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EXHIBIT (8)
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CUSTODY AGREEMENT
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THIS AGREEMENT, is made as of June 18, 1993, by and between The Cardinal
Group, a business trust organized under the laws of the State of Ohio (the
"Trust"), and THE FIFTH THIRD BANK, a banking company organized under the laws
of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios and any additional portfolios of the Trust, as each are
or will be identified in Exhibit A hereto (such current investment portfolios
and any additional portfolios individually referred to herein as a "Fund" and
collectively as the "Funds"), be held and administered by the Custodian
pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act and that it has capital, surplus
and undivided profits of at least $25 million; and
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Trust and the Custodian hereby agree as follows:
ARTICLE I
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DEFINITIONS
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Whenever used in this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any officer or other person duly authorized by
resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Trust and named in Exhibit B hereto or in such
resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees from time to time serving
under the Trust's Declaration of Trust, dated as of March 23, 1993, as from
time to time amended.
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular ▇▇. ▇▇▇, ▇▇
▇
▇▇▇ 306, in Subpart B of 31 CFR Part 350, or in such book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of a Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.6 "OFFICER" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the
Trust.
1.7 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary
course of business and (iii) orally confirmed by the Custodian. The Trust
shall cause all Oral Instructions to be confirmed by Written Instructions. If
such Written Instructions confirming Oral Instructions are not received by the
Custodian prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions
vary from the Written Instructions which purport to confirm them, the Custodian
shall notify the Trust of such variance but such Oral Instructions will govern
unless the Custodian has not yet acted.
1.8 "CUSTODY ACCOUNT" shall mean any account in the name of a Fund, which is
provided for in Section 3.2 below.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and
(provided that the Custodian shall have received a copy of a resolution of the
Board of Trustees, certified by an Officer, specifically approving the use of
such clearing agency as a depository for the Trust) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 (the "1934 Act"), which acts as a system
for the central handling of Securities where all Securities of any particular
class or series of an issuer deposited within the system are treated as
fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
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1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities, other money
market instruments or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that the
Custodian has the facilities to clear and to service.
1.12 "SHARES" shall mean the units of beneficial interest issued by the Trust.
1.13 "WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the Board of
Trustees shall have from time to time authorized, or (ii) communications by
telex or any other such system from a person or persons reasonably believed by
the Custodian to be Authorized, or (iii) communications transmitted
electronically through the Institutional Delivery System (IDS), or any other
similar electronic instruction system acceptable to the custodian and approved
by resolutions of the Board of Trustees, a copy of which, certified by an
Officer, shall have been delivered to the Custodian.
ARTICLE II
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APPOINTMENT OF CUSTODIAN
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2.1 APPOINTMENT. The Trust hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of the Trust
with respect to the Funds at any time during the period of this Agreement,
provided that such Securities or cash at all times shall be and remain the
property of the Trust.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
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CUSTODY OF CASH AND SECURITIES
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3.1 SEGREGATION. All Securities and non-cash property held by the Custodian
for the account of a Fund, except Securities maintained in a Securities
Depository or Book-Entry System, shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian and shall
be identified as subject to this Agreement.
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3.2 CUSTODY ACCOUNT. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to draft or
order of the Custodian, in which the Custodian shall enter and carry all
Securities, cash and other assets of such Fund which are delivered to it.
3.3 APPOINTMENT OF AGENTS. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has been
approved by the Board of Trustees and is qualified to act as a custodian under
the 1940 Act, as sub-custodian to hold Securities and cash and to carry out
such other provisions of this Agreement as it may determine, and may also open
and maintain one or more banking accounts with such a bank or trust company
(any such accounts to be in the name of the Custodian and subject only to its
draft or order), provided, however, that the appointment of any such agent
shall not relieve the Custodian of any of its obligations or liabilities under
this Agreement.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Trust shall deliver, or cause to
be delivered, to the Custodian all of a Fund's securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by such Fund at any time during the period of this
Agreement, and (b) all cash received by the Funds for the issuance, at any time
during such period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The
Custodian may deposit and/or maintain Securities of the Funds in a Securities
Depository or in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Trust shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going basis
to deposit in such Securities Depository or Book-Entry System all
Securities eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed for the
deposit of Securities of the Funds, the Trust shall annually re-adopt
such resolution and deliver a copy thereof, certified by an Officer, to
the Custodian.
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(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the
Custodian in such Book-Entry System or Securities Depository which
includes only assets held by the custodian as a fiduciary, custodian or
otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the books of
the Book-Entry System or Securities Depository, as the case may be, with
respect to Securities of a Fund maintained in a Book-Entry System or
Securities Depository shall, by book-entry or otherwise, identify such
Securities as belonging to such Fund.
(d) If Securities purchases by a Fund are to be held in a Book-Entry System
or Securities Depository, the Custodian shall pay for such Securities
upon (i) receipt of advice from the Book-Entry System or Securities
Depository that such Securities have been transferred to the Depository
Account, and (ii) the making of an entry on the records of the Custodian
to reflect such payment and transfer for the account of such Fund. If
Securities sold by a Fund are held in a Book-Entry System or Securities
Depository, the Custodian shall transfer such Securities upon (i)
receipt of advice from the Book-Entry System or Securities Depository
that payment for such Securities has been transferred to the Depository
Account, and (ii) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of a Fund.
(e) Upon request, the Custodian shall provide the Trust with copies of any
report (obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Funds are kept) on the internal
accounting controls and procedures for safeguarding Securities deposited
in such Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to Trust
resulting (i) from the use of a Book-Entry System or Securities
Depository by reason of any negligence or willful misconduct on the part
of Custodian or any sub-custodian appointed pursuant to Section 3.3
above or any of its or their employees, or (ii) from failure of the
Custodian or any such sub-custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities Depository. At
its election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System or
Securities
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Depository or any other person for any loss or damage to the Funds
arising from the use of such Book-Entry System or Securities Depository,
if and to the extent that the Trust has been made whole for any such
loss or damage.
3.6 DISBURSEMENT OF MONEYS FROM CUSTODY ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from a Custody Account but
only in the following cases:
(a) For the purchase of Securities for a Fund but only upon compliance with
4.1 of this Agreement and only (i) in the case of Securities (other than
options on Securities, futures contracts and options on futures
contracts), against the delivery to the Custodian (or any sub-custodian
appointed pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions forth in
Section 3.5 above; (ii) in the case of options on Securities, against
delivery to the Custodian (or such sub-custodian) of such receipts as
are required by the customs prevailing among dealers in such options;
(iii) in the case of futures contracts and options on futures contracts,
against delivery to the Custodian (or such sub-custodian) of evidence of
title thereto in favor of the Trust or any nominee referred to in
Section 3.9 below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between the Trust and a bank which is
a member of the Federal Reserve System or between the Trust and a
primary dealer in U.S. Government securities, against delivery of the
purchased Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or Securities
Depository for the account of the Fund with such Securities;
(b) In connection with the conversion, exchange or surrender, as set forth
in Section 3.7(f) below, of Securities owned by a Fund;
(c) For the payment of any dividends or capital gain distributions declared
by a Fund;
(d) In payment of the redemption price of Shares as provided in Section 5.1
below;
(e) For the payment of any expense or liability incurred by the Trust,
including but not limited to the following payments for the account of
a Fund: interest; taxes; administration, investment management,
investment advisory, accounting, auditing, transfer agent,
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custodian, trustee and legal fees; and other operating expenses of a
Fund; in all cases, whether or not such expenses are to be in whole or
in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD, relating to compliance with 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 by the
Trust;
(g) For transfer in accordance with the provisions of any agreement among
the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules
of the Commodity Futures Trading Commission and/or any contract market
(or any similar organization or organizations) regarding account
deposits in connection with transactions by the Trust;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less; and
(i) For any other proper purposes, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board of Trustees,
certified by an Officer, specifying the amount and purpose of such
payment, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom such payment is to be made.
3.7 DELIVERY OF SECURITIES FROM CUSTODY ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall release and deliver Securities from a Custody
Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only against
receipt of payment therefor in cash, by certified or cashiers check or
bank credit;
(b) In the case of a sale effected through a Book-Entry System or Securities
Depository, in accordance with the provisions of Section 3.5 above;
(c) To an Offeror's depository agent in connection with tender or other
similar offers for Securities of a Fund;
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provided that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name of the
Trust, the Custodian or any sub-custodian appointed pursuant to Section
3.3 above, or of any nominee or nominees of any of the foregoing, or
(ii) for exchange for a different number of 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;
(e) To the broker selling Securities, for examination in accordance with the
"street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided that,
in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or reverse
repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the exercise
thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of a Fund, but
only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowing by the Trust
on behalf of a Fund requiring a pledge of assets by such Fund, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust or a Fund;
(l) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian and a broker-dealer registered under the 1934
Act and a member
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of the 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 by the Trust on
behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement among
the Trust on behalf of a 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
transactions by the Trust on behalf of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the Board
of Trustees, certified by an Officer, 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.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held for a
Fund;
(a) Subject to Section 7.4 below, collect on a timely basis all income and
other payments to which the Trust is entitled either by law or pursuant
to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature or
be called, redeemed, or retired, or otherwise payable;
(c) Endorse for collection, in the name of the Trust, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for Securities
in definitive form;
(e) 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 now or hereafter in effect, and prepare
and submit the reports to the Internal Revenue Service
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("IRS") and to the Trust at such time, in such manner and containing such
information as is prescribed by the IRS;
(f) Hold for a Fund, either directly or, with respect to Securities held
therein, through a Book-Entry System or Securities Depository, all
rights and similar securities issued with respect to Securities of a
Fund; and
(g) In general, and except as otherwise directed in Proper Instructions,
attend to all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings with
Securities and assets of a Fund.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a Fund
that are issued or issuable only in bearer form shall be held by the Custodian
in that form, provided that any such Securities shall be held in a Book-Entry
System for the account of the Trust on behalf of a Fund, if eligible therefor.
All other Securities held for a Fund may be registered in the name of the Trust
on behalf of such Fund, the Custodian, or any sub-custodian appointed pursuant
to Section 3.3 above, or in the name of any nominee of any of them, or in the
name of a Book-Entry System, Securities Depository or any nominee of either
thereof; provided however, that such Securities are held specifically for the
account of the Trust on behalf of the Fund. The Trust shall 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 any of the nominees
hereinabove referred to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for
the Trust, including (i) journals or other records of original entry containing
an itemized daily record in detail of all receipts and deliveries of Securities
and all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Trust as the Trust
shall reasonably request or as may be required by the 1940 Act, including, but
not limited to Section 31 and Rules 31a-1 and 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and
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Exchange Commission, (ii) be the property of the Trust and at all times during
the regular business hours of the Custodian be made available upon request for
inspection by duly authorized officers, employees or agents of the Trust and
employees or agents of the Securities and Exchange Commission, and (iii) if
required to be maintained by Rule 31a-1 under the 1940 Act, be preserved for
the periods prescribed in Rule 31a-2 under the 1940 Act.
3.11 FUND REPORTS BY CUSTODIAN. The Custodian shall furnish the Trust with a
daily activity statement by Fund and a summary of all transfers to or from the
Custody Account on the day following such transfers. At least monthly and from
time to time, the Custodian shall furnish the Trust with a detailed statement,
by Fund, of the Securities and moneys held for the Trust under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Trust with
such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to
Section 3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies if
any, relating to Securities which are not registered in the name of a Fund, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
include all other proxy materials, if any, promptly deliver to the Trust such
proxies, all proxy soliciting materials, which should include all other proxy
materials, if any, and all notices to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. The Custodian will promptly notify
the Trust of corporate actions, limited to those securities registered in
nominee name and to those Securities held at a Securities Depository or a
sub-custodian acting as an agent for the Custodian. The Custodian will be
responsible only if the notice of such corporate actions is published by the
Financial Daily Card Service, ▇.▇. ▇▇▇▇▇ Called Bond Service, DTC, or received
by first class mail from the agent. For market announcements not yet received
and distributed by the Custodian's services, the Trust will inform its custody
representative with appropriate instructions. The Custodian will, upon receipt
of the Trust's response within the required deadline, affect such action for
receipt or payment for the Trust. For those responses received after the
deadline, the Custodian will affect such action for receipt or payment, subject
to the limitations of the agent(s) affecting such actions. The Custodian will
promptly notify the Trust for put options only if the notice is received by
first class mail from the agent. The Trust will provide, or cause to be
provided, the Custodian with all relevant information contained in the
prospectus for any security which has unique put/option
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provisions and provide the Custodian with specific tender instructions at least
ten business days prior to the beginning date of the tender period.
ARTICLE IV
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PURCHASE AND SALE OF INVESTMENTS OF THE TRUST
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4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units purchased, (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 to whom such amount is payable.
The Custodian shall upon receipt of such securities purchased by a Fund pay out
of the moneys held for the account of such Fund the total amount specified in
such Written Instructions to the person named therein. The Custodian shall not
be under any obligation to pay out moneys to cover the cost of a purchase of
Securities for a Fund, if in the relevant Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for a Fund is
made by the Custodian in advance of receipt for the account of the Fund of the
Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Trust
for such Securities to the same extent as if the Securities had been received
by the Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Trust as specified in such Written Instructions,
the Custodian shall deliver such Securities to the person specified in such
Written 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 custom prevailing among dealers
in Securities.
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4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Trust shall bear the risk that
final payment for such Securities may not be made or that such Securities may
be returned or otherwise held or disposed of by or through the person to whom
they were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the relevant Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Trust, and (iii) income from
cash, Securities or other assets of the Trust. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Trust to use funds so
credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Trust to facilitate the
settlement of the Trust transactions on behalf of a Fund in its Custody
Account. Any such advance shall be repayable immediately upon demand made by
Custodian.
ARTICLE V
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REDEMPTION OF TRUST SHARES
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5.1 TRANSFER OF FUNDS. From such funds as may be available for the purpose
in the relevant Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Trust may designate with respect to such amount in
such Proper Instructions.
5.2 NO DUTY REGARDING PAYING BANKS. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
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15
ARTICLE VI
----------
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust, the
Custodian and a broker-dealer registered under the 1934 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
by the Trust,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by a
Fund,
(c) which constitute collateral for loans of Securities made by a Fund,
(d) for purposes of compliance by the Trust with requirements under the 1940
Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and
when-issued, delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Trustees, certified by an Officer, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust for any loss, damages, cost, expense
(including attorneys' fees and
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disbursements), liability or claim unless such loss, damages, cost, expense,
liability or claim arises from negligence, bad faith or willful misconduct on
its part or on the part of any sub-custodian appointed pursuant to Section 3.3
above. The Custodian shall be entitled to rely on and may act upon advice of
counsel on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. The Custodian shall
promptly notify the Trust of any action taken or omitted by the Custodian
pursuant to advice of counsel. The Custodian shall not be under any obligation
at any time to ascertain whether the Trust is in compliance with the 1940 Act,
the regulations thereunder, the provisions of the Trust's charter documents or
by-laws, or its investment objectives and policies as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Trust or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for a Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian
shall be entitled to rely upon any Oral Instructions and/or any Written
Instructions actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this
Agreement against the Custodian.
7.7 COOPERATION. The Custodian shall cooperate with and supply necessary
information, by the Trust, to the entity or entities appointed by the Trust to
keep the books of account of the Trust and/or compute the value of the assets
of the Trust. The Custodian shall take all such reasonable actions as the
Trust may from time to time request to enable the Trust to obtain, from year
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to year, favorable opinions from the Trust's independent accountants with
respect to the Custodian's activities hereunder in connection with (a) the
preparation of the Trust's report on Form N-1A and Form N-SAR and any other
reports required by the Securities and Exchange Commission, and (b) the
fulfillment by the Trust of any other requirements of the Securities and
Exchange commission.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 INDEMNIFICATION. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such sub-custodian from and against any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability (including, without limitation, liability arising under the
Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or foreign
securities and/or banking laws) or claim arising directly or indirectly (a)
from the fact that Securities are registered in the name of any such nominee,
or (b) from any action or inaction by the Custodian or such sub-custodian (i)
at the request or direction of or in reliance on the advice of the Trust, or
(ii) upon Proper Instructions, or (c) generally, from the performance of its
obligations under this Agreement or any sub-custody agreement with a
sub-custodian appointed pursuant to Section 3.3 above or, in the case of any
such sub-custodian, from the performance of its obligations under such custody
agreement, provided that neither the Custodian nor any such sub-custodian shall
be indemnified and held harmless from and against any such loss, damage, cost,
expense, liability or claim arising from the Custodian's or such
sub-custodian's negligence, bad faith or willful misconduct.
8.2 INDEMNITY TO BE PROVIDED. If the Trust requests the Custodian to take
any action with respect to Securities which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or delay
in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without
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limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; strikes; epidemics; riots; power failures; computer
failure and any such circumstances beyond its reasonable control as may cause
interruption, loss or malfunction of utility, transportation, computer
(hardware or software) or telephone communication service; accidents; labor
disputes, acts of civil or military authority; governmental actions; or
inability to obtain labor, material equipment or transportation; provided,
however, that the Custodian in the event of a failure or delay shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of the date
first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 TERMINATION. Either party hereto way terminate this Agreement 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 the giving of
such notice. If a successor custodian shall have been appointed by the Board
of Trustees, the Custodian shall, upon receipt of a notice of acceptance by the
successor custodian, on such specified date of termination (a) deliver directly
to the successor custodian all Securities (other than Securities held in a
Book-Entry System or Securities Depository) and cash then owned by the Trust
and held by the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for the
benefit of the Trust at the successor custodian, provided that the Trust shall
have paid to the Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement in
the event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is not
designated by the Trust on or before the date of termination specified pursuant
to Section 10.2 above, then the Custodian shall have the right to deliver to a
bank or trust company of its own selection, which is (a) a "Bank" as defined in
the 1940 Act, (b) has aggregate capital, surplus and undivided profits as shown
on its then most recent published report of not less than $25 million, and (c)
is doing business in New York, New York, all Securities, cash and other
property held by the Custodian
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under this Agreement and to transfer to an account of or for the Funds at such
bank or trust company all Securities of the Funds held in a Book-Entry System
or Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement. If, after
reasonable inquiry, the Custodian cannot find a successor custodian as
contemplated in this Section 10.3, then the Custodian shall have the right to
deliver to the Trust all securities and cash then owned by the Funds and to
transfer any Securities held in a Book-Entry System or Securities Depository to
an account of or for the Trust. Thereafter, the Trust shall be deemed to be
its own custodian with respect to the Trust and the Custodian shall be relieved
of all obligations under this Agreement.
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Trust and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Funds are set forth in Exhibit C attached
hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
The Trust is a business trust organized under Chapter 1746, Ohio Revised
Code, and under a Declaration of Trust, to which reference is hereby made and a
copy of which is on file at the office of the Secretary of State of Ohio as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of the Trust entered into in the name of the Trust or
on behalf thereof by any of the Trustees, officers, employees or agents are
made not individually, but in such capacities, and are not binding upon any of
the Trustees, officers, employees, agents or shareholders of the Trust or the
Funds personally, but bind only the assets of the Trust, as set forth in
Section 1746.13(A), Ohio Revised Code, and all persons dealing with any of the
Funds of the Trust must look solely to the assets of the Trust belonging to
such Fund for the enforcement of any claims against the Trust.
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be
sent or delivered to the receipt at the address set forth after its name herein
below:
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TO THE TRUST:
The Cardinal Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE CUSTODIAN:
The Fifth Third Bank
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Area Manager - Trust Operations
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Trust shall not circulate any printed
matter which contains any reference to the Custodian without the prior written
approval of the Custodian, excepting printed matter contained in the prospectus
or statement of additional information on its registration statement for the
Trust and such other printed matter as merely identifies the Custodian as
custodian for the Trust. The Trust shall submit printed matter requiring
approval to the Custodian in draft form, allowing sufficient time for review by
the Custodian and its counsel prior to any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment to
this Agreement shall be effective unless evidenced by an instrument in writing
executed by the parties hereto.
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14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected
or impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: THE CARDINAL GROUP
/s/ ▇▇▇▇▇▇▇ ▇. Hire By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------- -------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
ATTEST: THE FIFTH THIRD BANK
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, AVP
------------------------- -------------------------------
(Name) (Title)
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Dated: January __, 1996
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
THE CARDINAL GROUP AND THE FIFTH THIRD BANK
JUNE 18, 1993
Name of Fund Date
------------ ----
Cardinal Balanced Fund June 18, 1993
Cardinal Aggressive Growth Fund June 18, 1993
The Cardinal Fund January __, 1996
Cardinal Government Obligations Fund January __, 1996
Cardinal Government Securities Money
Market Fund January __, 1996
Cardinal Tax Exempt Money Market Fund January __, 1996
THE CARDINAL GROUP
By
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
THE FIFTH THIRD BANK
By
----------------------------
(Name) (Title)
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Dated: January __, 1996
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
THE CARDINAL GROUP AND THE FIFTH THIRD BANK
JUNE 18, 1993
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer each Custody Account.
Name Signature
---- ---------
H. ▇▇▇▇▇ ▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------- --------------------------
Hannibal ▇. ▇▇▇▇▇▇ III
-------------------------- --------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- --------------------------
▇▇▇▇▇ ▇. Will
-------------------------- --------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
-------------------------- --------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------- --------------------------
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SIGNATURE RESOLUTION
--------------------
RESOLVED, That all of the following officers of THE CARDINAL GROUP and any of
them, namely the Chairman, President, Vice Presidents, Secretary and Treasurer,
are hereby authorized as signers for the conduct of business for and on behalf
of the Funds with THE FIFTH THIRD BANK:
H. ▇▇▇▇▇ ▇▇▇▇▇ CHAIRMAN
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ PRESIDENT
----------------------
Hannibal ▇. ▇▇▇▇▇▇, III VICE PRESIDENT
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ VICE PRESIDENT
----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ VICE PRESIDENT
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ VICE PRESIDENT
----------------------
▇▇▇▇▇ ▇. Will VICE PRESIDENT
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ TREASURER
----------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ SECRETARY
----------------------
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Trust for the purpose of effecting securities transactions:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ASSISTANT
TREASURER ----------------------
The undersigned officers of THE CARDINAL GROUP hereby certify that the
foregoing is within the parameters of a Resolution adopted by Trustees of the
Trust in a meeting held November __, 1995, directing and authorizing
preparation of documents and to do everything necessary to effect the Custody
Agreement between THE CARDINAL GROUP and THE FIFTH THIRD BANK.
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
President
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Secretary
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EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
THE CARDINAL GROUP AND THE FIFTH THIRD BANK
JUNE 18, 1993
MUTUAL FUND CUSTODY FEE SCHEDULE
--------------------------------
BASIC ACCOUNT CHARGE
FUND SIZE: Annual Monthly
------ -------
Less than $50MM $ 5,000 $ 416.67
$50MM - $99MM $10,000 $ 833.34
$100MM - $199MM $15,000 $1,250.00
$200MM - $349MM $20,000 $1,666.67
Greater than $350MM $25,000 $2,083.34
TRANSACTION FEES
DTC Eligible Transactions $12.00
FED Eligible Transactions $12.00
Physical Transactions $30.00
Amortized Securities
(GNMA purchase and sale, each) $50.00
Repurchase Agreements (includes
purchase and sale; $12.50 each) $25.00
Third Party Repurchase Agreements
(includes purchase and sale; $7.50 each) $15.00
Physical Commercial Paper Transactions
(includes purchase and maturity; $45.00
$22.50 each)
DTC Commercial Paper Transactions
(includes purchase and maturity; $20.00
$10.00 each)
Options $45.00
Amortized Security Receipts (principal payments) $ 5.00
Wire/Check Disbursements $ 7.00
Depository/Transfer Agent Rejects $20.00
Class 97 Money Market Transactions $ 5.00
CASH BALANCE CREDITS/CHARGES
Taxable Funds Rate BankSafe Rate
Overdrafts Fed Funds Rate + 0.75%
All Fifth Third Products are no charge.
All Fountain Square Products are no charge.
Holdings are no charge.
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