Exhibit 8(b)
CUSTODIAN AGREEMENT
This Agreement, dated as of the ____ day of ______ made by and between
THE HOMESTATE GROUP (the "Fund"), a corporation operating as an open-end
investment company, duly organized and existing under the laws of the
Pennsylvania and CoreStates Bank, N.A. (the "Custodian"), a national banking
association duly organized and existing under the laws of the United States of
America;
WITNESSETH THAT:
WHEREAS, the HOMESTATE SELECT OPPORTUNITIES FUND is currently the second
operating series of shares.
WHEREAS, the fund desires to appoint the custodian of the Securities and
principal cash of the Fund and the Custodian is willing to act in such
capacity upon the terms and conditions herein set forth;
WHEREAS, the Custodian in its capacity as custodian hereunder will also
collect and apply the dividends and interest on said Securities in the manner
and to the extent herein set forth; and
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
do hereby agree as follows:
Section 1. The terms as defined in this Section wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context other requires.
Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the Treasury of the United States of America and federal
agencies of the United States of America which are maintained in the book-
entry system ("the book-entry system") as provided in Subpart 0 of Treasury
Circular ▇▇. ▇▇▇, ▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇ of 31 CFR part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart 0 and the
term Book-Entry Account shall mean an account maintained by a Federal Reserve
Bank in accordance with the aforesaid Circular and regulations.
Custodian: The term Custodian shall mean CoreStates Bank, N.A. in its
capacity as custodian under this Agreement.
Investment Company Securities: The term Investment Company Securities
shall mean shares of stock or beneficial interest in a regulated investment
company registered under the Investment Company Act of 1940 amended.
Dividend Disbursing Agent: The term Dividend Disbursing Agent shall
mean Fund/Plan Services, Inc. A shareholder servicing corporation providing a
broad range of services which includes the distribution of dividends to fund
shareholders.
Investment Company Securities Transaction: The term INVESTMENT COMPANY
SECURITIES TRANSACTION shall mean the purchase, sale or redemption of the
account of the Fund of Investment Company Securities.
Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of
any kind transmitted to the Custodian in person or by telephone, telegram,
telecopy or other mechanical or documentary means lacking original signature,
by a person or persons reasonably believed in good faith by the Custodian to
be a person or persons authorized by a resolution of the Board of Trustees of
the Fund to give Oral Instructions on behalf of the Fund.
Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidence of indebtedness, and other securities and investments
from time to time owned by the Fund, including but not limited to Investment
Company Securities, options, stock index futures, and options on such stock
index futures.
Securities Depository: The term Securities Depository shall mean a
system for the central handling of securities where all securities of any
particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the securities.
Series: The term Series shall mean the HOMESTATE SELECT OPPORTUNITIES
FUND.
Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares of any Series of the Fund in accordance with
the stock registry records of the Fund.
Shares: The term Shares shall mean the issued and outstanding shares of
common stock of any Series of the Fund.
Stock Index Futures: This tern Stock Index Future shall mean futures
contracts on stock indices.
Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of
any kind transmitted to the Custodian in original writing containing original
signatures or a copy of such document transmitted by telecopy including
transmission of such signature, reasonably believed in good faith by the
Custodian to be the signature of a person authorized by a resolution of the
Board of Trustees of the Fund to give Written Instructions on behalf of the
Fund.
Section 2. The Fund shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Trustees authorizing
execution of Written Instructions and specifying the number of signatories
required, together with certified signatures of the officers and other
signatories authorized to sign, which shall constitute conclusive evidence of
the authority of the officers and other signatories designated therein, and
shall be considered in full force and effect with the Custodian fully
protected in acting in reliance thereon until it receives a new certified copy
of a resolution adding or deleting a person or persons with authority to give
Written Instructions. If the certifying officer is authorized to sign Written
Instructions, the certificate shall also be signed by a second officer of the
Fund.
The Fund shall from time to time file with the Custodian a certified copy of
each resolution of its Board of Trustees authorization the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions and the matter or matters which may be the subject of any such
instruction in accordance with this Agreement. Any resolution so filed with
the Custodian shall be considered in full force and effect and the Custodian
shall be fully protected in acting in reliance thereon until it actual
receives a new certified copy of a resolution adding or deleting a person or
persons with authority to give Oral Instructions or revising matters so
provided. If the certifying officer is authorized to give Oral Instructions,
the certification shall also be signed by a second officer of the Fund.
Section 3. For all purposes under this Agreement, the Custodian is
authorized to act upon receipt of the first of any Written or Oral
instructions it receives. In cases where the first Instruction is an Oral
Instruction that is not in the form of a document or written record, the Fund
shall be responsible for delivering, or having delivered to the Custodian, a
confirmatory Written Instruction or Oral Instruction the form of a document or
written record, and in cases where the Custodian receives an Instruction,
whether Written or Oral, with respect to a portfolio transaction (other than
an Investment Company Securities Transaction or a transaction involving a
transfer on the books of a Securities Depository) the Fund shall cause the
broker or dealer to send a written confirmation to the Custodian. The
Custodian shall be entitled to rely on the first Instruction received and, for
any act or omission undertaken in compliance therewith, shall be free of
liability and fully indemnified and held harmless by the Fund. The Custodian
shall if practicable act upon and comply with any subsequent Written or Oral
Instruction which modifies such first Instruction. The obligation of the
Custodian with respect to any follow-up or confirmatory Written Instruction,
Oral Instruction in documentary or written form, or broker-dealer written
confirmation shall be to make reasonable efforts to detect any discrepancy
between the original Instruction and such confirmation and to report such
discrepancy to the Fund. The Custodian shall also be responsible for taking
any action necessary with respect to any timely follow-up Written or Oral
Instruction which countermands or modifies a Written or Oral Instruction.
The Fund shall be responsible, at the Fund's expense, for taking any action,
including any reprocessing, necessary to correct any discrepancy or error and,
to the extent such action requires the Custodian to act, the Fund shall give
the Custodian specific Written Instructions as to the action required.
Section 4. The Fund hereby appoints the Custodian as custodian of the
Securities and cash from time to time on deposit hereunder, to be held by the
Custodian and applied as provided in this Agreement. The Custodian hereby
accepts such appointment subject to the terms and conditions hereinafter
provided. The Securities held by the Custodian shall, unless payable to
bearer or maintained in a Securities Depository or Book-Entry Account pursuant
to Section 5, be registered in the name of the Custodian or in the name of its
nominee. Securities, excepting bearer securities delivered from time to time
to the Custodian upon purchase or otherwise shall in all cases be in due form
for transfer or already registered as above provided. Such Securities and
cash of any Series of the Fund shall, however, be and remain the sole
property of the acquiring Series of the Fund and the Custodian shall have only
the bare custody thereof.
Section 5. The Fund hereby authorizes the Custodian to deposit with a
bank located in the United States assets held in the Option Account created
pursuant to Section 13 or Futures Account pursuant to Section 14 and to (a)
deposit in its account(s) with any Securities Depository registered as a
Clearing Agency under Section 17A of the Securities Exchange Act of 1934, all
or any part of the Securities as may from time to time be held for the Fund,
and (b) deposit Book-Entry Securities belonging to the Fund in a Book-Entry
Account which is maintained for the Custodian by a Federal Reserve Bank and
(c) hold Investment Company Securities in the name of the Custodian or its
nominee in the form of an account on the books of the respective investment
company issuer. So long as any deposit referred to in (a), (b) or (c) above
is maintained for the Fund, the Custodian:
(i) shall deposit the Securities in an account that includes only
assets held by it for customers;
(ii) shall, with respect to Securities transferred to the account
of the Fund, identify as belonging to the proper Series of
the Fund a quantity of securities in a 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 Securities Depository, the Book-Entry System,
the Custodian's agent, or the respective investment company
issuer; and
(iii) shall send to the Fund such reports of the systems of
internal accounting control of the Custodian and its agents
through which such Securities are deposited as are available
and as the Fund may reasonably request from time to time.
The Fund warrants that its Board of Trustees has approved the arrangement
for the deposit of Securities in a Securities Depository and the Book-Entry
System and the holding of Investment Company Securities in the name of the
Custodian or its nominee in an account on the books of the Investment Company
issuer.
Section 6 The Fund will initially transfer and deposit or cause to be
transferred and deposited with the Custodian all of the Securities and cash
owned by each Series of the Fund at the time this Agreement becomes effective.
Such deposit shall be evidenced by appropriate schedules duly executed by the
Fund and the Fund agrees that it is solely responsible for the accuracy of
said schedule. The Fund will cause to be deposited with the Custodian
additional Securities of each Series of the Fund as the same are purchased or
otherwise acquired from time to time, and any dividends or interest collected
on such Securities.
Thereafter the Fund will cause to be deposited with the Custodian
hereunder the net proceeds of Securities sold or redeemed from time to time.
Section 7 The Custodian is hereby authorized and directed to disburse
cash from time to time as follows:
(a) for the purpose of payment for the purchase of Securities purchased
by any Series of the Fund, upon receipt by the Custodian of both (i) Written
or Oral Instructions identifying the acquiring Series, specifying the
Securities and stating the purchase price, and the name of the broker,
investment banker or other party to or upon whose order the purchase price is
to be paid, and (ii) except in respect to Investment Company Securities, the
Securities so purchased in due form for transfer or already registered as
provided in Section 4, provided, however, that the Custodian may make payment
for Securities on deposit with a Securities Depository and Book-Entry
Securities at such times as the Custodian enters a credit in the account it
maintains for the proper Series of the Fund to the effect that it has accepted
delivery of such Securities on behalf of that Series of the Fund;
(b) for the purpose of transferring funds in connection with a
repurchase agreement, upon receipt by the Custodian of (i) Written or Oral
Instructions identifying the Series, specifying the Securities, the purchase
price and the party to whom the purchase price is to be paid and (ii) written
evidence of the identity of the party obligated to repurchase the Securities
from the Fund;
(c) for the purpose of transferring funds to a duly designated
redemption paying agent to redeem or repurchase Shares, upon receipt of
Written or Oral Instructions identifying the Series issuing such Shares and
stating the applicable redemption price thereof;
(d) for the purpose of exercising warrants and rights received upon the
Securities, upon timely receipt of Written or Oral Instructions authorizing
the exercise of such warrants and rights and stating the consideration to be
paid by the acquiring Series;
(e) for the purpose of repaying in whole or in part any loan of the
Fund, upon receipt of Written or Oral Instructions directing payment and
stating the Securities, if any, to be received against payment;
(f) for the purpose of paying over to a duly designated Dividend
Disbursing Agent such amounts as may be stated in Written or Oral
Instructions, representing proceeds of the sale of warrants, rights, stock
dividends, profit and increases in values of the Securities of a Series, as
the Fund may determine to include in dividends and/or distribution declared on
the Shares of such Series;
(g) for the purpose of making or reimbursing the Fund for other
corporate expenditures upon receipt of Written or Oral Instructions stating
that such expenditures were authorized by resolution of the Board of Trustees
of the Fund and are or were for proper corporate purposes, and specifying the
amount of payment, the purpose for which such payment is to be made, naming
the person or persons to whom payment is to be made, and allocating the
payment to the Series of the Fund chargeable therewith in whole or in part;
(h) for the purpose of transferring funds to any Sub-Custodian, upon
receipt of Written or Oral Instructions from the Fund;
(i) in connection with puts and calls traded on securities exchanges as
set forth in Section 14;
(j) as set forth in Section 9; or
(k) for the purpose of payment for the purchase of Investment Company
Securities purchased by any Series of the Fund, upon receipt by the Custodian
of Written or Oral Instructions specifying the Securities and stating the
purchase price and the name of the broker, investment banker or other party to
or upon whose order the purchase price is to be paid.
Section 8. The Custodian is hereby authorized and directed to deliver
Securities of any
Series of the Fund from time to time as follows;
(a) for the purpose of exchanging Investment Company Securities for
other Investment Company Securities within the same Investment company complex
of funds,'
(b) for the purpose of redeeming Investment Company Securities owned for
the account of any Series of the Fund, upon receipt by the Custodian of
Written or Oral Instructions specifying the Securities and stating the amounts
of the proceeds to be received for the account of the Series, the approximate
time of receipt and the manner of payments;
(c) for the purpose of completing sales of Securities other than
redemption of Investment Company Securities sold by any Series of the Fund,
upon receipt of both (i) the net proceeds of sale and (ii) Written or Oral
Instruction specifying the Securities sold and stating the amount to be
received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered provided, however, that the Custodian
may accept payment owing in connection with the disposition by the Fund of
Securities on deposit with a Securities Depository and Book-Entry Securities,
by means of a credit in the appropriate amount to the account described in
Section 5 hereof;
(d) for the purpose of exchanging Securities for other Securities and/or
cash upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be delivered and the Securities and/or cash to be received in
exchange and the manner in which the exchange is to be made, and (ii) against
receipt of the other Securities and/or cash as specified in the Written or
Oral Instructions.
(e) for the purpose of exchanging or converting Securities pursuant to
their terms or pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment or otherwise, upon timely
receipt of (i) Written or Oral Instructions authorizing such exchange or
conversion and stating the manner in which such exchange or conversion is to
be made, and (ii) the Securities, certificates of deposit, interim receipts,
and/or cash to be received as specified in the Written or Oral Instructions;
(f) for the purpose of presenting Securities for payment which have
matured or have been called for redemption;
(g) for the purpose of delivery of Securities of a Series upon
redemption of Shares of that Series in kind, upon receipt (i) of Share
Certificates of such Series in due form for transfer, or proper processing of
such Shares for which no Share Certificates are outstanding, and (ii)
appropriate Written or Oral Instructions;
(h) for the purpose of depositing with a lender Securities of a Series
to be held as collateral for a loan to that Series of the Fund upon receipt of
Written or Oral Instructions on directing delivery to the lender;
(i) upon receipt of Written or Oral Instructions stating (i) the
Securities to be delivered and the payment to be received and (ii) payment, in
connection with any repurchase agreement related to such Securities; or
Section 9. The Custodian will collect from time to time the dividends
and interest on the Securities held by it hereunder and will deposit the same
for the benefit of the proper Series of the Fund until disbursed as
hereinafter provided.
The Custodian is authorized to advance or pay out of the income account
of any Series cash accrued interest on bonds purchased and dividends on stocks
sold and like items.
Subject to proper reserves for dividends owing stocks sold and like
items, the Custodian will disburse the money from time to time on deposit for
the Fund to or upon the order of the Fund as it may from time to time direct
for the following purposes:
(a) to pay the proper compensation and expenses of the Custodian;-
(b) to transfer funds to a duly designated Dividend Disbursing Agent to
pay dividends and/or distributions which may be declared by The Fund on any
Shares of any Series upon receipt of appropriate Written or Oral Instructions;
(c) to pay or provide the Fund with money to pay taxes upon receipt of
appropriate Written or Oral Instructions;
(d) to transfer funds to a separate checking account maintained by the
Fund pursuant to Section 17(f) of the Investment Company Act of 1940, as
amended;
(e) to pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel, or
operating expenses (including, without limitation thereto, fees for legal,
accounting and auditing services), and to disburse cash for other purposes
charging any or all of such amounts against any Series properly chargeable
therewith upon receipt of Written or Oral Instructions requesting such payment
or disbursement and identifying the Series chargeable therewith.
Section 10. The Fund will cause any bank (including the Custodian)
from which it borrows money using Securities as collateral to deliver to the
Custodian a notice or undertaking in the form currently employed by such bank
setting forth the amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian Written or Oral Instructions identifying the borrowing Series
and stating, for each loan: (a) the name of the bank, (b) the amount and terms
of the borrowing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other loan agreement,
(c) the time and date, if known, on which the loan is to be entered into (the
"borrowing date"), (d) the date on which the loan becomes due and payable, (e)
the total amount payable to the borrowing Series of the Fund on the borrowing
date, and (f) the market. value of Securities of such Series to be delivered
as collateral for such loan, including the name of the issuer, the title and
the number of shares or the principal amount of any particular Securities.
The Custodian shall deliver on the borrowing date such specified collateral
and the executed promissory note, if any, against delivery by the lending bank
of the total amount of the loan payable, provided that the same confirms to
the total amount as set forth in the Written or Oral Instructions. The
Custodian may, at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights therein given
the lending bank by virtue of any promissory note or loan agreement.
The Custodian shall deliver from time to time such Securities as
additional collateral as may be specified in Written or Oral Instructions, to
collateralize further any transaction described in this section. The Fund
shall cause all Securities released from collateral status to be returned
directly to the Custodian.
In the event that Written or Oral Instructions fail to specify the name
of the issuer, the title and number of shares or the principal amount of any
particular Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any particular
Securities.
Section 11. If the Custodian should in its sole discretion advance
funds on behalf of a Series of the Fund which results in an overdraft because
the moneys held by the Custodian for the account of that Series of the Fund
shall be insufficient to pay the total amount payable upon purchase of
Securities or which results in an overdraft for some reason or if such Series
of the Fund is for any other reason indebted to the Custodian, such overdraft
or indebtedness shall be deemed to be a loan made by the Custodian to that
Series of the Fund payable on demand and bearing interest at the current rate
charged by the Custodian for such loans. The Fund hereby agrees that the
Custodian shall have a continuing lien and security interest in and to any
property at any time held by it for the benefit of the Fund or in which that
Series of the Fund may have an interest which that Series of the Fund may have
an interest which is then in the Custodian's possession or control or in
possession or control of any third party acting on the Custodian's behalf to
the extent of any such overdraft or indebtedness. The Fund authorizes the
Custodian, in its sole discretion at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to such Series' credit on the Custodian's books; provided, however,
that the Custodian may not charge any amounts against the balance of account
to the Series' credit unless it has notified the Fund of the overdraft prior
to the making of such charges.
Section 12. Upon receipt of Written or Oral Instructions, the
Custodian will execute, or cause a sub-custodian or agent to execute, an
escrow receipt relating to any covered call written by a Series of the Fund,
and will deliver such escrow receipt against payment of the premium therefor.
Such Instructions shall contain all information necessary for the issuance of
such receipt and will authorize the deposit of the Securities specified
therein into an escrow account of the proper Series of the Fund. Securities
so deposited into an escrow account will be held by the Custodian or sub-
custodian or agent subject to the terms of such escrow receipt. However, the
Custodian agrees that it will not deliver, or cause a sub-custodian or agent
to deliver, any Securities deposited in an escrow account pursuant to an
exercise notice unless it has received Instructions to do so or (i) it has
duly requested the issuance of such Instructions; (ii) at least two business
days have elapsed since the delivery of such request to the Fund; and (iii)
the Fund has not advised it that the Fund has purchased Securities that are to
be delivered pursuant to the exercise notice. The Fund agrees that it will
not issue any Instructions which shall conflict with the terms of any escrow
receipt executed by the Custodian or a sub-custodian or agent in relation to
the Fund which is then in effect. The parties agree that the Custodian need
not maintain any written evidence of any call written by the Fund as part of
its duties under this Agreement. The parties also agree that a Series of the
Fund may write calls on Securities ("underlying securities") which are not
owned by that Series of the Fund and issue Instructions to the Custodian to
execute, or cause a sub-custodian or agent to execute, an escrow receipt on
Securities ("convertible securities") which are, or are to be, owned by such
Series and are convertible into the underlying securities. In such event, the
parties agree that any Instructions as to the execution of the escrow receipt
will relate only to such convertible securities but that any Instructions as
to the delivery of such Securities may instruct the Custodian to convert the
same.
Section 13. a. If a Series of the Fund purchases or sells (writes) a put
option contract ("put") or call option contract ("call"), which is traded on
securities exchanges or quoted on the automatic quotation system of the
National Association of Securities Dealers, Inc., the Fund will, in connection
with such purchase or sale, deliver to the Custodian Written or Oral
Instructions which identify such Series, describe the put or call in question
including (i) whether the contract in question is a put or call and whether
the put or call has been purchased or sold by the Fund, (ii) the exercise
price, the expiration date and the amount of premium to be paid or received,
(iii) if a premium; is to be paid by the Fund, the identity of the broker and
the documentation to be provided by such broker against receipt by the broker
of the premium; (iv) if a premium is to be received by the Fund, the identity
of the paying broker; (v) a description of the investment to which the put or
call relates, (vi) if the transaction is a closing purchase or sale
transaction, the documentation or cash to be delivered to the broker through
which the transaction was made; and (vii) in the case of a call sold by a
Series of the Fund, whether the call is covered.
b. If the option sold is a put or uncovered call, the Written or Oral
Instructions shall also state either (a) the amount and kind of collateral
required by the broker, which amount shall be delivered directly to the broker
through whom such option was written in return for both a receipt issued by
such broker and a confirmation by such broker of the option transaction at
such times and in such manner as is in accordance with the customs prevailing
among brokers in such securities or (b) the amount and kind of assets of the
Series, if any, which shall be segregated from the general assets of that
Series and shall be held by the Custodian in a segregated option account (the
"Option Account"). The Custodian shall set up and maintain the Option Account
as it shall be directed by Written or Oral Instructions and shall increase or
decrease the assets in such Option Account only as it shall be so directed by
subsequent Written or Oral Instructions.
c. If an option contract purchased or sold by a Series expires, the
Fund will deliver to the Custodian Written or Oral Instructions containing the
information specified in paragraph a. above and instruct the Custodian to (a)
delete such option contract from the list of holdings that the Custodian
maintains for the Series if it is a put or call held by the Series and (b) to
either remove from the Option Account the assets held therein with respect to
such option (which assets shall be specified in such Written or Oral
Instructions), or to remove the restriction on any securities underlying a
covered call, as the case may be. Upon the return and/or cancellation or
expiration of any escrow receipts, the Custodian shall remove such
restrictions, delete the option from the list of holdings maintained by the
Custodian for the benefit of the Series. Collateral delivered by a broker
with whom it was previously deposited shall, if identical with the collateral
specified in the receipt previously issued by such broker, be accepted by the
Custodian and held in the general account maintained by the Custodian for the
benefit of the Series. The Custodian shall accept delivery of collateral not
specified in such a receipt only upon receipt of Written or Oral Instructions.
d. If a call option sold by a Series of the Fund is exercised, the Fund
shall promptly furnish the Custodian with Written or Oral Instructions
stating: (a) that the Custodian shall deliver the related investments or cash;
(b) a description of the related investments or a statement of the amount of
cash to be delivered; (c) the person to whom the delivery is to be made; (d)
the amount, if any to be received by the Custodian to hold for the Fund upon
such delivery; and (e) the assets, if any, to be removed from the Option
Account or the collateral, if any, to be returned by a broker with whom it was
deposited. Assets of the Fund freed of restrictions imposed by reason of an
option and collateral returned by a broker shall be held by the Custodian in
the general account of the proper Series of the Fund.
If a put option sold by a Series of the Fund is exercised, the Fund shall
promptly furnish the Custodian with Written or Oral Instructions stating: (a)
that the Custodian shall make payment for the related investment or a cash
payment as the case may be, subject to the put, (b) a description of the
related investment of a statement of the amount of cash to be delivered, (c)
the identity of the person to whom payment will be made against delivery of
the related investments or to whom the delivery of cash is to be made; (d) the
assets, if any, to be removed from the Option Account and/or the collateral,
if any, to be returned by a broker with which it was deposited, such assets
and collateral to be held by the Custodian in the general account of the
proper Series of the Fund.
e. If a put sold by a Series of the Fund is exercised, the Fund shall
promptly furnish the Custodian with Written or Oral Instructions stating (i)
that the Custodian shall make payment for the related investments subject to
the put or a cash payment as the case may be; (ii) a description of the
related investment of a statement of the amount of cash to be delivered; (iii)
the identity of the person to whom payment will be made against delivery of
the related investment or to whom the delivery of cash is to be made; and (iv)
the assets, if any, to be removed from the Option Account and/or the
collateral, if any, to be returned by a broker with which it was deposited,
such assets and/or collateral to be held by the Custodian in the general
account of the proper Series of the Fund,
f. If the Instructions indicate that the option transaction in question
is a closing purchase transaction, the Custodian shall, upon (i) payment by it
of the premium for the call purchased (if the closing purchase transaction is
as to a call sold by the Fund) or for the put purchased (if the closing
purchase transaction is as to a put sold by the Fund); (ii) (if the closing
purchase transaction is purchase of a call to close out a covered call written
by the Fund) the return and/or cancellation or expiration of any escrow
receipts as to such covered call; and (iii) receipt of Written or Oral
Instructions to do so, take action as to the put or call terminated by the
closing purchase transaction as specified for expired options in c. above.
g. If any put or call held by a Series of the Fund is to be exercised
by the Fund, such exercise must be the subject of Written or Oral Instructions
received by the Custodian not later than its close of business of the last
business day before the last day on which the option may be exercised. (This
shall not affect the right of the Fund to sell any put or call held by it at
any time prior to its lapse or to permit any put or call held by it to lapse
unexercised.) Such Instruction shall (i) identify the put or call held by the
Fund being exercised by it including the exercise price the related
investments and the broker which is the other party to the transaction; (ii)
in the case of the exercise of the Fund of a put, instruct the Custodian to
deliver the related investments to such broker against receipt of the exercise
price from such broker or to receive cash from such broker, as the case may
be, the amount of such cash to be specified in such Instructions; and (iii) in
the case of the exercise by the Fund of a call, instruct the Custodian to
deliver the exercise price to such broker against receipt from such broker of
the related investments; the Custodian shall then take action as to the put or
call exercised as specified for expired options.
h. The Custodian shall be under no duty or obligation to see that the
Fund has deposited or its maintaining adequate margin, if required, with any
broker in connection with an option nor shall the Custodian be under duty or
obligation to present such option to the broker unless it receives Written or
Oral Instructions from the Fund. The Custodian shall have no responsibility
for the legality of any put or call option purchased or sold on behalf of the
Fund, the propriety of any such purchase or sale, and the adequacy of any
collateral delivered to a broker in connection with an option or held in the
Option Account. The Custodian specifically, but not by way of limitation,
shall not be under any duty or obligation (i) to periodically check or notify
the Fund that the amount of such collateral held by broker or assets held in
the Option Account is sufficient to protect such broker or the Fund against
any loss, (ii) to effect the return of any collateral delivered to a broker,
or (iii) to advise the Fund @ any option it holds, has or is about to expire.
Such duties or obligations shall be the sole responsibility of the Fund.
Section 14. The Custodian is authorized and directed to take action as
to puts, calls, and future contracts ("Futures ") purchased or sold by the
Fund which are traded on commodities exchanges as set forth in this Section 14.
(a) If a Series of the Fund purchases or sells Futures or a put or call
traded on a commodities exchange, it will, in connection with such purchase or
sale of a Future deliver to the Custodian Written or Oral Instructions which
describe the Future in question including (i) the investment to which the
Future relates, (the "related investment"); (ii) the nature and amount of
initial margin; and (iii) the identity of the futures commission merchant
("FCM"); see (c) below as to the procedures as to puts and calls. The
Custodian shall thereupon establish an account (the "FCM Account") in the name
of such FCM, unless an FCM Account has already been established for such FCM.
The FCM Account shall contain cash or cash equivalents, including open-end
Investment Company Securities other than Shares, which equal at least the sum
of the aggregate value of the margin required to be established or maintained
on all future contracts through such FCM owned by the Fund, marked to market
each day. The Custodian shall permit access to the assets in the FCM Account
only by the FCM (except for payments to the Fund's general account on
Instructions from the Fund)and only if the FCM states to the Custodian orally
with written confirmation that the Fund is in default on an obligation to
perform, that all conditions precedent to the eight of the FCM to direct
disposition have been satisfied and that disposition is for a proper purpose.
Upon receipt of Written or Oral Instructions to do so, the Custodian shall
make deposits in and withdrawals a specified and segregated FCM Account in
connection with initial and variation margin and excess margin, including
deposits and withdrawals in connection with the closing out of Futures and the
taking or making of delivery pursuant to any Future. Upon receipt of Written
or Oral Instructions to do so, the Custodian shall make payments to a clearing
corporation if such corporation has made payments to an FCM on behalf the
Fund.
(b) In connection with the purchase of Futures and calls on Futures, the
Custodian shall, on receipt of Written or Oral Instructions to do so,
segregate from the general assets of the Fund and hold in a segregate from the
general assets of the Fund and hold in a segregated sub-account (the "Futures
Account ") an amount and kind of assets indicated in such Instructions and
consistent with the Fund's exemptive order from the United States Securities
and Exchange Commission and shall increase or decrease the assets in the
Futures Account, the Custodian shall segregate assets of the required value
from the Fund's general custodian accounts equal in value to at least the sum
of the aggregate value of all Futures Contracts of the Fund, market to market
each day, less than amount of margin deposits with respect thereto, such
assets being free of any allocation to support any other options or Futures
obligations of the Fund. The Fund may direct the substitution of any
qualified asset in its general accounts for any segregated asset in its Future
Accounts.
(c) The procedures and responsibilities as to puts and calls as set
forth in Section 13 shall also apply to puts and calls covered by this Section
14 except that (i) references to brokers shall be deemed to refer to FCM; and
(ii) reference to collateral shall be deemed to refer to initial and variation
margin, and collateral shall not be delivered or received from a broker but
initial and variation margin shall be deposited to or withdrawn from the
applicable FCM Account; (iii) reference to the Option Account shall be deemed
to refer to the Futures Account.
(d) Nothing herein contained shall prevent the Custodian, the Fund and
any FCM from entering into any agreement or agreements (to which the Fund's
investment adviser may also be a party) not inconsistent herewith relating to
Futures and/or puts and calls traded on commodities exchanges.
(e) The responsibilities and liabilities of the Custodian as to Futures,
puts and c@ traded on commodities exchanges, any FCM Account and the Futures
Account shall be limited as set forth in paragraph (h) of Section 13 as if
such paragraph referred to an FCM Account, instead of margin, FCMs rather than
brokers, Futures and puts and calls traded on commodities exchanges rather
than puts and calls there covered and the Futures Account rather than the
Option Account.
Section 15. The Custodian assumes no duty, obligation or
responsibility whatsoever to exercise any voting or consent powers with
respect or the Securities held by it from time to time hereunder, it being
understood that the Fund or such person or persons as it may designate, shall
have the right to vote, or consent or otherwise act with respect to such
Securities. The Custodian will exercise its best efforts to furnish to the
Fund in a timely manner proxies or other appropriate authorization with
respect to Securities registered in the name of the Custodian or its nominee
so that such voting powers, or powers to consent to or otherwise act may be
exercised by the Fund or pursuant to its direction.
Section 16. The Custodian's compensation shall be as set forth in
Schedule A hereto attached, or as shall be set forth in amendments to such
Schedule approved in writing by the Fund and the Custodian.
Section 17. Custodian will exercise its best efforts to handle,
forward, or process in a prompt and timely manner notices of stockholder
meetings, proxy statements, annual reports, conversion notices, call notices,
or other notices or written materials of any kind sent to the registered
owners of securities (hereinafter referred to as "notices and materials"), it
being understood that the Fund and its investment adviser have primary
responsibility for reviewing such notices and materials, and for taking action
thereon. The Custodian will make reasonable efforts to promptly forward such
notices and materials as it receives them to the Fund, but makes no warranty
or representation that all notices and materials have not been timely received
by Custodian.
Upon receipt by the Custodian of warrants or rights issued in connection
with the assets of the Fund, the Custodian shall enter into its ledgers
appropriate notations indicating such receipt and shall notify the firm of
such receipt, but shall not have any obligation to @ any action of any kind
with respect to such warrants or rights except upon receipt of Written or Oral
Instructions from the Fund.
Section 18. The Custodian assumes no duty, obligation or
responsibility whatsoever with respect to Securities not deposited with the
Custodian, with the exception of Securities deposited with any sub-custodian
appointed by the Custodian. Common stocks or other Securities exchanged for
Shares shall not be considered deposited with the Custodian until physically
received by Custodian in accordance with the provisions of this Agreement.
Custodian does not warrant the effective transfer of any Security until
registration in the name of the Custodian or its nominee has been
accomplished.
Section 19. The Custodian acknowledges and agrees that all books and
records maintained for the Fund in any capacity under this Agreement are
confidential and the property of the Fund. They may be inspected by the Fund,
or any authorized regulatory agency, at any reasonable time, and upon request
will be surrendered promptly to the Fund. The Custodian shall provide the
Fund with immediate notice of any request for review of the Fund's books and
records, and no party will be allowed access to such books and records unless
such prior notice has been given and consent has been received from the Fund
unless otherwise required by law, regulation, or court order; the Custodian
will immediately notify the Fund of any such examination in progress. The
Custodian agrees to make available upon request and to preserve for the
periods prescribed in Rule 3la-2 under the Investment Company Act of 1940 any
records relating to services provided under this Agreement which are required
to be maintained by Rule 3la-1 under said Act.
Section 20. The Custodian assumes only the usual duties and
obligations normally performed by custodians of mutual funds. It specifically
assumes no responsibility for the management, investment or reinvestment of
the Securities from time to time owned by the Fund whether or not on deposit
hereunder, it being understood that the responsibility for the proper and
timely management, investment and reinvestment of said Securities shall be
that of the Fund and its investment advisor.
The Custodian shall not be liable for any taxes, assessments or
governmental charges which may be levied or assessed upon the Securities held
by it hereunder, or upon the income therefrom or otherwise whatsoever. The
Custodian may pay any such tax, assessment or charge and reimburse itself out
of the moneys of the Fund or out of the Securities held hereunder; provided,
however, the Custodian shall consult the officers of the Fund before making
any such payment.
The Fund shall indemnify the Custodian and save it harmless from any and
against any and all actions, suits and claims whether groundless or otherwise,
arising directly or indirectly to of or in connection with its performance
under this Agreement and from and against any and all losses, damages, costs,
charge, counsel fees, payments, expenses and liabilities incurred by the
Custodian in connection with any such action, suit or claim except as shall
arise out of the negligence or willful misconduct of the Custodian, its
officers, agents or employees. The Custodian shall not be under any obligation
to prosecute or to defend any action, suit or claim arising out of or in
connection with its performance under this Agreement, which, in the opinion of
its counsel, may involve it in expense or liability, and the Fund shall, so
often as reasonably requested, furnish the Custodian with satisfactory
indemnity against such expense or liability, and upon request of the Custodian
the Fund shall assume the entire defense of any action, suit or claim subject
to the foregoing indemnity; provided, however, that the Custodian shall give
the Fund written notice, and reasonable opportunity to defend. any such
action, suit, or claim, in the name of the Fund or the Custodian or both.
Without limitation of the foregoing:
(a) The Custodian may rely upon the advice of counsel, who may be
counsel for the Fund or counsel for the Custodian and upon statements of
accountants, brokers and other persons believed by it in good faith to be
expert in the matters upon which they are consulted and for any actions taken
in good faith upon such statements, the Custodian shall not be liable to
anyone.
(b) The Custodian shall not be liable for any action taken in good faith
reliance upon any Written or Oral Ion or certified copy of any resolution of
the Board of Trustees of the Fund, and the Custodian may rely upon the
genuineness of any such document or copy there of believed in good faith by
the Custodian to have been validly executed.
(c) The Custodian may rely and shall be protected in acting upon any
signature, instruction, opinion of counsel, statement, instrument, report,
notice, consent, order, authorization or other paper or document believed by
it to be genuine and to have been signed or presented by the Fund or other
proper party or parties.
Section 21. The Custodian is empowered to appoint one or more U.S.
banking instructions as Sub-Custodian including but not limited to, U.S. banks
located in foreign countries) of Securities and moneys at any time owned by
the fund to permit Custodian to effectively perform the duties called for
hereunder. Upon receipt of Written or 0ral Instructions, directing or
approving such appointment, the Custodian shall incur no liability to the Fund
or any other person by reason of any act or omission of any Sub-Custodian so
approved or appointed by the Fund and the Fund shall indemnify the Custodian
and save it harmless from any and against any and all actions, suits and
claims, whether groundless or otherwise and from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising directly or indirectly out of or in connection with the
performance of any Sub-Custodian approved or appointed by the Fund. The
Custodian shall not be under any obligation to prosecute or to defend any
action, suit or claim arising out of or in connection with the performance of
any Sub-Custodian approved or appointed by the Fund, which, in the opinion of
its counsel, may involve it in expense or liability, and the Fund shall, so
often as reasonably requested, furnish the Custodian with satisfactory
indemnity against such expense or liability, and upon request of the
Custodian, the Fund shall assignee the entire defense of any action, suit or
claim subject to the foregoing indemnity.
The Fund shall pay all fees and expenses of any Sub-Custodian approved or
appointed by the Fund, to the extent that such fees or expenses have not been
paid to the Custodian for the performance of the services so provided by the
Sub-Custodian.
Section 22. This Agreement may be amended from time to time without
notice to or approval of the Shareholders by a written supplemental agreement
executed by the Fund and the Custodian and amending and supplementing this
Agreement in a manner mutually agreed.
Section 23. Either the Fund or the Custodian may give written notice to
the other of the termination of this Agreement, such termination to take
effect at the time specified in the notice which shall not be earlier than
sixty (60) days after the date of giving such notice. In case such notice of
termination is given either by the Fund or by the Custodian, the Fund shall
use its best efforts to obtain a qualified successor custodian. If the Fund
cannot obtain a qualified successor custodian, then the Board of Trustees of
the Fund shall, by resolution duly adopted, promptly designate the Fund as its
own custodian. Each successor custodian shall be a person qualified to so act
under the Investment Company Act of 1940, as amended. Upon receipt of written
notice from the Fund of the appointment of such successor and upon receipt of
Written or Oral Instructions, the Custodian shall deliver such Securities and
cash as it may then be holding hereunder directly to and only to the successor
custodian. Unless or until a successor custodian has been appointed as above
provided, the Custodian then acting shall continue to act as Custodian under
this Agreement. Every successor custodian appointed hereunder shall execute
and deliver an appropriate written acceptance of its appointment and shall
thereupon become vested with the rights, powers, obligations and custody of
its predecessor Custodian. The Custodian ceasing to act shall nevertheless,
upon request of the Fund and successor custodian and upon payment of its
charges and disbursements, execute an instrument in form approved by its
counsel transferring to the successor custodian all the predecessor
Custodian's rights, duties, obligations and custody.
In case the Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall ipso facto, without the execution or filing of
any papers or documents, succeed to and be substituted for the Custodian with
like effect as though originally named as such.
Section 24. Nothing contained in this Agreement is intended to or shall
require the Custodian in any capacity hereunder to perform any functions or
duties on any holiday, day or special observance or any other day on which the
Custodian or the New York Stock Exchange is closed unless required by law, and
functions or duties normally scheduled to be performed on such days shall be
performed on, and as of the next succeeding business day on which both the New
York Stock Exchange and the Custodian are open.
Section 25. This Agreement shall take effect on the date hereof or on
such other date as the parties agree to transfer the Fund's assets to the
Custodian.
Section 26. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instruments.
Section 27 This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of
the Fund, authorized or approved by a resolution of its Board of Trustees.
Section 28. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the Fund and the Custodian have caused this Agreement
to be signed by their respective Presidents or Vice Presidents and their
corporate seals hereunto duly affixed, and attested by their respective
Secretaries of Assistant Secretaries, as of the day and year first above
written.
THE HOMESTATE GROUP
By:
▇▇▇▇▇ ▇. ▇▇▇▇, President
CORESTATES BANK, N.A.
By:
Name, Title
Attest:
Name, Title
