CUSTODY AGREEMENT
Agreement made as of the 19th day of August, 1994, between Croft Funds
Corporation, (the "Corporation"), a corporation organized under the laws of the
State of Maryland and having its office at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000 acting for and on behalf of Croft-Leominster Value
Fund and Croft-Leominster Income Fund (each a "Fund" and, collectively, the
"Funds"), which is operated and maintained by the Corporation for the benefit of
the holders of shares of each Fund, and Star Bank, N.A. (the "Custodian"), a
national banking association having its principal office and place of business
at Star Bank Center, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000, which Agreement
provides for the furnishing of custodian services to the Fund.
Custodian agrees to retain custody of U.S. Government Securities and
securities issued and sold primarily in the United States. Pursuant to Paragraph
7 of Article IX of this Agreement, Custodian hereby appoints Bankers Trust
Company as Sub-Custodian to retain custody of foreign securities in accordance
with the terms and conditions of the Agreement dated as of _____________ between
Bankers Trust Company and Star Bank, N.A. attached hereto as Appendix D (the
"Sub-Custodian Agreement"). The Corporation hereby acknowledges such appointment
and expressly agrees to the terms and conditions set forth in the Sub-Custodian
Agreement.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter set forth the
Corporation, on behalf of each Fund, and each and every other series of the
Corporation as is established by the Board of Directors and listed as Appendix C
hereto and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1. "Authorized Person" shall be deemed to include the Chairman,
President, Secretary, Treasurer, Controller, and any Vice President, or any
other person, whether or not any such person is an officer or employee of the
Corporation, duly authorized by the Board of Directors of the Corporation to
give Oral Instructions and Written Instructions on behalf of the Funds and
listed in the Certificate annexed hereto as Appendix A or such other Certificate
as may be received by the Custodian from time to time, subject in each case to
any limitations on the authority of such person as set forth in Appendix A or
any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency securities, its successor
or successors and its nominee or nominees, provided that the Custodian has
received a certified copy of a resolution of the Board of Directors of the
Corporation specifically approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian which is signed on behalf of a Fund by an officer of the
Corporation and is actually received by the Custodian.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees. The term "Depository" shall
further mean and include any other person or clearing agency authorized to act
as a depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, provided that the Custodian has received
a certified copy of a resolution of the Board of Directors of the Corporation
specifically approving such other person or clearing agency as a depository.
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5. "Dividend and Transfer Agent" shall mean the dividend and transfer
agent active, from time to time, in such capacity pursuant to a written
agreement with the Corporation, changes in which the Corporation shall
immediately report to the Custodian in writing.
6. "Money Market Security" shall be deemed to mean high quality
short-term debt obligations, including without limitation, securities issued or
guaranteed as to principal and/or interest by the government of the United
States or agencies or instrumentalities thereof, commercial paper, obligations
(including certificates of deposit, bankers' acceptances, repurchase and reverse
repurchase agreements with respect to the same) and bank time deposits of
domestic banks that are members of the Federal Deposit Insurance Corporation,
and short-term corporate obligations where the purchase and sale of such
securities normally require settlement in federal funds or their equivalent on
the same day as such purchase or sale.
7. "Officers" shall be deemed to include the Chairman, the President,
the Secretary, the Treasurer, the Controller, and any Vice President of the
Corporation listed in the Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to time.
8. "Oral Instructions" shall mean oral instructions actually received
by the Custodian from an Authorized Person (or from a person which the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions from Authorized Persons in such manner so that such Written
Instructions are received by the Custodian on the next business day.
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9. "Prospectus" shall mean the Fund's currently effective
prospectus(es) and statement(s) of additional information, as filed with and
declared effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities, common
or preferred stocks, options, bonds, debentures, corporate debt securities,
notes, mortgages or other obligations, and any certificates, receipts, warrants
or other instruments representing rights to receive, purchase or subscribe for
the same, or evidencing or representing any other rights or interest therein, or
any property or assets.
11. "Written Instructions" shall mean communications actually received
by the Custodian from one Authorized Person or from one person which the
Custodian reasonably believes in good faith to be an Authorized Person in
writing or by telex or any other such system whereby the receiver of such
communication is able to verify by codes or otherwise with a reasonable degree
of certainty the authenticity of the sender of such communication.
12. "Foreign Securities" include securities issued and sold primarily
outside of the United States by a foreign government, a national of any foreign
country or a corporation or other organization incorporated or organized under
the laws of any foreign country and securities issued or guaranteed by the
Government of the United States or by any state or any political subdivision
thereof or by any agency thereof by any entity organized under the laws of the
United States or of any state thereof which have been issued and sold primarily
outside the United States.
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ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
1. The Corporation, acting for and on behalf of the Funds, hereby
constitutes and appoints the Custodian as custodian of all the Securities and
monies at any time owned by each Fund during the period of this Agreement ("Fund
Assets").
2. The Custodian hereby accepts appointment as Custodian and agrees to
perform the duties set forth in this Agreement.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE CORPORATION
--------------------------------------------
The Corporation hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Articles of Incorporation certified by its Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Directors appointing the
Custodian certified by its Secretary.
4. A copy of the most recent Prospectus of the Corporation.
5. A Certificate of the President and Secretary setting forth the names
and signatures of the present officers of the Corporation.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
------------------------------
1. The Corporation will deliver or cause to be delivered to the
Custodian all Fund Assets, including cash received for the issuance of its
shares, at any time during the period of this Agreement. The Custodian will not
be responsible for such Fund Assets until actually received by it.
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Upon such receipt, the Custodian shall hold in safekeeping and physically
segregate at all times from the property of any other persons, firms or
corporations all Fund Assets received by it from or for the account of the Fund.
Subject to the provisions of Article IX, Section 5 and Article IV, Section 5 the
Custodian will be entitled to reverse any credits made on a Fund's behalf where
such credits have been previously made and monies are not finally collected
within 90 days of the making of such credits. The Custodian is hereby authorized
by the Corporation, acting on behalf of each Fund, to actually deposit any Fund
Assets in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Corporation for the Fund Assets so
deposited. Fund Assets deposited in the Book-Entry System or the Depository will
be represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account or accounts in the
name of the Fund all monies received by it for the account of a Fund, and shall
disburse the same only:
(a) In payment for Securities purchased for the account of the Fund,
as provided in Article V;
(b) In payment of dividends or distributions, as provided in Article
VI hereof,
(c) In payment of original issue or other taxes, as provided in
Article VII hereof;
(d) In payment for shares of the Fund redeemed by it, as provided in
Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting forth
the name and address of the person to whom the payment is to be made, the amount
of such payment and the purpose for which payment is to be made (the Custodian
not being required to question such direction) or (ii) if reserve requirements
are established for the Fund by law or by valid regulation, directing the
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Custodian to deposit a specified amount of collected funds in the form of U.S.
dollars at a specified Federal Reserve Bank and stating the purpose of such
deposit, or
(f) In reimbursement of the expenses and liabilities of the
Custodian, as provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day a Fund is open and
valuing its portfolio the Custodian shall furnish the Corporation with a
detailed statement of monies held for each Fund under this Agreement and with
confirmations and a summary of all transfers to or from the account of the
Fund(s) during said day. Where Securities are transferred to the account of a
Fund without physical delivery, the Custodian shall also identify as belonging
to the Fund a quantity of Securities in a fungible bulk of Securities registered
in the name of the Custodian (or its nominee) or shown on the Custodian's
account on the books of the Book-Entry System or the Depository. At least
monthly and from time to time, the Custodian shall furnish the Corporation with
a detailed statement of the Securities held for each Fund under this Agreement.
4. All Securities held for a Fund which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for a Fund may
be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Corporation agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository,
any Securities which it may hold for the account of a Fund and which may from
time to time be registered in the name of the Fund. The Custodian shall hold all
such Securities which are not held in the Book-Entry System or by the Depository
or a Sub-Custodian in a separate account or accounts in the name of the Fund,
segregated at all times from those of any other Fund maintained and operated by
the Corporation and from those of any other person or persons.
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5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian shall with respect to all Securities held for a Fund in accordance
with this Agreement:
(a) Collect all income due or payable to the Fund with respect to
Fund Assets;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Surrender Securities in temporary form for definitive
Securities;
(d) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for the account of the
Fund, all rights and similar securities issued with respect to any Securities
held by the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository, shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for a Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
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(c) Deliver any Securities held for the account of a Fund to any
protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of a Fund and
take such other steps as shall be stated in said Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund.
7. The Custodian shall promptly deliver to the Corporation all notices,
proxy material and executed but unvoted proxies pertaining to shareholder
meetings of Securities held by each Fund. The Custodian shall not vote or
authorize the voting of any Securities or give any consent, waiver or approval
with respect thereto unless so directed by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Corporation all material
received by the Custodian and pertaining to Securities held by the Funds with
respect to tender or exchange offers, calls for redemption or purchase,
expiration of rights, name changes, stock splits and stock dividends, or any
other activity involving ownership rights in such Securities.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
---------------------------------------------
1. Promptly after each purchase of Securities by a Fund, the
Corporation shall deliver to the Custodian (i) with respect to each purchase of
Securities which are not Money Market Securities, a Certificate or Written
Instructions, and (ii) with respect to each purchase of Money Market Securities,
Written Instructions, a Certificate or Oral Instructions, specifying with
respect to each
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such purchase: (a) the name of the issuer and the title of the Securities, (b)
the principal amount purchased and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase and (f) the name of the person from whom or the
broker through whom the purchase was made. The Custodian shall, upon receipt of
Securities purchased by or for a Fund, pay out of the monies held for the
account of the Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Written Instructions
or Oral Instructions.
2. Promptly after each sale of Securities by the Corporation for the
account of a Fund, the Corporation shall deliver to the Custodian (i) with
respect to each sale of Securities which are not Money Market Securities, a
Certificate or Written Instructions, and (ii) with respect to each sale of Money
Market Securities, Written Instructions, a Certificate or Oral Instructions,
specifying with respect to each such sale: (a) the name of the issuer and the
title of the Security, (b) the principal amount sold, and accrued interest, if
any, (c) the date of sale, (d) the sale price per unit, (e) the total amount
payable to the Fund upon such sale and (f) the name of the broker through whom
or the person to whom the sale was made. The Corporation agrees that it will
institute no short sales of any securities, convertible or other. The Custodian
shall deliver the Securities upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the total amount payable
as set forth in such Certificate, Written Instructions or Oral Instructions.
Subject to the foregoing, the Custodian may accept payment in such form as shall
be satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
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3. Promptly after the time as of which the Corporation, on behalf of a
Fund, either
(a) writes an option on Securities
(b) notifies the Custodian that its obligations in respect of any
put or call option, as described in the Corporation's Prospectus, require that
the Fund deposit Securities or additional Securities with the Custodian,
specifying the type and value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in respect of any
other Security, as described in the Corporation's Prospectus, require that the
Fund deposit Securities or additional Securities with the Custodian, specifying
the type and value of Securities required to be so deposited,
(d) the Custodian will cause to be segregated or identified as
deposited, pursuant to the Fund's obligations as set forth in the Prospectus,
Securities of such kinds and having such aggregate values as are required to
meet the Fund's obligations in respect thereof.
The Corporation will provide to the Custodian, as of the end of each
trading day, the market value of the Fund's option liability and the market
value of its portfolio of common stocks.
4. On contractual settlement date, the account of a fund will be
charged for all purchases settling on that day, regardless of whether or not
delivery is made. On contractual settlement date, sale proceeds will likewise be
credited to the account of the Fund irrespective of delivery.
In the case of "sale fails", the Custodian may request the assistance
of the Fund in making delivery of the failed Security.
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ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
-------------------------------------
1. The Corporation shall furnish to the Custodian a copy of the
resolution of the Board of Directors, certified by the Secretary, either (i)
setting forth the date of the declaration of any dividend or distribution in
respect of shares of a Fund, the date of payment thereof, the record date as of
which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date and the total
amount to be paid by the Dividend and Transfer Agent on the payment date, or
(ii) authorizing the declaration of dividends and distributions in respect of
shares of a fund on a daily basis and authorizing the Custodian to rely on
Written Instructions or a Certificate setting forth the date of the declaration
of any such dividend or distribution, the date of payment thereof, the record
date as of which Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date and the
total amount to be paid by the Dividend and Transfer Agent on the payment date.
2. Upon the payment date specified in such resolution, Written
Instructions or Certificate, as the case may be, the Custodian shall arrange for
such payments to be made by the Dividend and Transfer Agent out of monies held
for the account of the Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUNDS
------------------------------------------
1. The Custodian shall receive and credit to the account of a Fund such
payments for shares of the Fund issued or sold from time to time as are received
from the distributor for the Fund's shares, from the Dividend and Transfer
Agent, or from the Corporation.
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2. Upon receipt of Written Instructions, the Custodian shall arrange
for payment of redemption proceeds to be made by the Dividend and Transfer Agent
out of the monies held for the account of the Fund in the total amount specified
in the Written Instructions.
3. Notwithstanding the above provisions regarding the redemption of
Fund shares, whenever shares of the Fund are redeemed pursuant to any check
redemption privilege which may from time to time be offered by a Fund, the
Custodian, unless otherwise subsequently instructed by Written Instructions
shall, upon receipt of any Written Instructions setting forth that the
redemption is in good form for redemption in accordance with the check
redemption procedure, honor the check presented as part of such check redemption
privilege out of the monies held in the account of the Fund for such purposes.
ARTICLE VIII
INDEBTEDNESS
------------
In connection with any borrowings, the Corporation, on behalf of a
fund, will cause to be delivered to the Custodian by a bank or broker (including
the Custodian, if the borrowing is from the Custodian), a notice or undertaking
in the form currently employed by any such bank or broker setting forth the
amount which such bank or broker will loan to the Fund against delivery of a
stated amount of collateral. The Corporation shall promptly deliver to the
Custodian a Certificate specifying with respect to each such borrowing: (a) the
name of the bank or broker, (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 Corporation, acting on behalf of the Fund, or other loan
agreement, (c) the date and time, if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Fund on the borrowing date,
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(f) the market value of Securities collateralizing the loan, including the name
of the issuer, the title and the number of shares or the principal amount of any
particular Securities and (g) a statement that such loan is in conformance with
the Investment Company Act of 1940 and the Fund's then-current Prospectus. The
Custodian shall deliver on the borrowing date specified in a Certificate the
specified collateral and the executed promissory note, if any, against delivery
by the lending bank or broker of the total amount of the loan payable, provided
that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank or broker,
keep such collateral in its possession, but such collateral shall be subject to
all rights therein given the lending bank or broker, by virtue of any promissory
note or loan agreement. The Custodian shall deliver in the manner directed by
the Corporation from time to time such Securities as additional collateral as
may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Corporation shall cause all Securities released
from collateral status to be returned directly to the Custodian and the
Custodian shall receive from time to time such return of collateral as may be
tendered to it. In the event that the Corporation fails to specify in a
Certificate or Written Instructions 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 Securities. The Custodian may require such reasonable conditions
with respect to such collateral and its dealings with third-party lenders as it
may deem appropriate.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
1. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage, including reasonable counsel fees, resulting from
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its action or omission to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Corporation, on
behalf of each Fund and only from Fund Assets (or insurance purchased by the
Corporation with respect to its liabilities on behalf of a Fund hereunder),
shall defend, indemnify and hold harmless the Custodian and its directors,
officers, employees and agents with respect to any loss, claim, liability or
cost (including reasonable attorneys' fees) arising from or relating to the
Corporation's duties with respect to a Fund hereunder or any other action or
inaction of the Corporation or its Directors, officers, employees or agents as
to the Fund, except such as may arise from the negligent action, omission or
willful misconduct of the Custodian, its directors, officers, employees or
agents. The Custodian shall defend, indemnify and hold harmless the Corporation
and its Directors, officers, employees or agents with respect to any loss,
claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Custodian's duties with respect to the
Fund hereunder or any other action or inaction of the Custodian or its
directors, officers, employees, agents, nominees or Sub-Custodians as to a Fund,
except such as may arise from the negligent action, omission or willful
misconduct of the Corporation, its Directors, officers, employees or agents. The
Custodian may, with respect to questions of law that arise under or relate to
this agreement apply for and obtain the advice and opinion of counsel to the
Corporation at the expense of the Corporation, or of its own counsel at its own
expense. and shall be fully protected with respect to anything done or omitted
by it in good faith in conformity with the advice or opinion of counsel to the
Corporation, and shall be similarly protected with respect to anything done or
omitted by it in good faith in conformity with advice or opinion of its counsel,
unless counsel to the Fund shall, within a reasonable time after being notified
of the substance of the legal advice received by the Custodian, have a differing
interpretation of such question of law. The Custodian shall be liable to the
Corporation for any proximate loss or damage resulting from the use of the
Book-Entry
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System or any Depository arising by reason of any negligence, misfeasance or
misconduct on the part of the Custodian or any of its employees, agents,
nominees or Sub-Custodians, but not for any special, incidental, consequential,
or punitive damages; provided, however, that nothing contained herein shall
preclude recovery by the Corporation, on behalf of a Fund, of principal and of
interest to the date of recovery on, Securities incorrectly omitted from the
Fund's account or penalties imposed on the Corporation, in connection with a
Fund, for any failures to deliver Securities.
In any case in which one party hereto is asked to indemnify the other
or hold the other harmless, the party from whom indemnification is sought (the
"Indemnifying Party") shall be advised of all pertinent facts concerning the
situation in question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Parry promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and satisfactory to the Indemnified Party and the
Indemnifying Party will so notify the Indemnified Party and thereupon such
Indemnifying Party shall take over the complete defense of the claim and the
Indemnified Party shall sustain no further legal or other expenses in such
situation for which indemnification has been sought under this paragraph, except
the expenses of any additional counsel retained by the Indemnified Party. In no
case shall any party claiming the right to indemnification confess any claim or
make any compromise in any case in which the other party has been asked to
indemnify such party (unless such confession or compromise is made with such
other party's prior written consent).
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The obligations of the parties hereto under this paragraph shall
survive the termination of this Agreement.
2. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or for
the account of a Fund, the legality of the purchase thereof, or the propriety of
the amount paid therefor;
(b) The legality of the sale of any Securities by or for the account
of a Fund, or the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of a Fund, or
the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of a Fund, or the
propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by
the Corporation in respect of shares of a Fund;
(f) The legality of any borrowing by the Corporation, on behalf of a
Fund, using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV hereof.
3. The Custodian shall not be liable for any money or collected funds
in U.S. dollars deposited in a Federal Reserve Bank in accordance with a
Certificate described in clause (ii) of paragraph 2(e) of Article IV hereof, nor
be liable for or considered to be the Custodian of any money, whether or not
represented by any check, draft, or other instrument for the payment of money,
received by it on behalf of a Fund until the Custodian actually receives and
collects such money directly or by the final crediting of the account
representing the Fund's interest at the Book-Entry System or Depository.
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4. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from the Dividend and
Transfer Agent nor to take any action to effect payment or distribution by the
Dividend and Transfer Agent of any amount paid by the Custodian to the Dividend
and Transfer Agent in accordance with this Agreement.
5. Income due or payable to a Fund with respect to Fund Assets will be
credited to the account of the Fund as follows:
(a) Dividends will be credited on the first business day following
payable date irrespective of collection.
(b) Interest on fixed rate municipal bonds and debt securities
issued or guaranteed as to principal and/or interest by the government of the
United States or agencies or instrumentalities thereof (excluding securities
issued by the Govemment National Mortgage Association) will be credited on
payable date irrespective of collection.
(c) Interest on fixed rate corporate debt securities will be
credited on the first business day following payable date irrespective of
collection.
(d) Interest on variable and floating rate debt securities and debt
securities issued by the Government National Mortgage Association will be
credited upon the Custodian's receipt of funds.
(e) Proceeds from options will be credited upon the Custodian's
receipt of funds.
6. Notwithstanding paragraph 5 of this Article IX, the Custodian shall
not be under any duty or obligation to take action to effect collection of any
amount, if the Securities upon which such amount is payable are in default, or
if payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action or, at the Custodian's option, prepayment.
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7. Provided that the provisions of Section 17(f) of the Investment
Company Act of 1940 and the rules adopted thereafter are fully complied with,
the Custodian may appoint one or more financial or banking institutions, as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including, but
not limited to, banking institutions located in foreign countries, of Securities
and monies at any time owned by a Fund, upon terms and conditions approved in a
Certificate. Current Depository(s) and Sub-Custodian(s) are noted in Appendix B.
The Custodian shall not be relieved of any obligation or liability under this
Agreement in connection with the appointment or activities of such Depositories
or Sub-Custodians.
8. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
a Fund are such as properly may be held by the Fund under the provisions of the
Articles of Incorporation and the Corporation's By-Laws.
9. The Custodian shall treat all records and other information relating
to the Corporation, the Funds and Fund Assets as confidential and shall not
disclose any such records or information to any other person unless: (a) the
Corporation shall have consented thereto in writing or (b) such disclosure is
compelled by law.
10. The Custodian shall be entitled to receive and the Corporation
agrees to pay to the Custodian, for each Fund's account from Fund Assets only,
such compensation as shall be determined pursuant to Appendix C attached hereto,
or as shall be determined pursuant to amendments to such Appendix approved by
the Custodian and the Corporation, on behalf of each Fund.
- 19 -
The Custodian shall be entitled to charge against any money held by it for the
account of a Fund the amount of any loss, damage, liability or expense,
including reasonable counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement as determined by agreement
of the Custodian and the Corporation or by the final order of any court or
arbitrator having jurisdiction and as to which all rights of appeal shall have
expired. The expenses which the Custodian may charge against the account of a
Fund include, but are not limited to, the expenses of Sub-Custodians incurred in
settling transactions involving the purchase and sale of Securities of the Fund.
11. The Custodian shall be entitled to rely upon any Certificate
reasonably believed by it to be genuine. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or V hereof. The Corporation agrees to forward
to the Custodian Written Instructions from Authorized Persons confirming Oral
Instructions in such manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex or otherwise, on the first
business day following the day on which such Oral Instructions are given to the
Custodian. The Corporation agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Corporation. The Corporation agrees that the Custodian shall
incur no liability to a Fund in acting upon Oral Instructions given to the
Custodian hereunder concerning such transactions.
12. The Custodian will (a) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of each Fund
under the Investment Company Act of 1940, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder, and (b) preserve for the
- 20 -
periods prescribed by applicable Federal statute or regulation all records
required to be so preserved. The books and records of the Custodian shall be
open to inspection and audit at reasonable times and with prior notice by
Officers and auditors employed by the Corporation.
13. The Custodian and its Sub-Custodians shall promptly send to the
Corporation, for the account of a Fund, any report received on the systems of
internal accounting control of the Book-Entry System or the Depository and with
such reports on their own systems of internal accounting control as the
Corporation may reasonably request from time to time.
14. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Funds. The Custodian is not a selling
agent for shares of any Fund and performance of its duties as a custodial agent
shall not be deemed to be a recommendation to the Custodian's depositors or
others of shares of a Fund as an investment.
ARTICLE X
TERMINATION
-----------
1. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Corporation, on behalf
of the Fund, it shall be accompanied by a copy of a resolution of the Board of
Directors, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian or custodians,
each of which shall be a bank or corporation company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, the Corporation shall, on or before the
- 21 -
termination date, deliver to the Custodian a copy of a resolution of its Board
of Directors, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Fund. In the absence of such designation by
the Corporation, the Custodian may designate a successor custodian which shall
be a bank or corporation company having not less than $2,000,000 aggregate
capital, surplus, and undivided profits. Upon the date set forth in such notice
this Agreement shall terminate, and the Custodian, provided that it has received
a notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and monies then owned by the
Funds and held by it as Custodian. Upon termination of this Agreement, the
Corporation shall pay to the Custodian on behalf of the Fund such compensation
as may be due as of the date of such termination. The Corporation agrees on
behalf of the Fund that the Custodian shall be reimbursed for its reasonable
costs in connection with the termination of this Agreement.
2. If a successor custodian is not designated by the Corporation, on
behalf of the Funds, or by the Custodian in accordance with the preceding
paragraph, or the designated successor cannot or will not serve, the Corporation
shall upon the delivery by the Custodian to the Corporation of all Securities
(other than Securities held in the Book-Entry System which cannot be delivered
to the Corporation) and monies then owned by the Fund, other than monies
deposited with a Federal Reserve Bank pursuant to a Certificate described in
clause (ii) of paragraph 2(e) of Article IV, be deemed to be the custodian for
the Fund, and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty with respect to
Securities held in the Book-Entry System which cannot be delivered to the
Corporation to hold such Securities hereunder in accordance with this Agreement.
- 22 -
ARTICLE XI
MISCELLANEOUS
-------------
1. Appendix A sets forth the names and the signatures of all Authorized
Persons. The Corporation agrees to furnish to the Custodian, on behalf of the
Fund, a new Appendix A in form similar to the attached Appendix A, if any
present Authorized Person ceases to be an Authorized Person, or if any other or
additional Authorized Persons are elected designated or appointed. Until such
new Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
Appendix A.
2. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Corporation or of any
predecessor or successor, either directly or through the Corporation or any such
predecessor or successor, whether by virtue of any constitution, statute or rule
of law or equity, or be the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this Agreement and the
obligations thereunder are enforceable solely against Fund Assets, and that no
such personal liability whatever shall attach to, or is or shall be incurred by,
the organizers, shareholders, Officers, Directors of the Corporation or of any
predecessor or successor, or any of them as such, because of the obligations
contained in this Agreement or implied therefrom and that any and all such
liability is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
3. The obligations set forth in this Agreement as having been made by
the Corporation have been made by the Board of Directors, acting as such
Directors for and on behalf of the Corporation, pursuant to the authority vested
in them under the laws of the State of Maryland, the Articles
- 23 -
of Incorporation and the By-Laws of the Corporation. This Agreement has been
executed by Officers of the Corporation as officers, and not individually, and
the obligations contained herein are not binding upon any of the Directors,
Officers, agents or holders of shares, personally, but bind only the Corporation
and then only to the extent of Fund Assets.
4. Such provisions of the Prospectus of the Corporation and any other
documents (including advertising material) specifically mentioning the Custodian
(other than merely by name and address) shall be reviewed with the Custodian by
the Corporation.
5. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 000 Xxxxxx Xxxxxx, X.X. 0000, Xxxxxxxxxx, Xxxx 00000, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
6. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Corporation shall be sufficiently given when
delivered to the Corporation or on the third business day following the time
such notice is deposited in the U.S. mail postage prepaid and addressed to the
Corporation at its office at 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx 00000, or at such other place as the Corporation may from time to time
designate in writing.
7. This Agreement with the exception of Appendices A and B may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Directors of the Corporation.
- 24 -
8. 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 Corporation or by the Custodian,
and no attempted assignment by the Corporation or the Custodian shall be
effective without the written consent of the other party hereto.
9. This Agreement shall be construed in accordance with the laws of the
State of Ohio.
10. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
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 above written.
ATTEST: Croft Funds Corporation
By:
-------------------------- -------------------------
ATTEST: Star Bank, N.A.
By:
-------------------------- -------------------------
- 25 -
APPENDIX A
BOARD OF DIRECTORS
------------------
AUTHORIZED PERSONS SPECIMEN SIGNATURES
------------------ -------------------
Chairman ------------------ -------------------
President ------------------ -------------------
Vice President ------------------ -------------------
Secretary ------------------ -------------------
Treasurer ------------------ -------------------
Controller: ------------------ -------------------
Adviser Employees ------------------ -------------------
------------------ -------------------
------------------ -------------------
American Data Services,
Inc. Employees: ------------------ -------------------
------------------ -------------------
------------------ -------------------
------------------ -------------------
APPENDIX B
The following Depository(s) and Sub-Custodian(s) are employed currently by Star
Bank, N.A. for securities processing and control . . .
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
APPENDIX C
Star Bank, N.A.
CUSTODY FEE SCHEDULE
FOR
CROFT-LEOMINSTER VALUE FUND
CROFT-LEOMINSTER INCOME FUND
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
--------------------------
(a) For each repurchase agreement transaction $ 7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $ 9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $25.00
(e) For each GNMA Prin/Ant Paydown, GNMA Sales $8.00
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $ 5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. MARKET VALUE FEE
----------------
Based upon an annual rate of: MILLION
-------
.0005 (5 Basis Points) on First $10
.0003 (3 Basis Points) on Next $10
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III.MONTHLY MINIMUM FEE-PER FUND $400.00
IV. OUT-OF-POCKET EXPENSES
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.
V. XXX DOCUMENTS
Per Shareholder/year to hold each XXX Document $8.00
VI. EARNINGS CREDITS
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management service
fees generated. Earnings credits are based on the average yield on the
91 day U.S. Treasury Xxxx for the preceding thirteen weeks less the 10%
reserve.
- 2 -
APPENDIX D
CUSTODIAN AGREEMENT
-------------------
AGREEMENT dated as of _________________ between BANKERS TRUST COMPANY (the
"Custodian") and Star Bank, N.A. (the "Customer"). Customer represents and
Custodian acknowledges that it is entering into this Agreement solely as
Custodian of Croft-Leominster Value Fund and the Croft-Leominster Income Fund
(the "Funds"), its client, with whom Customer has a Custody Agreement.
1. Employment of Custodian. The Customer hereby employs the Custodian
as custodian of all assets of the Customer which are delivered to and accepted
by the Custodian or any of its subcustodians (as that term is defined in Section
5) anywhere in the world (the "Property") pursuant to the terms and conditions
set forth herein. Without limitation, such Property shall include stocks and
other equity interests of every type, evidences of indebtedness, other
instruments representing same or rights or obligations to received, purchase,
deliver or sell same and other non-cash investment property of the Customer
("Securities") and cash from whatever source and in whatever currency ("Cash").
The Custodian shall not be responsible for any property of the Customer held or
received by the Customer or others and not delivered to the Custodian or any of
its subcustodians.
2. Custody Account. The Custodian agrees to establish and maintain a
custody account in the name of the Customer (the "Account") for any and all
Property from time to time received and accepted by the Custodian or any of its
subcustodians for the account of the Customer. The Customer acknowledges its
responsibility as a principal for all of its obligations to the Custodian
arising under or in connection with this Agreement, notwithstanding that it may
be acting on behalf of Funds and warrants its authority to deposit in the
Account any Property received therefor by the Custodian shall not be subject to,
nor shall its rights and obligations under this Agreement or with respect to the
Account be affected by, any agreement between the Customer and any other person.
The Custodian shall hold, keep safe and protect as custodian in the Account, on
behalf of the Customer, all Property. All transactions, including, but not
limited to, foreign exchange transactions, involving the Property shall be
executed or settled solely in accordance with Instructions (as that term is
defied in Section 10), except that until the Custodian receives Instructions to
the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments whether paid in cash or in kind, on the Property,
as the same become payable and credit the same to the
Account;
(b) present for payment all Securities held in the Account which
are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for
payment upon presentation and hold the cash received in the
Account pursuant to this Agreement;
(c) exchange Securities where the exchange is purely ministerial
(including, without limitation, the exchange of temporary
securities for those in
definitive form and the exchange of warrants, or other
documents of entitlement to securities, for the Securities
themselves);
(d) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears an
expiration date, if after endeavoring to obtain the
Customer's Instructions such Instructions are not received
in time for the Custodian to take timely action, sell in the
discretion of the Custodian (which sale the Customer hereby
authorizes the Custodian to make) such rights entitlement or
fractional interest and credit the Account with the net
proceeds of such sale;
(e) executed in the Customer's name for the Account, whenever
the Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property; and
(f) pay for the Account, any and all taxes and levies in the
nature of taxes imposed on income on the Property by any
governmental authority. In the event there is insufficient
Cash available in the Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in the Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and required in connection with
the payment of any such taxes to cooperate with the
Custodian in furnishing information, executing documents or
otherwise.
The Custodian shall deliver, subject to Section 12 below, any and all Property
in the Account in accordance with instructions and in connection therewith, the
Customer will accept delivery of Securities of the same class and denomination
in place of those contained in the Account. Neither the Custodian nor any
subcustodian shall have any duty or responsibility to see to the application of
any Property withdrawn from the Account upon Instructions.
Except as otherwise may be agreed upon by the parties hereto, the Custodian
shall not be required to comply with any Instructions to settle the purchase of
any Securities for the Account unless there is sufficient Cash in the Account at
the time or to settle the sale of any Securities from the Account unless such
Securities are in deliverable form. Notwithstanding the foregoing, if the
purchase price of such Securities exceeds the amount of Cash in the Account at
the time of such purchase, the Custodian may, in its sole discretion, advance
the amount of the difference in order to settle the purchase of such Securities.
The amount of any such advance shall be deemed a loan from the Custodian to the
Customer payable on demand and bearing interest accruing from the date such loan
is made to but not including the date such loan is repaid at a rate per annum
customarily charged by the Custodian on similar loans.
3. Records, Ownership of Property and Statements. The ownership of the
Property whether Securities, Cash and/or other property, and whether held by the
Custodian or a subcustodian
- 2 -
or in a securities depository or clearing agency as hereinafter authorized,
shall be clearly recorded on the Custodian's books as belonging to the Account
and not for the Custodian's own interest. The Custodian shall keep accurate and
detailed accounts of all investments, receipts, disbursements and other
transactions for the Account. All accounts, books and records of the Custodian
relating thereto shall be open to inspection and audit at all reasonable times
during normal business hours by any person designated by the Customer. The
Custodian will supply to the Customer from time to time, as mutually agreed
upon, a statement in respect to any Property in the Account held by the
Custodian or by a subcustodian. In the absence of the filing in writing with the
Custodian by the Customer of exceptions or objections to any such statement
within sixty (60) days of the mailing thereof, the Customer shall be deemed to
have approved such statement; and in such case or upon written approval of the
Customer of any such statement, the Custodian shall, to the extent permitted by
law, be released, relieved and discharged with respect to all matters and things
set forth in such statement as though such statement had been settled by the
decree of a court of competent jurisdiction in an action in which the Customer
and all persons having any equity interest in the Customer were parties.
4. Maintenance of Property Outside of the United States. Property in
the Account may be held in a country or other Jurisdiction outside of the United
States; provided that (a) with respect to Securities, such country or other
jurisdiction shall be one in which the principal trading market for such
Securities is located or the country or other jurisdiction in which such
Securities are to be presented for payment or are acquired for the Account and
(b) with respect to cash, the amount thereof to be maintained in any country or
other jurisdiction shall be an amount which is deemed necessary to settle
transactions relating to Securities purchased for the Account in such country or
jurisdiction or which is received in connection with the holding of such
Securities in the Account.
5. Subcustodians and Securities Depositories. The Custodian may employ,
directly or indirectly, one or more subcustodians to assist in the performance
of obligations hereunder; provided, however, that the employment of any such
subcustodians (other than any such subcustodian which is a securities depository
or clearing agency) the Custodian shall only be responsible or liable for losses
arising from such employment caused by the Custodian's own failure to exercise
reasonable care.
The Customer authorizes and instructs the Custodian to hold the Property in the
Account in custody accounts which have been established by the Custodian with
one of its branches, a branch of another U.S. bank, a foreign bank or trust
company acting as custodian or a securities depository in which the Custodian
participants. Hereinafter, the term "subcustodian" will refer to any third-party
agent referred to in the first sentence of this paragraph which has entered into
an agreement with the Custodian of the type contemplated hereunder regarding
Securities and/or Cash held in or to be acquired for the Account. In addition,
the Customer also authorizes the Custodian to authorize any subcustodian to hold
the Property in the Account in one or more accounts with securities depositories
or clearing agencies in which such subcustodian participates subject to the
provisions set forth below. The Custodian shall select in its sole discretion
the entity or entities in the custody of which any of the Securities may be so
maintained or with which any Cash may be so deposited. Furthermore, any entity
so selected is authorized to hold such Securities or Cash in its account with
any securities depository or clearing agency in which it participates.
- 3 -
6. Use of Subcustodian. With respect to Securities in the Account which
are maintained by the Custodian in the custody of a subcustodian pursuant to
Section 5,
(a) The Custodian will identify on its books as belonging to the
Customer any Securities held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities
placed in its care to be held in a securities depository or clearing
agency, such subcustodian will be required by its agreement with the
Custodian to identify on its books such Securities as being held for
the account of the Custodian for its customers.
(c) Any Securities in the Account held by a subcustodian will be
subject only to the instructions of the Custodian or its agents
unless specifically otherwise authorized by the Custodian on an
exception basis; and any Securities held in a securities depository
or clearing agency for the account of the Custodian or a
subcustodian will be subject only to the instructions of the
Custodian or such subcustodian, as the case may be.
(d) Securities deposited with a subcustodian will be maintained in an
account holding only assets for customers of the Custodian.
(e) Any agreement the Custodian shall enter into with a subcustodian
with respect to the holding of Securities shall require that (i) the
Securities are not subject to any right, charge, security interest
lien or claim of any kind in favor of such subcustodian except a
claim for payment in accordance with such agreement for their safe
custody or administration and expenses related thereto and (ii)
beneficial ownership of such Securities be freely transferable
without the payment of money or value other than for safe custody or
administration and expenses related thereto.
(f) Upon request by the Customer, the Custodian will identify the name,
address and principal place of business of any subcustodian and the
name and address of the governmental agency or other regulatory
authority that supervises or regulates such subcustodian.
7. Holding of Securities, Nominees, etc. Securities in the Account
which are held by the Custodian or any subcustodian may be held by such entity
in the name of the Customer, in its own name, in the name of its nominee or in
bearer form. Securities which are held with a subcustodian or are eligible for
deposit in a securities depository as provided above may be maintained with the
subcustodian or depository, as the case may be, in an account for the
Custodian's or subcustodian's customers. The Custodian or subcustodian, as the
case may be, may combine certificates of the same issue held by it as fiduciary
or as a custodian. In the event that any Securities in the name of the Custodian
or its nominee or held by one of its subcustodians and registered in the name of
such subcustodian or its nominee are called for partial redemption by the issuer
of such Security, the
- 4 -
Custodian may, subject to the rules or regulations pertaining to allocation of
any securities depository in which such Securities have been deposited, allot,
or cause to be allotted, the called portion to the respective beneficial holders
of such class of security in any manner the Custodian deems to be fair and
equitable.
8. Proxies, etc. With respect to any proxies, notices, reports or other
communications relative to any of the Securities in the Account, the Custodian
shall perform such services relative thereto as may be agreed upon between the
Custodian and the Customer. Neither the Custodian nor its nominees or agents
shall vote upon or in respect of any of the Securities in the Account, execute
any form of proxy to vote thereon, or give any consent or take any action
(except as provided in Section 2) with respect thereto except upon the receipt
of Instructions from the Customer relative thereto.
9. Settlement Procedures. Settlement and payment for Securities
received for the Account and delivery of Securities maintained for the Account
may be effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the Jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering Securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the expectation of
receiving later payment for such Securities from such purchaser or dealer, and
in accordance with the standard operating procedures of the Custodian in effect
from time to time for that jurisdiction or market.
10. Instructions. The term "Instructions" means instructions from the
Customer in respect of any of the Custodian's duties hereunder which have been
received by the Custodian at its address set forth in Section 15 below in
writing or by tested telex signed or given by such one or more person or persons
as the Customer shall have from time to time authorized to give the particular
class of Instructions in question and whose name and (if applicable) signature
and office address have been filed with the Custodian, or upon receipt of such
other form of instructions as the Customer may from time to time authorize in
writing and which the Custodian agrees to accept. The Custodian shall have the
right to assume in the absence of notice to the contrary from the Customer that
any person whose name is on file with the Custodian pursuant to this Section 10
has been authorized by the Customer to give the Instructions in question and
that such authorization has not been revoked.
11. Standard of Care. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Securities in the Account and carrying out its obligations under
the Agreement. So long as and to the extent that it has exercised reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any Property or other property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon, and may conclusively rely on, without liability for any
loss resulting therefrom, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed or furnished
by the proper party or parties, including, without limitation, Instructions, and
shall be indemnified by the Customer for any losses, damages, costs and expenses
(including, without limitation, the fees and expenses of counsel) incurred by
the Custodian and arising out of action
- 5 -
taken or omitted in good faith by the Custodian hereunder or under any
Instructions. The Custodian shall be liable to the Customer for any loss which
shall occur directly as the result of the failure of a subcustodian (other than
any subcustodian which is a securities depository or clearing agency the actions
or omissions for which the Custodian's liability and responsibility is set forth
in the last proviso of the first paragraph of Section 5) to exercise reasonable
care with respect to the safekeeping of such Securities. In the event of any
loss to the Customer by reason of the failure of the Custodian or its
subcustodian to utilize reasonable care, the Custodian shall be liable to the
Customer to the extent of the Customer's actual damages at the time such loss
was discovered without reference to any special conditions or circumstances. In
no event shall the Custodian be liable for any consequential or special damages.
The Custodian shall be entitled to rely, and may act, on advice of counsel (who
may be counsel for the Customer) on all matters and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
All collections of funds or other property paid or distributed in respect of
Securities in the Account, including funds involved in third-party foreign
exchange transactions, shall be made at the risk of the Customer. The Custodian
shall have no liability for any loss accessioned by delay in the actual receipt
of notice by the Custodian or by its subcustodian of any payment, reception or
other transaction regarding Securities in the Accounting respect of which the
Custodian has agreed to take action as provided in Section 2 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether DE JURE or DE FACTO),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; acts of war, terrorism, insurrection or
revolution; strikes or work stoppages; the inability of a local clearing and
settlement system to settle transactions for reasons beyond the control of the
Custodian; hurricane, cyclone, earthquake, volcanic eruption, nuclear fusion,
fission, radioactivity or other acts of God.
The provisions of this Section shall survive termination of this Agreement.
12. Fees and Expenses. The Customer agrees to pay to the Custodian such
compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's out-of-pocket or
incidental expenses, including (but not limitation) legal fees. The Customer
hereby agrees to hold the Custodian harmless from any liability or loss
resulting from any taxes or other governmental charges, and any expense related
thereto, which may be imposed, or assessed with respect to any Property in the
Account and also agrees to hold the Custodian, its subcustodians, and their
respective nominees harmless from any liability as a record holder of Property
in the Account. The Custodian is authorized to charge any account of the
Customer for such items. The provisions of this Section shall survive the
termination of this Agreement.
13. Amendment, Modifications, etc. No provisions of this Agreement may
amended, modified or waived except in writing signed by the parties hereto.
14. Termination. This Agreement may be terminated by the Customer or
the Custodian by ninety (90) days' notice to the other; provided that notice by
the Customer shall specify the names of the persons to who the Custodian shall
deliver the Securities in the Account and to whom the Cash in the Account shall
be paid. If notice of termination is given by the Custodian, the Customer shall,
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within ninety (90) days following the giving of such notice, deliver to the
Custodian a written notice specifying the names of the persons to whom the
Custodian shall deliver the Securities in the Account and to whom the Cash in
the Account shall be paid. In either case, the Custodian will deliver such
Securities and Cash to the persons so specified, after deducting therefrom any
amounts which the Custodian determines to be owed to it under Section 12. In
addition, the Custodian may in its discretion withhold from such delivery such
Cash and Securities as may be necessary to settle transactions pending at the
time of such delivery. If within ninety (90) days following the giving of a
notice of termination by the Custodian, the Custodian does not receive from the
Customer a written notice specifying the names of the persons to whom the Cash
in the Account shall be paid, the Custodian, at its election, may deliver such
Securities and pay such Cash to a bank or trust company doing business in the
State of New York to be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to the Custodian.
15. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, had delivered or sent by telex,
telegram, facsimile or cable, addressed, if to the Customer, to its address set
forth on the signature page hereof and, if to the Custodian, to c/o BTNY
Services, Inc., 00 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000, Attention:
Global Securities Services, (Telex Xx. 000000 Xxxx 00 Answerback: BANTRUS)
(Facsimile No. 201/860-7290), or in either case to such other address as shall
have been furnished to the receiving party pursuant to the provisions hereof and
(b) shall be deemed effective when received, or, in the case of a telex, when
sent to the proper number and acknowledged by a proper answerback.
16. Security for Payment. To secure payment of all fees and expenses
payable to Custodian hereunder, including but not limited to amounts payable
pursuant to indemnification provisions and to the last paragraph of Section 2,
the Customer hereby grants to Custodian a continuing security interest in and
right to setoff against the Account and all Property held therein from time to
time in the full amount of such obligations; provided that, if the Account
consists of more than one fund and the obligations secured pursuant to this
Section 16 can be allocated to a specific fund, such security interest and right
of setoff will be limited to any amounts owned hereunder, Custodian shall be
entitled to use available Cash in the Account or such applicable portion thereof
held for a specific fund, as the case, may be, and to dispose of Securities in
the Account or such applicable portion thereof as is necessary. In the event
Securities in the Account or such applicable portion thereof are insufficient to
discharge such obligations, the Customer hereby grants Custodian a continuing
security interest in and right of setoff against the balance from time to time
in any non-custodian account of the Customer (the "Pledged Balances"), and
Custodian may, at any time or from time to time at Custodian's sole option and
without notice, appropriate and apply toward the payment of such obligations,
the Pledged Balances. If at any time Property in the Account or such applicable
portion thereof and the Pledged Balances are insufficient to fully collateralize
such obligations, Customer shall provide to Custodian additional collateral in
form and amount satisfactory to Custodian and shall grant to Custodian a
continuing security interest in and right of setoff against such collateral. In
any such case and without limiting the foregoing, Custodian shall be entitled to
take such other action(s) or exercise such other options, powers and rights as
Custodian now or hereafter has a secured creditor under the New York Uniform
Commercial Code or any other applicable law.
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17. Governing Law and Successors and Assigns. This Agreement shall be
governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
Custodian.
18. Publicity. Customer shall furnish to Custodian at its office
referred to in Section 15 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way Custodian. Customer shall not distribute or permit the
distribution of such materials if Custodian reasonable objects in writing within
ten (10) business days (or such other time as may be mutually agreed) after
receipt thereof. The provisions of this Section shall survive the termination of
this Agreement.
19. Submission to Jurisdiction. To the extent, if any, to which the
Customer or any of its respective properties may be deemed to have or hereafter
to acquire immunity, on the ground of sovereignty or otherwise, from any
judicial process or proceeding to enforce this Agreement or to collect amounts
due hereunder (including, without limitation, attachment proceedings prior to
judgment or in aid of execution) in any jurisdiction, the Customer hereby waives
such immunity and agrees not to claim the same. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of Xxx Xxxx, Xxxxx xx Xxx Xxxx, Xxxxxx Xxxxxx of America,
and the Customer irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of such suit, action or proceeding brought in such a court and
any claim that such suit, action or proceeding was brought in an inconvenient
forum. The Customer hereby irrevocably designates, appoints and empowers, as its
authorized agent to receive, for and on behalf of the Customer and its property
service of process in the State of New York when and as such legal actions or
proceedings may be brought in any of the aforementioned courts, and such service
of process shall be deemed complete upon the date of delivery thereof to such
agent whether or not such agent gives notice thereof to the Customer or upon the
earliest of any other date permitted by applicable law. The Customer further
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
certified air mail, postage prepaid, to the Customer at its address set forth
below or in any other manner permitted by law, such service to become effective
upon the earlier of (i) the date fifteen (15) days after such mailing or (ii)
any earlier of date permitted by applicable law. The Customer agrees that it
will at all times continuously maintain an agent to receive service of process
in the City and State of New York on behalf of itself and its properties with
respect to this Agreement and in the event that, for any reason, the agent named
above or its successor shall no longer serve as agent of the Customer to receive
service of process in the City and State of New York on its behalf, the Customer
shall promptly appoint a successor to so serve and shall advise the Custodian
thereof
20 Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
STAR BANK, N.A.
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By:
------------------------------------
Title: Senior Trust Officer
Address: 000 Xxxxxx Xx., X.X. 0000
Xxxxxxxxxx, Xxxx 00000
BANKERS TRUST COMPANY
By:
------------------------------------
Title:
------------------------------------
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Star Bank, N.A
Global Custody
Fee Schedule
1. ANNUAL CHARGE ON FUND ASSETS NON-EMERGING MARKETS
-------------------------------------------------
-- 10 basis points on the first $25 million
-- 12 basis points on the next $25 million
-- Remainder to be negotiated
2. TRANSACTION FEE FOR NON-EMERGING MARKETS:
----------------------------------------
-- $125 per Security Purchase/sale until funds asset value reaches $25
million
-- $75 per security purchase/sale once funds asset value exceeds
$25 million
NON-EMERGING MARKETS:
---------------------
-- Cedel (Eurobonds) -- Australia -- Austria
-- Euroclear (Eurobonds) -- Belgium -- Hong Kong
-- Canada -- Indonesia
-- Denmark -- Malaysia
-- France -- Mexico (Equieies)
-- Germany -- Philippines
-- Italy -- Singapore
-- Ireland -- Spain
-- Japan -- Sweden
-- Luxembourg -- Thailand
-- Netherlands
-- New Zealand
-- Norway
-- Switzerland
-- United Kingdom
ASSET AND TRANSACTION FEE -- EMERGING MARKETS
---------------------------------------------
COUNTRY ANNUAL ASSET FEE TRANSACTIONS
------- ---------------- ------------
Argentina 45 Basis Points $175
Bangladesh 35 Basis Points $175
Brazil 50 Basis Points $125
Chile 30 Basis Points $125
Columbia 40 Basis Points $150
Finland 15 Basis Points $125
Greece 50 Basis Points 20 Basis Points
India 45 Basis Points $175
Mexico (Bonds) 30 Basis Points $125
Pakistan 30 Basis Points $175
Xxxx 00 Basis Points $175
Portugal 15 Basis Points $125
Shanghai 25 Basis Points $100
Xxxxxxx 00 Xxxxx Xxxxxx $100
South Korea 15 Basis Points $125
Sri Lanka 25 Basis Points $100
Turkey 30 Basis Points $125
Venezuela 35 Basis Points $125
3. Base Fee -- $525 per Account (per month)
4. Communications (Globe*Link) -- Free of Charge
* The above fee schedule assumes the client will deal directly with Star
Bank and all foreign security transactions will be settled in U.S. dollars.
NOTES:
------
1. Fees are billed monthly.
2. Fees for the receipt of positions relating to the initial asset
transaction will be waived with the exception of Spain and Indonesia were
re-registration fees will be assessed.
3. Cash movements relating to third party FX trades will be assessed at $15
per U.S. wire movement and $50 per non-U.S. wire movement. For FX trades
concluded with BTCo., this charge will be waived.
4. Fees for investment in countries not listed will be negotiated separately.
5. Fees for stamp duty and registration, charged by local authorities, not
included as part of trade cost will be billed separately.
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