intentional, unintentional, or negligent) to maintain
the confidentiality of your ID and/or Password and/or the security of
your digital certificate and/or encryption key.
29
3. INSTRUCTIONS.
3.1. Proper instructions under this Schedule shall be provided as
designated in the Related Agreements (INSTRUCTIONS).
3.2. The following additional provisions apply to Instructions provided via
the Services:
a. Instructions sent by electronic mail will not be accepted or
acted upon.
b. You authorize us to act upon Instructions received through the
Services utilizing your digital certificate, ID, and/or Password
as though they were duly authorized written instructions, without
any duty of verification or inquiry on our part, and agree to
hold us harmless for any losses you experience as a result.
c. From time to time, the temporary unavailability of third party
telecommunications or computer systems required by the Services
may result in a delay in processing Instructions. In such an
event, we shall not be liable to you or any third party for any
liabilities, losses, claims, costs, damages, penalties, fines,
obligations, or expenses of any kind (including without
limitation, reasonable attorneys', accountants', consultants', or
experts' fees and disbursements) that you experience due to such
a delay.
4. ELECTRONIC DOCUMENTS.
We may make periodic statements, disclosures, notices, and other documents
available to you electronically, and, subject to any delivery and receipt
verification procedures required by law, you agree to receive such
documents electronically and to check the statements for accuracy. If you
believe any such statement contains incorrect information, you must follow
the procedures set forth in the Related Agreement(s).
5. MALICIOUS CODE.
You understand and agree that you will be responsible for the introduction
(by you, your employees, agents, or representatives) into the Services,
whether intentional or unintentional, of (i) any virus or other code,
program, or sub-program that damages or interferes with the operation of
the computer system containing the code, program or sub-program, or halts,
disables, or interferes with the operation of the Services themselves; or
(ii) any device, method, or token whose knowing or intended purpose is to
permit any person to circumvent the normal security of the Services or the
system containing the software code for the Services (MALICIOUS CODE). You
agree to take all necessary actions and precautions to prevent the
introduction and proliferation of any Malicious Code into those systems
that interact with the Services.
6. INDEMNIFICATION.
For avoidance of doubt, the parties agree that the provisions in the
Related Agreement(s) related to each party's indemnification of the other
party and any limitations on liability and responsibilities shall be
applicable to this Agreement, and are hereby expressly incorporated herein.
You agree that the Services are comprised of telecommunications and
computer systems, and that it is possible that Instructions, information,
transactions, or account reports might be added to, changed, or omitted by
electronic or programming malfunction, unauthorized access, or other
failure of the systems which comprise the Services, despite the security
features that have been designed into the Services. You agree that we will
not be liable for any action taken or not taken in complying with the terms
of this Schedule, except for our willful misconduct or negligence. The
provisions of this paragraph shall survive the termination of this Schedule
and the Related Agreements.
7. TERM/TERMINATION.
7.1. This Schedule is effective as of the date you sign it or first use the
Services, whichever is first, and continues in effect until such time
as either you or we terminate the Schedule in accordance with this
Section 7 and/or until your off-line use of the Services is
terminated.
30
7.2. We may terminate your access to the Services at any time, for any
reason, with five (5) business days prior notice; provided that we may
terminate your access to the Services with no prior notice (i) if your
account with us is closed, (ii) if you fail to comply with any of the
terms of this Agreement, (iii) if we believe that your continued
access to the Services poses a security risk, or (iv) if we believe
that you are violating or have violated applicable laws, and we will
not be liable for any loss you may experience as a result of such
termination. You may terminate your access to the Services at any time
by giving us ten (10) business days notice. Upon termination, we will
cancel all your Passwords and IDs and any in-process or pending
Instructions will be carried out or cancelled, at our sole discretion.
8. MISCELLANEOUS.
8.1. NOTICES. All notices, requests, and demands (other than routine
operational communications, such as Instructions) shall be in such
form and effect as provided in the Related Agreement(s).
8.2. INCONSISTENT PROVISIONS. Each Service may be governed by separate
terms and conditions in addition to this Schedule and the Related
Agreement(s). Except where specifically provided to the contrary in
this Schedule, in the event that such separate terms and conditions
conflict with this Schedule and the Related Agreement(s), the
provisions of this Schedule shall prevail to the extent this Schedule
applies to the transaction in question.
8.3. BINDING EFFECT; ASSIGNMENT; SEVERABILITY. This Schedule shall be
binding on you, your employees, officers and agents. We may assign or
delegate our rights and duties under this Schedule at any time without
notice to you. Your rights under this Schedule may not be assigned
without our prior written consent. In the event that any provision of
this Schedule conflicts with the law under which this Schedule is to
be construed or if any such provision is held invalid or unenforceable
by a court with jurisdiction over you and us, such provision shall be
deemed to be restated to effectuate as nearly as possible the purposes
of the Schedule in accordance with applicable law. The remaining
provisions of this Schedule and the application of the challenged
provision to persons or circumstances other than those as to which it
is invalid or unenforceable shall not be affected thereby, and each
such provision shall be valid and enforceable to the full extent
permitted by law.
8.4. CHOICE OF LAW; JURY TRIAL. This Schedule shall be governed by and
construed, and the legal relations between the parties shall be
determined, in accordance with the laws of the State of Massachusetts,
without giving effect to the principles of conflicts of laws. Each
party agrees to waive its right to trial by jury in any action or
proceeding based upon or related to this Agreement. The parties agree
that all actions and proceedings based upon or relating to this
Schedule shall be litigated exclusively in the federal and state
courts located within Massachusetts.
The undersigned acknowledges that (I/we) have received a copy of this
document.
ICON FUNDS ("YOU")
BY:
-------------------------
TITLE:
-------------------------
DATE:
-------------------------
31
EXHIBIT A
17f-5 DELEGATION SCHEDULE
By its execution of this Delegation Schedule dated as of _____________,
2005, ICON FUNDS, a management investment company registered with the Securities
and Exchange Commission (the COMMISSION) under the Investment Company Act of
1940, as amended (the 1940 ACT), acting through its Board of Trustees or its
duly appointed representative (the FUND), hereby appoints XXXXX BROTHERS
XXXXXXXX & CO., a New York limited partnership with an office in Boston,
Massachusetts (the DELEGATE) as its delegate to perform certain functions with
respect to the custody of Fund's Assets outside the United States.
1. MAINTENANCE OF FUND'S ASSETS ABROAD. The Fund, acting through its Board
or its duly authorized representative, hereby instructs Delegate pursuant to the
terms of the Custodian Agreement dated as of the date hereof executed by and
between the Fund and the Delegate (the CUSTODIAN AGREEMENT) to place and
maintain the Fund's Assets in countries outside the United States in accordance
with Instructions received from the Fund's Investment Advisor. Such instruction
shall represent an Instruction under the terms of the Custodian Agreement. The
Fund acknowledges that (a) the Delegate shall perform services hereunder only
with respect to the countries where it accepts delegation as Foreign Custody
Manager as indicated on the Delegate's Global Custody Network Listing; (b)
depending on conditions in the particular country, advance notice may be
required before the Delegate shall be able to perform its duties hereunder in or
with respect to such country (such advance notice to be reasonable in light of
the specific facts and circumstances attendant to performance of duties in such
country); and (c) nothing in this Delegation Schedule shall require the Delegate
to provide delegated or custodial services in any country, and there may from
time to time be countries as to which the Delegate determines it will not
provide delegation services.
2. DELEGATION. Pursuant to the provisions of Rule 17f-5 under the 1940 Act
as amended, the Board hereby delegates to the Delegate, and the Delegate hereby
accepts such delegation and agrees to perform, only those duties set forth in
this Delegation Schedule concerning the safekeeping of the Fund's Assets in each
of the countries as to which it acts as the Board's delegate. The Delegate is
hereby authorized to take such actions on behalf of or in the name of the Fund
as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause the Fund's Assets to be placed
with a particular Eligible Foreign Custodian in accordance herewith. The Fund
confirms to the Delegate that the Fund or its investment adviser has considered
the
32
Sovereign Risk and prevailing Country Risk as part of its continuing investment
decision process, including such factors as may be reasonably related to the
systemic risk of maintaining the Fund's Assets in a particular country,
including, but not limited to, financial infrastructure, prevailing custody and
settlement systems and practices (including the use of any Securities Depository
in the context of information provided by the Custodian in the performance of
its duties as required under Rule 17f-7 and the terms of the Custodian Agreement
governing such duties), and the laws relating to the safekeeping and recovery of
the Fund's Assets held in custody pursuant to the terms of the Custodian
Agreement.
3. SELECTION OF ELIGIBLE FOREIGN CUSTODIAN AND CONTRACT ADMINISTRATION. The
Delegate shall perform the following duties with respect to the selection of
Eligible Foreign Custodians and administration of certain contracts governing
the Fund's foreign custodial arrangements:
(a) SELECTION OF ELIGIBLE FOREIGN CUSTODIAN. The Delegate shall place
and maintain the Fund's Assets with an Eligible Foreign Custodian; PROVIDED that
the Delegate shall have determined that the Fund's Assets will be subject to
reasonable care based on the standards applicable to custodians in the relevant
market after considering all factors relevant to the safekeeping of such assets
including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to, the physical protections
available for certificated securities (if applicable), the controls and
procedures for dealing with any Securities Depository, the method of
keeping custodial records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Fund's Assets;
(iii) The Eligible Foreign Custodian's general reputation and standing;
and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by virtue
of the existence of any offices of such Eligible Foreign Custodian in the
United States or such Eligible Foreign Custodian's appointment of an agent
for service of process in the United States or consent to jurisdiction in
the United States.
The Delegate shall be required to make the foregoing determination to the best
of its knowledge and belief based only on information reasonably available to
it.
(b) CONTRACT ADMINISTRATION. The Delegate shall cause that the
foreign custody arrangements with an Eligible Foreign Custodian shall be
governed by a written contract that the Delegate has determined will
33
provide reasonable care for Fund assets based on the standards applicable to
custodians in the relevant market. Each such contract shall, except as set forth
in the last paragraph of this subsection (b), include provisions that provide:
(i) For indemnification or insurance arrangements (or any combination
of the foregoing) such that the Fund will be adequately protected against
the risk of loss of assets held in accordance with such contract;
(ii) That the Fund'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 its creditors except a claim of payment for their safe
custody or administration or, in the case of cash deposits, liens or rights
in favor of creditors of such Custodian arising under bankruptcy,
insolvency or similar laws;
(iii) That beneficial ownership of the Fund's Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) That adequate records will be maintained identifying the Fund's
Assets as belonging to the Fund or as being held by a third party for the
benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the
contents of such records; and
(vi) That the Delegate will receive sufficient and timely periodic
reports with respect to the safekeeping of the Fund's Assets, including,
but not limited to, notification of any transfer to or from the Fund's
account or a third party account containing the Fund's Assets.
Such contract may contain, in lieu of any or all of the provisions
specified in this Section 3(b), such other provisions that the Delegate
determines will provide, in their entirety, the same or a greater level of
care and protection for the Fund's Assets as the specified provisions, in
their entirety.
(c) LIMITATION TO DELEGATED SELECTION. Notwithstanding anything in
this Delegation Schedule to the contrary, the duties under this Section 3 shall
apply only to Eligible Foreign Custodians selected by the Delegate and shall not
apply to Securities Depositories or to any Eligible Foreign Custodian that the
Delegate is directed to use pursuant to Section 7 of this Delegation Schedule.
4. MONITORING. The Delegate shall establish a system to monitor at reasonable
intervals (but at least annually) the appropriateness of maintaining the Fund's
Assets with each Eligible Foreign Custodian that has been selected by the
Delegate pursuant to Section 3 of this Delegation Schedule. The Delegate shall
monitor the
34
continuing appropriateness of placement of the Fund's Assets in accordance with
the criteria established under Section 3(a) of this Delegation Schedule. The
Delegate shall monitor the continuing appropriateness of the contract governing
the Fund's arrangements in accordance with the criteria established under
Section 3(b) of this Delegation Schedule.
5. REPORTING. At least annually and more frequently as mutually agreed
between the parties, the Delegate shall provide to the Board written reports
specifying placement of the Fund's Assets with each Eligible Foreign Custodian
selected by the Delegate pursuant to Section 3 of this Delegation Schedule and
shall promptly report as to any material changes to such foreign custody
arrangements. Delegate will prepare such a report with respect to any Eligible
Foreign Custodian that the Delegate has been instructed to use pursuant to
Section 7 of this Delegation Schedule only to the extent specifically agreed
with respect to the particular situation.
6. WITHDRAWAL OF FUND'S ASSETS. If the Delegate determines that an
arrangement with a specific Eligible Foreign Custodian selected by the Delegate
under Section 3 of this Delegation Schedule no longer meets the requirements of
said Section, Delegate shall withdraw the Fund's Assets from the non-complying
arrangement as soon as reasonably practicable; PROVIDED, however, that if in the
reasonable judgment of the Delegate, such withdrawal would require liquidation
of any of the Fund's Assets or would materially impair the liquidity, value or
other investment characteristics of the Fund's Assets, it shall be the duty of
the Delegate to provide information regarding the particular circumstances and
to act only in accordance with Instructions of the Fund or its Investment
Advisor with respect to such liquidation or other withdrawal.
7. DIRECTION AS TO ELIGIBLE FOREIGN CUSTODIAN. Notwithstanding this
Delegation Schedule, the Fund, acting through its Board, its Investment Advisor
or its other authorized representative, may direct the Delegate to place and
maintain the Fund's Assets with a particular Eligible Foreign Custodian,
including without limitation with respect to investment in countries as to which
the Custodian will not provide delegation services. In such event, the Delegate
shall be entitled to rely on any such instruction as an Instruction under the
terms of the Custodian Agreement and shall have no duties under this Delegation
Schedule with respect to such arrangement save those that it may undertake
specifically in writing with respect to each particular instance.
8. STANDARD OF CARE. In carrying out its duties under this Delegation
Schedule, the Delegate agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for safekeeping the Fund's
Assets would exercise.
35
9. REPRESENTATIONS. The Delegate hereby represents and warrants that it is a
U.S. Bank and that this Delegation Schedule has been duly authorized, executed
and delivered by the Delegate and is a legal, valid and binding agreement of the
Delegate.
The Fund hereby represents and warrants that its Board of Trustees has
determined that it is reasonable to rely on the Delegate to perform the
delegated responsibilities provided for herein and that this Delegation Schedule
has been duly authorized, executed and delivered by the Fund and is a legal,
valid and binding agreement of the Fund.
10. EFFECTIVENESS; TERMINATION. This Delegation Schedule shall be effective as
of the date on which this Delegation Schedule shall have been accepted by the
Delegate, as indicated by the date set forth below the Delegate's signature.
This Delegation Schedule may be terminated at any time, without penalty, by
written notice from the terminating party to the non-terminating party. Such
termination shall be effective on the 30th calendar day following the date on
which the non-terminating party shall receive the foregoing notice. The
foregoing to the contrary notwithstanding, this Delegation Schedule shall be
deemed to have been terminated concurrently with the termination of the
Custodian Agreement.
11. NOTICES. Notices and other communications under this Delegation Schedule
are to be made in accordance with the arrangements designated for such purpose
under the Custodian Agreement unless otherwise indicated in a writing
referencing this Delegation Schedule and executed by both parties.
12. DEFINITIONS. Capitalized terms not otherwise defined in this Delegation
Schedule have the following meanings:
a. Country Risk - shall have the meaning set forth in Section 10.1.2 of
the Custodian Agreement.
b. ELIGIBLE FOREIGN CUSTODIAN - shall have the meaning set forth in Rule
17f-5(a)(1) of the 1940 Act and shall also include a U.S. Bank.
c. FUND'S ASSETS - shall mean any of the Fund's investments
(including foreign currencies) for which the primary market is outside the
United States, and such cash and cash equivalents as are reasonably
necessary to effect the Fund's transactions in such investments.
36
d. INSTRUCTIONS - shall have the meaning set forth in the Custodian
Agreement.
e. SECURITIES DEPOSITORY - shall have the meaning set forth in Rule 17f-7
of the 1940 Act.
f. SOVEREIGN RISK - shall have the meaning set forth in Section [6.3] of
the Custodian Agreement.
g. U.S. BANK - shall mean a bank which qualifies to serve as a
custodian of assets of investment companies under Section 17(f) of the
1940 Act.
13. GOVERNING LAW AND JURISDICTION. This Delegation Schedule shall be
construed in accordance with the laws of the State of New York. The parties
hereby submit to the exclusive jurisdiction of the Federal courts sitting in the
State of New York or the Commonwealth of Massachusetts or of the state courts of
either such State or such Commonwealth.
14. FEES. Delegate shall perform its functions under this Delegation Schedule
for the compensation determined under the Custodian Agreement.
15. INTEGRATION. This Delegation Schedule sets forth all of the Delegate's
duties with respect to the selection and monitoring of Eligible Foreign
Custodians, the administration of contracts with Eligible Foreign Custodians,
the withdrawal of assets from Eligible Foreign Custodians and the issuance of
reports in connection with such duties. The terms of the Custodian Agreement
shall apply generally as to matters not expressly covered in this Delegation
Schedule, including dealings with the Eligible Foreign Custodians in the course
of discharge of the Delegate's obligations under the Custodian Agreement.
37
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
The undersigned acknowledges that (I/we) have received a copy of this document
XXXXX BROTHERS XXXXXXXX & CO. ICON FUNDS
By: By:
----------------------- ----------------------
Name: Name:
Title: Title:
Date: Date:
38
EXHIBIT B
FEE SCHEDULE
The Trust shall pay Custodian the following fee for the services under this
Agreement:
I. Custody Fees:
An asset-based fee calculated on the average net asset value of the Funds,
with the fee rates applied incrementally to assets at the respective levels
indicate below (as applicable), and accrued daily, as follows:
US ANNUAL RELATIONSHIP ASSET CUSTODY BASED CHARGES:
0.65 basis points on the first $50 million
0.50 basis points on the all assets above $50 million
US TRANSACTION CHARGE*: $ 8.00
* Includes DTC, Fed, wires, book transfers, derivatives, repos, commercial
paper, maturity collections, paydowns and cancels & corrects.
NON-US ANNUAL RELATIONSHIP ASSET CUSTODY BASED CHARGES*: 3.00 basis points
NON-US TRANSACTION CHARGE**: $ 25.00
* Includes those assets invested in transactional depositories such as
Euroclear
** Includes market charges, 3rd party FX, non-US wires and cancels &
corrects.
A non-automated instruction charge of $15.00 will be assessed on a per
instruction basis for all instructions, which are not provided to BBH in a
properly formatted electronic form.
OUT OF POCKET EXPENSES:
Out-of-pocket expenses that would be additional, include but are not
limited to locally mandated charges, securities pricing provided by
approved pricing vendors, communications expenses, telex, audit reporting,
legal, telephone, fax, postage, including overnight and other courier
services, duplication, forms and supplies, travel and lodging relating to
Board meeting, stamp duties, foreign investor registration, commissions,
dividend and income collection charges, proxy charges, taxes, certificate
fees, special handling, transfer, withdrawal, Euroclear deposit and
withdrawal charges, holdings charges, registration fees, the cost of
obtaining market quotations, record retention, retrieval and destruction
costs, customized programming expenses, ad hoc reporting fees at an agreed
upon rate and other expenses as agreed to by the parties from time to time.
ANNUAL MINIMUMS: $ 170,000 per annum for the Trust.
II. Value Added Services:
FOREIGN EXCHANGE: BBH will waive transaction charges associated with
foreign exchange with BBH.
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CASH MANAGEMENT: BBH&Co. will pay ICON interest on balances. Idle
balances are invested automatically through BBH&Co.'s cash management
sweep service where investments are made in overnight time deposits with
BBH's Grand Cayman branch or other commercial banks approved as part of
the program.
ICON FUNDS
By:
--------------------------
Name:
Title:
XXXXX BROTHERS XXXXXXXX & CO.
By:
--------------------------
Name:
Title:
40
