CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of August, 1994, between THE
XXXXXXXX FUNDS, INC., a Maryland corporation (the "Company") and FIRSTAR TRUST
COMPANY (the "Custodian").
The Company, an open-end management investment company, desires to
place and maintain all of its portfolio securities and cash in the custody of
the Custodian. The Custodian has at least the minimum qualifications required by
Section 17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to act
as custodian of the portfolio securities and cash of the Company, and has
indicated its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Appointment as Custodian. The Company hereby appoints the Custodian
as custodian of its portfolio securities and cash delivered to the Custodian as
hereinafter described and the Custodian agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms below will have the
following meaning:
2.1. Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Company by appropriate resolution of its Board of Directors (the
"Board"), and set forth in a certificate as required by Section 4 hereof.
2.2. Security. The term security as used herein will have the
same meaning as when such term is used in the Securities Act of 1933, as
amended, including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation in
any profit sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or group
or index of securities (including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered into on a
national securities exchange relating to a foreign currency, or, in general, any
interest or instrument commonly known as a "security", or any certificate of
interest or participation in, temporary or interim certificate for, receipt for,
guarantee of, or warrant or right to subscribe to, or option contract to
purchase or sell any of the foregoing, and futures, forward contracts and
options thereon.
2.3. Portfolio Security. Portfolio Security will mean any
security owned by the Company.
2.4. Officers' Certificate. Officers' Certificate will mean,
unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any one Authorized Person of the Company.
2.5. Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6. Depository. Depository shall mean The Depository Trust
Company ("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include Participants Trust Company and any
other person authorized to act as a depository under the 1940 Act, its successor
or successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Board.
2.7. Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Custodian and the Company shall agree
upon from time to time, and (ii) instructions (which may be continuing
instructions) regarding other matters signed or initialed by such one or more
persons from time to time designated in an Officers' Certificate as having been
authorized by the Board. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Company shall cause all oral instructions to be promptly confirmed
in writing. The Custodian shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction and the sole obligation of the
Custodian with respect to any follow-up or confirmatory instruction shall be to
make reasonable efforts to detect any discrepancy between the original
instruction and such confirmation and to report such discrepancy to the Company.
Upon receipt of an Officers' Certificate as to the authorization by the Board
accompanied by a detailed description of procedures approved by the Company,
Proper Instructions may include communication that effected directly between
electro-mechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards for the
Company's assets.
3. Separate Accounts. If the Company has more than one series or
portfolio, the Custodian will segregate the assets of each series or portfolio
to which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon).
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4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Custodian
his or her certification to the Custodian, in such form as may be acceptable to
the Custodian, of (i) the names and signatures of the Authorized Persons and
(ii) the names of the Board, it being understood that upon the occurrence of any
change in the information set forth in the most recent certification on file
(including without limitation any person named in the most recent certification
who is no longer an Authorized Person as designated therein), the Secretary or
Assistant Secretary of the Company, will sign a new or amended certification
setting forth the change and the new, additional or omitted names or signatures.
The Custodian will be entitled to rely and act upon any Officers' Certificate
given to it by the Company which has been signed by Authorized Persons named in
the most recent certification.
5. Custody of Cash. As custodian for the Company, the Custodian will
open and maintain a separate account or accounts in the name of the Company or
in the name of the Custodian, as Custodian of the Company, and will deposit to
the account of the Company all of the cash of the Company, except for cash held
by a subcustodian appointed pursuant to Section 13.2 hereof, including borrowed
funds, delivered to the Custodian, subject only to draft or order by the
Custodian acting pursuant to the terms of this Agreement. Upon receipt by the
Custodian of Proper Instructions (which may be continuing instructions) or in
the case of payments for redemptions and repurchases of outstanding shares of
common stock of the Company, notification from the Company's transfer agent as
provided in Section 7, requesting such payment, designating the payee or the
account or accounts to which the Custodian will release funds for deposit, and
stating that it is for a purpose permitted under the terms of this Section 5,
specifying the applicable subsection, the Custodian will make payments of cash
held for the accounts of the Company, insofar as funds are available for that
purpose, only as permitted in subsections 5.1-5.9 below.
5.1. Purchase of Securities. Upon the purchase of securities for
the Company, against contemporaneous receipt of such securities by the Custodian
registered in the name of the Company or in the name of, or properly endorsed
and in form for transfer to, the Custodian, or a nominee of the Custodian, or
receipt for the account of the Custodian pursuant to the provisions of Section 6
below, each such payment to be made at the purchase price shown on a broker's
confirmation (or transaction report in the case of Book Entry Paper) of purchase
of the securities received by the Custodian before such payment is made, as
confirmed in the Proper Instructions received by the Custodian before such
payment is made.
5.2. Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Company offered for repurchase
or redemption in accordance with Section 7 of the Agreement.
5.3. Distributions and Expenses of Company. For the payment on
the account of the Company of dividends or other distributions to shareholders
as may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, distribution fees,
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fees of the Custodian or its services hereunder and reimbursement of the
expenses and liabilities of the Custodian as provided hereunder, fees of any
transfer agent, fees for legal, accounting, and auditing services, or other
operating expenses of the Company.
5.4. Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Company held by or to be delivered to the Custodian.
5.5. Repayment of Loans. To repay loans of money made to the
Company, but, in the case of final payment, only upon redelivery to the
Custodian of any Portfolio Securities pledged or hypothecated therefor and upon
surrender of documents evidencing the loan.
5.6. Repayment of Cash. To repay the cash delivered to the
Company for the purpose of collateralizing the obligation to return to the
Company certificates borrowed from the Company representing Portfolio
Securities, but only upon redelivery to the Custodian of such borrowed
certificates.
5.7. Foreign Exchange Transactions. For payments in connection
with foreign exchange contracts or options to purchase and sell foreign
currencies for spot and future delivery which may be entered into by the
Custodian on behalf of the Company upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or banking institution (which
may be the Custodian, or any other subcustodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Custodian shall
have no duty with respect to the selection of such currency brokers or banking
institutions with which the Company deals or for their failure to comply with
the terms of any contract or option.
5.8. Other Authorized Payments. For other authorized transactions
of the Company, or other obligations of the Company incurred for proper Company
purposes; provided that before making any such payment the Custodian will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Company,
or specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
5.9. Termination. Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1. Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to
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Section 13.2 hereof, the Custodian will receive and hold pursuant to the
provisions hereof, in a separate account or accounts and physically segregated
at all times from those of other persons, any and all Portfolio Securities which
may now or hereafter be delivered to it by or for the account of the Company.
All such Portfolio Securities will be held or disposed of by the Custodian for,
and subject at all times to, the instructions of the Company pursuant to the
terms of this Agreement. Subject to the specific provisions herein relating to
Portfolio Securities that are not physically held by the Custodian, the
Custodian will register all Portfolio Securities (unless otherwise directed by
Proper Instructions or an Officers' Certificate), in the name of a registered
nominee of the Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or regulations or under the laws of any state.
The Company will from time to time furnish to the Custodian
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Company.
6.2. Voting and Proxies. Neither the Custodian nor any nominee of
the Custodian will vote any of the Portfolio Securities held hereunder, except
in accordance with Proper Instructions or an Officers' Certificate. The
Custodian will execute and deliver, or cause to be executed and delivered, to
the Company all notices, proxies and proxy soliciting materials with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Company), but
without indicating the manner in which such proxies are to be voted.
6.3. Book-Entry System. Provided (i) the Custodian has received a
certified copy of a resolution of the Board specifically approving deposits of
Company assets in the Book-Entry System and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered and Officer's Certificate to the Custodian
indicating that the Board has withdrawn its approval:
(a) The Custodian may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are represented in an
account ("Account") of the Custodian (or its agent) in such System which will
not include any assets of the Custodian (or such agent) other than assets held
as a fiduciary, custodian, or otherwise for customers;
(b) The records of the Custodian (and any such agent) with
respect to the Company's participation in the Book-Entry System through the
Custodian (or any such agent) will identify by book entry Portfolio Securities
which are included with other securities deposited in the Account and shall at
all times during the regular business hours of the Custodian (or such agent) be
open for inspection by duly authorized officers, employees or agents of the
Company. Where securities are transferred to the Company's account, the
Custodian shall
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also, by book entry or otherwise, identify as belonging to the Company a
quantity of securities in fungible bulk of securities (i) registered in the name
of the Custodian or its nominee, or (ii) shown on the Custodian's account on the
books of the Federal Reserve Bank;
(c) The Custodian (or its agent) shall pay for securities
purchased for the account of the Company or shall pay cash collateral against
the return of Portfolio Securities loaned by the Company upon (i) receipt of
advice from the Book-Entry System that such Securities have been transferred to
the Account, and (ii) the making of an entry on the records of the Custodian (or
its agent) to reflect such payment and transfer for the account of the Company.
The Custodian (or its agent) shall transfer securities sold or loaned for the
account of the company upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Company has been transferred to the
Account; and
(ii) the making of an entry on the records of the
Custodian (or its agent) to reflect such transfer and payment for the account of
the Company. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Company shall identify the Company, be
maintained for the Company by the Custodian and shall be provided to the Company
at its request or, in the alternative the Custodian shall provide to the Company
written confirmation of all securities movements authorized by the Company or
provide the Company access to the Custodian's Securities Accounting System to
enable verification of securities transactions by the Company. The Custodian
shall send the Company a confirmation, as defined by Rule 17f-4 of the 1940 Act,
of any transfers to or from the account of the company;
(d) The Custodian will promptly provide the Company with any
report obtained by the Custodian or its agent on the Book-Entry System's
accounting system, internal accounting control and procedures for safeguarding
securities deposited in the Book-Entry System;
(e) The Custodian shall be liable to the Company for any
loss or damage to the Company resulting from use of the Book-Entry System by
reason of any gross negligence, willful misfeasance or bad faith of the
Custodian or any of its agents or of any of its or their employees or from any
reckless disregard by the Custodian or any such agent of its duty to use its
best efforts to enforce such rights as it may have against the Book-Entry
System; at the election of the Company, it shall be entitled to be subrogated
for the Custodian in any claim against the Book-Entry System or any other person
which the Bank or its agent may have as a consequence of any such loss or damage
if and to the extent that the Company has not been made whole for any loss or
damage.
6.4. Use of a Depository. Provided (i) the Custodian has received
a certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the
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Board has reviewed and approved the arrangement and has not delivered an
Officer's Certificate to the Custodian indicating that the Board has withdrawn
its approval:
(a) The Custodian may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal with Portfolio Securities
including stock dividends, rights and other items of like nature, and to receive
and remit to the Custodian on behalf of the Company all income and other
payments thereon and to take all steps necessary and proper in connection with
the collection thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository.
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Company and the Company shall pay cash collateral against the return of
Portfolio Securities loaned by the Company only upon delivery of the Securities
to or for the account of the Company; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment thereof or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Company; and
(d) The Custodian shall be liable to the Company for any
loss or damage to the Company resulting from the use of a Depository by reason
of any gross negligence, willful misfeasance or bad faith of the Custodian or
its employees or from any reckless disregard by the Custodian of its duty to use
its best efforts to enforce such rights as it may have against a Depository; at
the election of the Company, it shall be entitled to be subrogated for the
Custodian in any claim against the Depository or any other person which the
Custodian or its agent may have as a consequence of any such loss or damage if
and to the extent that the Company has not been made whole for any loss or
damage;
In this connection, the Custodian shall use its best efforts to
ensure that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Custodian upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Custodian for prompt transmittal to the Company;
(iii) Such Depository immediately forwards to the
Custodian confirmation of any purchase or sale of Portfolio Securities and of
the appropriate book entry made by such Depository to the Custodian's account;
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(iv) Such Depository prepares and delivers to the
Custodian such records with respect to the performance of the Custodian's
obligations and duties hereunder as may be necessary for the Company to comply
with the recordkeeping requirements of Section 31(a) of the 1940 Act and Rule
31(a) thereunder; and
(v) Such Depository delivers to the Custodian and the
Company all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Company may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.5. Use of Book-Entry System for Commercial Paper. Provided (i)
the Custodian has received a certified copy of a resolution of the Board
specifically approving participation in a system maintained by the Custodian for
the holding of commercial paper in electronic book-entry form ("Electronic
Book-Entry System") and (ii) for each year following such approval the Board has
received and approved the arrangements, upon receipt of Proper Instructions and
upon receipt of confirmation from an Issuer (as defined below) that the Company
has purchased such Issuer's commercial paper, the Custodian shall issue and hold
in its Electronic Book-Entry System, on behalf of the Company, commercial paper
issued by issuers (the "Issuers"). In maintaining its Electronic Book-Entry
System, the Custodian agrees that:
(a) the Custodian will maintain all book-entry commercial
paper held by the Company in an account of the Custodian that includes only
assets held by it for customers;
(b) the electronic records of the Custodian with respect to
the Company's purchase of book-entry commercial paper through the Custodian will
identify commercial paper belonging to the Company which is included in the
Electronic Book-Entry System which system shall at all times during the regular
business hours of the Custodian be available for inspection by duly authorized
officers, employees or agents of the Company;
(c) the Custodian shall pay for book-entry commercial paper
purchased for the account of the Company upon contemporaneous (i) receipt of
advice from the Issuer that such sale of book-entry commercial paper has been
effected, and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Company;
(d) the Custodian shall cancel such book-entry commercial
paper obligation upon the maturity thereof upon contemporaneous (i) receipt of
advice that payment for such book-entry commercial paper has been transferred to
the Company, and (ii) the making of an entry on the records of the Custodian to
reflect such payment for the account of the Company;
(e) the Custodian shall transmit to the Company a
transaction journal confirming each transaction in book-entry commercial paper
for the account of the
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Company on the next business day following the transaction or provide equivalent
information by giving the Company access to Custodian's Electronic Book-Entry
System; and
(f) the Custodian will send to the Company such reports on
its system of internal accounting control with respect to the Electronic
Book-Entry System as the Company may reasonably request from time to time.
6.6. Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
1. The Custodian shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Company
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions between the
Custodian, any broker-dealer registered under the Exchange Act and a member of
the National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Company relating to the compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange, or of
any similar organization or organizations.
2. Unless another agreement requires it to do so, the
Custodian shall be under no duty or obligation to see that the Company has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Custodian be under duty or obligation
to present such option to the broker for exercise unless it receives Proper
Instructions from the Company. The Custodian shall have no responsibility for
the legality of any put or call purchased or sold on behalf of the Company, the
propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection 6.7 below).
(b) Puts, Calls and Futures Traded on Commodities
Exchanges.
1. The Custodian shall take action as to puts, calls and
futures contracts ("Future") purchased or sold by the Company in accordance with
the provisions of any agreement among the Company, the Custodian and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding account
deposits in connection with transactions by the Company.
2. The responsibilities and liabilities of the Custodian as
to futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in subparagraph (a)(2) of this
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Section 6.6 as if such subparagraph referred to Futures Commission Merchants
rather than brokers, and Futures and puts and calls thereon instead of options.
6.7. Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a Segregated Account or Accounts for
and on behalf of the Company, into which Account or Accounts may be transferred
upon receipt of Proper Instructions cash and/or Portfolio Securities:
(a) in accordance with the provisions of any agreement among
the Company, the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Company;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Company or commodity futures
purchased or written by the Company;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Company's
then outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Company's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;
(d) for the deposit of any Portfolio Securities which the
Company has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
(e) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(f) for other proper corporate purposes, but only, in the
case of this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
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(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Company's
obligations under outstanding firm commitment or when-issued
agreements for the purchase of Portfolio Securities and
under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Company's outstanding
forward commitment or when-issued agreements for the
purchase of portfolio securities or reverse repurchase
agreements are sold to other parties or the Company's
obligations thereunder are met from assets of the Company
other than those in the Segregated Account; or
(v) for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio Securities.
6.8. Interest Bearing Call or Time Deposits. The Custodian shall,
upon receipt of Proper Instructions relating to the purchase by the Company of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Custodian shall include in its records with
respect to the assets of the Company appropriate notation as to the amount of
each such deposit, and the banking institution with which such deposit is made
(the "Deposit Bank"), and shall retain such forms of advice or receipt
evidencing the deposit, if any, as may be forwarded to the Custodian by the
Deposit Bank. Such deposits shall be deemed Portfolio Securities of the Company
and the responsibility of the Custodian therefore shall be the same as and no
greater than the Custodian's responsibility in respect of other Portfolio
Securities of the Company.
6.9. Transfer of Securities. The Custodian will transfer,
exchange, deliver or release Portfolio Securities held by it hereunder, insofar
as such Securities are available for such purpose, provided that before making
any transfer, exchange, delivery or release under this Section the Custodian
will receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section 6.9,
specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Custodian to ascertain
the applicable subsection, only
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(a) upon sales of Portfolio Securities for the account of
the Company, against contemporaneous receipt by the Custodian of payment
therefor in full, each such payment to be in the amount of the sale price shown
in a broker's confirmation of sale of the Portfolio Securities received by the
Custodian before such payment is made, as confirmed in the Proper Instructions
received by the Custodian before such payment is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Custodian shall have to liability for
failure to so tender in a timely manner unless such Proper Instructions are
received by the Custodian at least two business days prior to the date required
for tender, and unless the Custodian (or its agent or subcustodian hereunder)
has actual possession of such Security at least two business days prior to the
date of tender;
(c) upon conversion of Portfolio Securities pursuant to
their terms into other securities;
(d) for the purpose of redeeming in kind shares of the
Company upon authorization from the Company;
(e) in the case of option contracts owned by the Company,
for presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Custodian in order to collateralize loans made to the
Company by any bank, including the Custodian; provided, however, that such
Portfolio Securities will be released only upon payment to the Custodian for the
account of the Company of the moneys borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, and such
fact is made to appear in the Proper Instructions, further Portfolio Securities
may be released for that purpose without any such payment. In the event that any
such pledged Portfolio Securities are held by the Custodian, they will be so
held for the account of the lender, and after notice to the Company from the
lender in accordance with the normal procedures of the lender, that an event of
deficiency or default on the loan has occurred, the Custodian may deliver such
pledged Portfolio Securities to or for the account of the lender;
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(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Custodian of the
fair market value of such security, as set forth in the Proper Instructions
received by the Custodian before such payment is made;
(i) for the purpose of delivering securities lent by the
Company to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Company and the Custodian,
and upon receipt of payment in connection with any repurchase agreement relating
to such securities entered into by the Company;
(j) for other authorized transactions of the Company or for
other proper corporate purposes; provided that before making such transfer, the
Custodian will also receive a certified copy of resolutions of the Board, signed
by an authorized officer of the Company (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Company or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Custodian pursuant to
subsections (a), (b), (c), (e), (f), (g), (h) and (i) securities or cash
receivable in exchange therefor shall be delivered to the Custodian.
7. Redemptions. In the case of payment of assets of the Company
held by the Custodian in connection with redemptions and repurchases by the
Company of outstanding common shares, the Custodian will rely on notification by
the Company's transfer agent of receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles and By-laws of the
Company, from assets available for said purpose.
8. Merger, Dissolution, etc. of Company. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of the Company into or the consolidation of the Company with another
investment company, the sale by the Company of all, or substantially all, of its
assets to another investment company, or the liquidation or dissolution of the
Company and distribution of its assets, the Custodian will deliver the Portfolio
Securities held by it under this Agreement and disburse cash only upon the order
of the Company set forth in an Officers' Certificate, accompanied by a certified
copy of a resolution of the Board authorizing any of the foregoing transactions.
Upon completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Custodian, this Agreement will terminate.
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9. Actions of Custodian Without Prior Authorization.
Notwithstanding anything herein to the contrary, unless and until the Custodian
receives an Officers' Certificate to the contrary, it will without prior
authorization or instruction of the Company or the transfer agent:
9.1. Endorse for collection and collect on behalf of and in
the name of the Company all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Company and hold for the account of the Company all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;
9.2. Present for payment all coupons and other income items
held by it for the account of the Company which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Company;
9.3. Receive and hold for the account of the Company all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4. Execute as agent on behalf of the Company all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Company's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Custodian will execute and deliver such certificates in connection
with Portfolio Securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any State;
9.5. Present for payment all Portfolio Securities which are
called, redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Company; and
9.6. Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Custodian will use all
reasonable efforts to collect any funds which may to its knowledge become
collectible arising from Portfolio Securities, including dividends, interest and
other income, and to transmit to the Company notice actually received by it of
any call for redemption, offer of exchange, right of subscription,
reorganization or other proceedings affecting such Securities. If Portfolio
Securities upon which such income is payable are in default or payment is
refused after due demand or presentation, the Custodian will notify the Company
in writing of any default or refusal to pay within two business days from the
- 14 -
day on which it receives knowledge of such default or refusal. In addition, the
Custodian will send the Company a written report once each month showing any
income on any Portfolio Security held by it which is more than ten days overdue
on the date of such report and which has not previously been reported.
11. Maintenance of Records and Accounting Services. The Custodian
will maintain records with respect to transactions for which the Custodian is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the 1940 Act and such
other rules and regulations as shall be mutually agreed upon in writing from
time to time, and will furnish the Company daily with a statement of condition
of the Company. The Custodian will furnish to the Company at the end of every
month, and at the close of each quarter of the Company's fiscal year, a list of
the Portfolio Securities and the aggregate amount of cash held by it for the
Company. The books and records of the Custodian pertaining to its actions under
this Agreement and reports by the Custodian or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Company and will be preserved
by the Custodian in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Custodian shall keep the books of account and render
statements or copies from time to time as reasonably requested by the Treasurer
or any executive officer of the Company.
The Custodian shall assist generally in the preparation of
reports to shareholders and others, audits of accounts, and other ministerial
matters of like nature.
12. Concerning the Custodian.
12.1. Performance of Duties and Standard of Care.
In the performance of its duties hereunder, the Custodian
will be protected and not be liable, and will be indemnified and held harmless
for any action taken or omitted to be taken by it in good faith reliance upon
the terms of this Agreement, any Officers' Certificate, Proper Instructions,
resolution of the Board, telegram, notice, request, certificate or other
instrument reasonably believed by the Custodian to be genuine and for any other
loss to the Company except in the case of its negligence, willful misfeasance or
bad faith in the performance of its duties or reckless disregard of its
obligations and duties hereunder.
12.2. Agents and Subcustodians. The Custodian may employ
agents in the performance of its duties hereunder and shall be responsible for
the acts and omissions of such agents as if performed by the Custodian
hereunder.
Upon receipt of Proper Instructions, the Custodian may
employ subcustodians, provided that any such subcustodian meets at least the
minimum qualifications required by Section
- 15 -
17(f)(1) of the 1940 Act to act as a custodian of the Company's assets with
respect to property of the Company held in the United States, or Rule 17f-5 of
the 1940 Act with respect to property of the Company held outside of the United
States, as more fully set forth on Schedule A hereto relating to the custody of
foreign securities. The Custodian shall have the same liability to the Company
on account of any act or omission of any sub-custodian so employed as any such
sub-custodian has to the Custodian.
12.3. Insurance. The Custodian shall use the same care with
respect to the safekeeping of Portfolio Securities and cash of the Company held
by it as it uses in respect of its own similar property but it need not maintain
any special insurance for the benefit of the Company.
12.4. Fees and Expenses of Custodian. The Company will pay
or reimburse the Custodian from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Custodian in the
performance of this Agreement (including any duties listed on any Schedule
hereto, if any) including any indemnities for any loss, liabilities or expense
to the Custodian as provided above. For the services rendered by the Custodian
hereunder, the Company will pay to the Custodian such compensation or fees at
such rate and at such times as shall be agreed upon in writing by the parties
from time to time. The Custodian will also be entitled to reimbursement by the
Company for all reasonable expenses incurred in conjunction with termination of
this Agreement by the Company.
13. Termination.
13.1. This Agreement may be terminated at any time without
penalty upon sixty days written notice delivered by either party to the other by
means of registered mail, and upon the expiration of such sixty days this
Agreement will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the date
of delivery of such notice (i) by the Custodian in order to prepare for the
transfer by the Custodian of all of the assets of the Company held hereunder,
and (ii) by the Company in order to give the Company an opportunity to make
suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Company will, at its request, have access to
the records of the Custodian relating to the performance of its duties as
custodian.
13.2. In the event of the termination of this Agreement, the
Custodian will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly endorsed
and all records maintained under Section 11 to the successor custodian when
appointed by the Company. The obligation of the Custodian to deliver and
transfer over the assets of the Company held by it directly to such successor
custodian will commence as soon as such successor is appointed and will continue
until completed as aforesaid. If the Company does not select a successor
custodian within ninety (90) days from the date of
- 16 -
delivery of notice of termination the Custodian may, subject to the provisions
of subsection (14.3), deliver the Portfolio Securities and cash of the Company
held by the Custodian to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Company under terms similar to those on which
they were held by the Custodian, whereupon such bank or trust company so
selected by the Custodian will become the successor custodian of such assets of
the Company with the same effect as though selected by the Board.
13.3. Prior to the expiration of ninety (90) days after
notice of termination has been given, the Company may furnish the Custodian with
an order of the Company advising that a successor custodian cannot be found
willing and able to act upon reasonable and customary terms and that there has
been submitted to the shareholders of the Company the question of whether the
Company will be liquidated or will function without a custodian for the assets
of the Company held by the Custodian. In that event the Custodian will deliver
the Portfolio Securities and cash of the Company held by it, subject as
aforesaid, in accordance with one of such alternatives which may be approved by
the requisite vote of shareholders, upon receipt by the Custodian of a copy of
the minutes of the meeting of shareholders at which action was taken, certified
by the Company's Secretary and an opinion of counsel to the Company in form and
content satisfactory to the Custodian.
14. Confidentiality. Both parties hereto agree that any
non-public information obtained hereunder concerning the other party is
confidential and may not be disclosed to any other person without the consent of
the other party, except as may be required by applicable law or at the request
of a governmental agency. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that
each of them is entitled, without bond or other surety, to an injunction or
injunctions to prevent breaches of this provision.
15. Notices. Any notice or other instrument in writing authorized
or required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Company to:
The Xxxxxxxx Funds, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxx, President
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(b) In the case of notices sent to the Custodian to:
Firstar Trust Company
Securities Division
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
or at such other place as such party may from time to time
designate in writing
16. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case of
the Company, such alteration or amendment will be authorized and approved by its
Board.
17. Parties. This Agreement will be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be assignable by the
Company without the written consent of the Custodian or by the Custodian without
the written consent of the Company, authorized and approved by its Board; and
provided further that termination proceedings pursuant to Section 14 hereof will
not be deemed to be an assignment within the meaning of this provision.
18. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of New York.
19. Counterparts. This Agreement may be executed in any number of
counterparties, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
day and year first written above.
The Xxxxxxxx Funds, Inc.
By:
--------------------------------
ATTEST:
-----------------------------
Firstar Trust Company
By:
--------------------------------
ATTEST:
-----------------------------
DATE:________________________
