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CUSTODIAN CONTRACT
Between
CTB SECURITIES TRUST FUND
and
CHINATRUST BANK (U.S.A.)
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TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held by It ...............................................4
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2. Duties of the Custodian With Respect to Property of the Funds Held By the Custodian .................4
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2.1 Holding Securities .........................................................................4
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2.2 Delivery of Securities .....................................................................5
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2.3 Registration of Securities .................................................................7
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2.4 Bank Accounts ..............................................................................7
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2.5 Payments for Shares ........................................................................7
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2.6 Availability of Federal Funds .............................................................8
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2.7 Collection of Income .......................................................................8
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2.8 Payment of Fund Moneys......................................................................8
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2.9 Liability for Payment in Advance of Receipt of Securities Purchased.........................9
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2.10 Payments for Repurchases or Redemptions of Shares of a Fund.................................9
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2.11 Appointment of Agents.......................................................................10
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2.12 Deposit of Fund Assets in Securities System.................................................10
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2.13 Segregated Account..........................................................................11
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2.14 Joint Repurchase Agreements.................................................................11
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2.15 Ownership Certificates for Tax Purposes.....................................................12
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2.16 Proxies.....................................................................................12
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2.17 Communications Relating to Fund Portfolio Securities........................................12
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2.18 Proper Instructions.........................................................................12
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2.19 Actions Permitted Without Express Authorization.............................................13
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2.20 Evidence of Authority.......................................................................13
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2.21 Notice to Fund by Custodian Regarding Cash Movement.........................................13
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3. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value and Net
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Income...............................................................................................13
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4. Records..............................................................................................14
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5. Opinion of Fund's Independent Public Accountants.....................................................14
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6. Reports to Fund by Independent Public Accountants....................................................14
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7. Compensation of Custodian............................................................................15
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8. Responsibility of Custodian..........................................................................15
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9. Effective Period, Termination and Amendment..........................................................16
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10. Successor Custodian..................................................................................17
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11. Interpretive and Additional Provisions...............................................................17
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12. California Law to Apply..............................................................................17
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13. Notices..............................................................................................18
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14. Counterparts.........................................................................................18
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15. Limitations of Liability.............................................................................18
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CUSTODIAN CONTRACT
This Contract between CTB SECURITIES TRUST FUND, (the "Fund"), a
Massachusetts business trust, organized and existing under the laws of the
Commonwealth of Massachusetts, having its principal place of business at 00000
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, and CHINATRUST BANK (U.S.A.), a
state-chartered banking corporation, having its principal place of business at
00000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, hereinafter called the
"Custodian,"
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1 Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Fund. Except as otherwise expressly provided herein, the securities
and other assets of the Fund shall be segregated from all other persons
and entities. The Fund will deliver to the Custodian all securities and
cash owned by the Fund and all payments of income, payments of principal
or capital distributions received by the Fund with respect to all
securities owned by the Fund from time to time, and the cash
consideration received by the Fund for units of beneficial interest
("Shares") of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund held or
received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more
sub-custodians upon the terms specified in the Proper Instructions.
2. Duties of the Custodian With Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than securities which are maintained pursuant to
Section 2.12 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System," or
securities which are subject to a joint repurchase agreement with
affiliated funds pursuant to Section 2.14. The Custodian shall maintain
records of all receipts, deliveries and locations of such securities,
together with a current inventory thereof, and shall conduct periodic
physical inspections of certificates representing stocks, bonds and other
securities held by it under this Contract in such manner as the Custodian
shall determine from time to time to be advisable in order to verify the
accuracy of such inventory. With respect to securities held by any agent
appointed pursuant to Section 2.11 hereof, and with respect to securities
held by any sub-custodian appointed pursuant to Section 1 hereof, the
Custodian may rely upon certificates from such agent as to the
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holdings of such agent and from such sub-custodian as to the holdings of
such sub-custodian, it being understood that such reliance in no way
relieves the Custodian of its responsibilities under this Contract. The
Custodian will promptly report to the Fund the results of such
inspections, indicating any shortages or discrepancies uncovered thereby,
and take appropriate action to remedy any such shortages or
discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
(1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund, in accordance with
the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange for
a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom"; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own failure to act in accordance
with the standard of reasonable care or any higher standard of
care imposed upon the Custodian by any applicable law or
regulation if such above-stated standard of reasonable care were
not part of this Contract;
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(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10) For delivery in connection with any loans of portfolio securities
of the Fund, but only against receipt of adequate collateral in
the form of (a) cash, in an amount specified by the Fund, (b)
certificated securities of a description specified by the Fund,
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, or (c) securities of a description specified by the
Fund, transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings
requiring a pledge of assets by the Fund, but only against receipt
of amounts borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, further
securities may be released for the purpose;
(12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions for the Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization
or organizations, regarding account deposits in connection with
transaction for a Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
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(15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies affiliated with the Fund, or
in the name or nominee name of any agent appointed pursuant to Section
2.11 or in the name or nominee name of any sub-custodian appointed
pursuant to Section 1. All securities accepted by the Custodian on behalf
of the Fund under the terms of this Contract shall be in "street names"
or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained in a joint repurchase account with other affiliated funds
pursuant to Section 2.14 of this Contract or by a particular Fund in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended, (the "1940 Act"). Funds held
by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall be approved by vote of a majority of the Board of
Trustees ("Board") of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian for the Fund and shall be
withdrawable by the Custodian only in that capacity. If requested by the
Fund, the Custodian shall furnish the Fund, not later than twenty (20)
days after the last business day of each month, an internal
reconciliation of the closing balance as of that day in all accounts
described in this section to the balance shown on the daily cash report
for that day rendered to the Fund.
2.5 Payments for Shares. The Custodian shall make such arrangements with the
Transfer Agent of the Fund as will enable the Custodian to receive the
cash consideration due to the Fund and will deposit into the Fund's
account such payments as are received from the Transfer Agent. The
Custodian will provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the respective Fund.
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2.6 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall make federal funds available to the
Fund as of specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks, clearing house funds, and other
non-federal funds received in payment for Shares of the Fund which are
deposited into the Fund's accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to
which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to the Fund's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. The collection of income due the Fund on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Custodian of
the income to which the Fund is properly entitled.
(2) The Fund shall promptly notify the Custodian whenever income due
on securities is not collected in due course and will provide the
Custodian with monthly reports of the status of past due income.
The Fund will furnish the Custodian with a weekly report of
accrued/past due income for the Fund. Once an item is identified
as past due and the Fund has furnished the necessary claim
documentation to the Custodian, the Custodian will then initiate a
claim on behalf of the Fund. The Custodian will furnish the Fund
with a status report monthly unless the parties-otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of the Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
"pursuant to Section 2.11 hereof" registered in the name of the
Fund or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, (b) in the case
of a purchase effected through a Securities System, in accordance
with the conditions set forth
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in Section 2.12 hereof or (c) in the case of repurchase agreements
entered into between the Fund and any other party, (i) against
delivery of the securities either in certificate form or through
an entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Fund;
(2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of the Fund issued by
the Fund as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the Fund,
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees of the Fund signed by an officer of the
Fund and certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to be
a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased, in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose of repurchasing or redeeming
Shares of the Fund, but subject to the limitations of the Certificate of
Incorporation and any applicable votes of the Board of the Fund pursuant
thereto, the Custodian shall, upon receipt of instructions from the
Transfer Agent, make funds available for payment to holders of shares of
the Fund who have delivered to the Transfer Agent a request for
redemption or repurchase
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of their shares including without limitation through bank drafts,
automated clearing-house facilities, or by other means. In connection
with the redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act and any applicable
state law or regulation, to act as a custodian, as its agent to carry out
such of the provisions of this Section 2 as the Custodian may from time
to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Exchange Act, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies, collectively referred to herein as
"Securities System", in accordance with applicable Federal Reserve Board
and SEC rules and regulations, if any, and subject to the following
provisions:
(1) The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account
of the Fund upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account of the
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall furnish the
Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish
to the Fund copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of the
Fund.
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(4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not relieve
the Custodian from using reasonable care and diligence in making
use of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.12 hereof, (I) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
for the Fund, (ii) for purpose of segregating cash or government
securities in connection with options purchased, sold or written for the
Fund or commodity futures contracts or options thereon purchased or sold
for the Fund, (iii) for the purpose of compliance by the Fund with the
procedures required by any release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies and
(iv) for other proper corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Board signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper Instructions, the
Custodian shall deposit and/or maintain any assets of the Fund and any
affiliated funds which are
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subject to joint repurchase transactions in an account established solely
for such transactions for the Fund and its affiliated funds.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name
of the Fund or a nominee of the Fund, all proxies, without indication of
the manner in which such proxies are to be voted, and shall promptly
deliver to the Fund such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund and the investment adviser of the Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held for
the Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund and the investment adviser of the Fund all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund or the
investment adviser of the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the Fund
shall notify the Custodian in writing at least three business days prior
to the date on which the Custodian is to take such action. However, the
Custodian shall nevertheless exercise its best efforts to take such
action in the event that notification is received three business days or
less prior to the date on which action is required. For securities which
are not held in nominee name, the Custodian will act as a secondary
source of information and will not be responsible for providing corporate
action notification to the Fund.
2.18 Proper Instructions. Proper Instructions as used throughout this Section
2 means a writing signed or initialed by one or more person or persons as
the Board shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction involved.
Oral instructions will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by the Board
of the Fund accompanied by a detailed description of procedures approved
by the Board, Proper Instructions may include communications effected
directly between electromechanical or electronic devices provided that
the
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Board and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
2.19 Actions Permitted Without Express Authorization. The Custodian may in its
discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Fund in such form that it may be allocated to the Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Fund except
as otherwise directed by the Fund.
2.20 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to have
been properly executed on behalf of the Fund. The Custodian may receive
and accept a certified copy of a vote of the Board of the Fund as
conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination of or any action by
the Board pursuant to the Certificate of Incorporation as described in
such vote, and such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
2.21 Notice to Fund By Custodian Regarding Cash Movement. The Custodian will
provide timely notification to the Fund of any receipt of cash, income or
payments to the Fund and the release of cash or payment by the Fund.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Fund to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding Shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective private offering
memorandum ("Memorandum") and shall advise the Fund and the Transfer Agent daily
of the total amounts of such net income and, if instructed in writing by an
officer of the Fund to do so, shall advise
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the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of the Fund shall be made at the time or times described from time
to time in the Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to Section
31 thereof and Rules 3la-1 and 3la-2 thereunder, and specifically including
identified cost records used for tax purposes. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and upon notice to the Fund, employees and agents of the SEC.
In the event of termination of this Contract, the Custodian will deliver all
such records to the Fund to a successor Custodian, or to such other person as
the Fund may direct. The Custodian shall supply daily to the Fund a tabulation
of securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations. In addition, the Custodian shall electronically transmit daily to
the Fund information pertaining to security trading and other investment
activity and all other cash activity of the Fund.
5. Opinion of Fund's Independent Public Accountants.
The Custodian shall take all reasonable action to obtain from year to
year favorable opinions from independent public accountants with respect to its
activities hereunder in connection with the preparation of the Fund's
registration statement, periodic reports, or any other reports to the SEC and
with respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants for the Fund
on the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for the Fund under this
Contract; such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination and, if there are
no such inadequacies, the reports shall so state.
7. Compensation of Custodian.
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The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian, and as reflected on Schedule A attached hereto.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the Custodian shall
be held to any higher standard of care which would be imposed upon the Custodian
by any applicable law or regulation if such above stated standard of reasonable
care was not part of this Contract. The Custodian shall be entitled to rely on
and may act upon advice of counsel for the Fund on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice, provided that such action is not in violation of applicable federal or
state laws or regulations, and is in good faith and without negligence. Subject
to the limitations set forth in Section 15 hereof, the Custodian shall be kept
indemnified by the Fund but only from the assets of the Fund involved in the
issue at hand and be without liability for any action taken or thing done by it
that is reasonably related to its responsibility to carry out the terms and
provisions of this Contract in accordance with the above standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Fund may be asked
to indemnify or save the Custodian harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification.
The Fund shall have the option to defend the Custodian against any claim which
may be the subject of this indemnification, and in the event that the Fund so
elects it will so notify the Custodian and thereupon the Fund shall take over
complete defense of the claim, and the Custodian shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund. If the Fund requires
the Custodian to take any action with respect to securities, which action
involves the payment of money or which action may, in the reasonable opinion of
the Custodian, result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some other form, the
Custodian may request the Fund, as a prerequisite to requiring the Custodian to
take such action, to provide indemnity to the Custodian in an amount and form
satisfactory to the Custodian. Subject to the limitations set forth in Section
15 hereof, the Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including reasonable counsel fees) (referred to herein as
authorized charges) incurred or assessed against it or its nominee in connection
with the performance of this Contract, except such as may arise from it or its
nominee's own failure to act in accordance with the standard of
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care set forth herein or any higher standard of care which would be imposed upon
the Custodian by any applicable law or regulation if such above-stated standard
of care were not part of this Contract. To secure any authorized charges and any
advances of cash or securities made by the Custodian to or for the benefit of
the Fund for any purpose which results in the Fund incurring an overdraft at the
end of any business day or for extraordinary or emergency purposes during any
business day, the Fund hereby grants to the Custodian a security interest in and
pledges to the Custodian securities held for the Fund by the Custodian in an
amount not to exceed 10 percent of the Fund's gross assets, the specific
securities to be designated in writing from time to time by the Fund or the
Fund's investment adviser. Should the Fund fail to make such designation, or
should it instruct the Custodian to make advances exceeding the percentage
amount set forth above and should the Custodian do so, the Fund hereby agrees
that the Custodian shall have a security interest in all securities or other
property purchased for the Fund with the advances by the Custodian, which
securities or property shall be deemed to be pledged to the Custodian, and the
written instructions of the Fund instructing their purchase shall be considered
the requisite description and designation of the property so pledged for
purposes of the requirements of the Uniform Commercial Code. Should the Fund
fail to repay promptly any authorized charges or advances of cash or securities,
subject to the provision of the second paragraph of this Section 8 regarding
indemnification, the Custodian shall be entitled to use available cash and to
dispose of pledged securities and property as is necessary to repay any such
advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System as required in each case by Rule 17f-4 under the
1940 Act; provided further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
or any provision of the Certificate of Incorporation, and further provided, that
the Fund may at any time by action of its Board (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its reasonable costs, expenses and
disbursements incurred in connection with its performance of this agreement
through the date of termination.
10. Successor Custodian.
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If a successor custodian shall be appointed by the Board of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder for the Fund and shall transfer to separate
accounts of the successor custodian all of the Fund's securities held in a
Securities System. If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote. In the
event that no written order designating a successor custodian or certified copy
of a vote of the Board shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the Custodian shall
have the right to deliver to a bank or trust company, which is a 'bank' as
defined in the 1940 Act, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $100,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract for the Fund and to transfer to
separate accounts of such successor custodian all of the Fund's securities held
in any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Certificate of Incorporation. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of this
Contract.
12. California Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of California.
13. Notices.
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Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Fund at 00000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, or to the Custodian at 00000 Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, or to such other address as the Fund or
the Custodian may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more counterparts,
each which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability
as set forth in Article X of the Declaration of Trust and agrees that the
obligations and liabilities assumed by the Fund pursuant to this Contract,
including, without limitation, any obligation or liability to indemnify the
Custodian pursuant to Section 8 hereof, shall be limited in any case to the Fund
and its assets and that the Custodian shall not seek satisfaction of any such
obligation from the shareholders of the Fund, from its shareholders, or from the
Trustees, Officers, employees or agents of the Fund, or any of them.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 30th day of August, 2000.
CTB SECURITIES TRUST FUND
/s/ Xxxxx Xxxx
--------------------------------------------
President
CHINATRUST BANK (U.S.A.)
/s/ Yu-Xxxxx Xxx
--------------------------------------------
Executive Vice President
and Chief Financial Officer
CHINATRUST BANK (U.S.A.)
/s/ Xxxxx Xxx
--------------------------------------------
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First Vice President
and Corporate Secretary
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Custodian Contract
Schedule A
For its services under the Custodian Contract, the Custodian will receive
an annual fee of $120,000 payable monthly in arrears.
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