CUSTODY AGREEMENT
THIS AGREEMENT is entered into as of September 9, 1994, between XXXXXXXXX
ASSOCIATES, INC. ("Fund"), a corporation, having its principal office and place
of business at 000 Xxxxx Xx. Xxxx, Xxxxxx, Xxxxx 00000 and THE BANK OF
CALIFORNIA, NATIONAL ASSOCIATION (the "Bank"), a National Banking Association
organized under the laws of the United States with its principal place of
business at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000.
In consideration of the mutual promises set forth below, the Fund and the Bank
agree as follows:
1. DEFINITIONS.
Whenever used in this Agreement or in any Schedules to this Agreement, the words
and phrases set forth below shall have the following meanings, unless the
context otherwise requires:
1.1 "Authorized Person" shall mean the President, and any Vice President,
the Secretary, the Assistant Secretary, the Treasurer and any Assistant
Treasurer of the Fund, or any other person, including persons employed by the
investment manager of the Fund, whether or not any such person is an officer of
the Fund, duly authorized by the Board of Trustees of the Fund to give Written
Instructions on behalf of the Fund and listed in the certification annexed
hereto as Appendix A or such other certification as may be received by the Bank
from time to time.
1.2 "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
1.3 "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its successor
or successors and its nominee or nominees, in which the Bank is hereby
specifically authorized to make deposits. The term "Depository" shall further
mean and include any other person to be named in Written Instructions authorized
to act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees.
1.4 "Money Market Security" shall mean any security generally referred to
as a "money market" instrument, and shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and principal
by the Government of the United States or agencies or instrumentalities thereof,
and repurchase and reverse repurchase agreements with respect to any of the
foregoing types of securities, commercial paper, bank certificates of deposit,
bankers' acceptances and short-term corporate obligations, where the purchase or
sale of such securities normally requires settlement in federal funds on the
same day as such purchase or sale.
1.5 "Prospectus" shall mean the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's Shares under
the Securities Act of 1933, as amended.
1.6 "Security" or "Securities" shall mean any security and other investment
from time to time owned by any Portfolio, and shall be deemed to include,
without limitation, bonds, debentures, notes, stocks, shares, evidences of
indebtedness, and other securities and investments from time to time owned by
each.Portfolio of the Fund.
1.7 "Shares" shall mean the shares of beneficial interest of a Portfolio of
the Fund.
1.8 "Portfolio" shall mean Portfolios shown on Schedule A, attached hereto
and made a part hereof by this reference, and any such other Portfolio as may
from time to time be created and designated in accordance with the Articles of
Incorporation.
1.9 "Transfer Agent" shall mean the person which performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions for
the Fund.
1.10 "Written Instructions" shall mean a written or electronic
communication including facsimile actually received by the Bank from an
Authorized Person or from a person reasonably believed by the Bank to be an
Authorized Person by telex or any other such system whereby the receiver of such
communication is able to verify through codes or otherwise with a reasonable
degree of certainty the authenticity of the sender of such communication.
1.11 "Oral Instructions" shall mean an oral or telephonic or similar
communication actually received by the Bank from an Authorized Person or from a
person reasonably believed by the Bank to be an Authorized Person by telephone
or any other such system whereby the receiver of such communication is able to
verify with a reasonable degree of certainty the authenticity of the sender of
the communication. All Oral Instruction shall be confirmed by Written
Instructions.
1.12 The "1940 Act" shall mean the Investment Company Act of 1940, and the
rules and regulations thereunder, all as amended from time to time.
2. APPOINTMENT OF CUSTODIAN.
2.1 The Fund hereby constitutes and appoints the Bank as custodian of all
the Securities and moneys owned by or in the possession of the Fund during the
period of this Agreement.
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2.2 The Bank hereby accepts appointment as custodian for the Fund and
agrees to perform the duties thereof as hereinafter set forth. In addition to
the specific duties set forth in this Agreement, the Bank will in general attend
to all routine and mechanical matters in connection with the sale, exchange,
substitution, purchase, transfer, deposit or other dealings with Securities or
other property of the Fund except as may be otherwise provided in this Agreement
or directed from time to time by the Board of Trustees of the Fund.
2.3 The Bank agrees to notify the Fund promptly should its aggregate
capital, surplus, and undivided profits fall below prescribed minimums under the
1940 Act or, for any reason, should it becomes unqualified to act as Custodian
under the 1940 Act or other law.
3. COMPENSATION.
3.1 The Fund will compensate the Bank for its services rendered under this
Agreement in accordance with the fees set forth in the Fee Schedule attached as
Schedule B and made a part of this Agreement by this reference.
3.2 The parties to this Agreement will agree upon the compensation for
acting as Custodian for any Portfolio hereafter established and designated, and
at the time that the Bank commences serving as such for said Portfolio, such
agreement shall be reflected in a revised Fee Schedule for the Fund, which shall
be attached to Schedule B of this Agreement.
3.3 Any compensation agreed to hereunder may be adjusted from time to time
by not less than 90 days advance written notice of such fee increase from the
Bank to Fund.
3.4 The Bank will xxxx the Fund as soon as practicable after the end of the
month, and said xxxxxxxx will be detailed in accordance with the Fee Schedule.
The Fund will promptly pay to the Bank the amount of such billing. In the event
such xxxx is not promptly paid with respect to a Portfolio, the Bank may charge
against any money specifically allocated to the Portfolio such compensation and
any expenses incurred by the Bank in the performance of its duties pursuant to
this Agreement. The Bank shall also be entitled to charge against any money held
by it and specifically allocated to a Portfolio the amount of any loss, damage,
liability or expense incurred with respect to such Portfolio, including counsel
fees, for which it shall be entitled to reimbursement under the provisions of
this Agreement.
There shall be no additional fees or expenses to the Fund incurred by the
Bank's use of Sub-Custodians or foreign branches of the Bank in settling
Portfolio Security transactions outside of San Francisco or New York City.
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4. CUSTODY OF CASH AND SECURITIES.
4.1 RECEIPT AND HOLDING OF ASSETS. The Fund will deliver or cause to be
delivered to the Bank all Securities and moneys owned by it, including cash
received from the issuances of its Shares, at any time during the period of this
Agreement and shall specify the Portfolio to which the Securities and moneys are
to be specifically allocated. The Bank shall physically segregate and keep apart
on its books the assets of each Portfolio, including separate identification of
Securities held in the Book-Entry System. The Bank will not be responsible for
such Securities and moneys until actually received by it. The Fund shall
instruct the Bank from time to time in its sole discretion, by means of Written
Instructions or Oral Instruction confirmed by Written Instructions, as to the
manner in which and in what amounts Securities and moneys of a Portfolio are to
be deposited on behalf of such Portfolio in the Book-Entry System or the
Depository and specifically allocated on the books of the Bank to such
Portfolio. Securities and moneys of the Fund deposited in the Book-Entry System
or the Depository will be represented in accounts which include only assets held
by the Bank for customers, including but not limited to accounts in which the
Bank acts in a fiduciary or representative capacity.
4.2 ACCOUNTS AND DISBURSEMENTS. The Bank shall establish and maintain a
separate account for each Portfolio and shall credit to the separate account of
each Portfolio all moneys received by it for the account of such Portfolio and
shall disburse the same only:
4.2.1 In payment for Securities purchased for such Portfolio, as
provided in Section 5 hereof;
4.2.2 In payment of dividends or distributions with respect to the
Shares of such Portfolio;
4.2.3 In payment of original issue or other taxes with respect to the
Shares of such Portfolio;
4.2.4 In payment for Shares which have been redeemed by such
Portfolio;
4.2.5 Pursuant to Written Instructions, or Oral Instructions confirmed
by Written Instructions setting forth the name of such Portfolio, the name and
address of the person to whom the payment is to be made. the amount to be paid
and the purpose for which payment is to be made; or
4.2.6 In payment of fees and in reimbursement of the expenses and
liabilities of the Bank attributable to such Portfolio.
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4.2.7 The Bank shall upon receipt of written Instructions, or Oral
Instructions confirmed by Written Instructions, establish and maintain a
segregated account or accounts for and on behalf of each Portfolio of the Fund,
into which account or accounts may be transferred cash and Securities, (i) in
accordance with the provisions of any agreement among the Fund, the Bank and a
broker-dealer registered under the Securities and Exchange Act of 1934 (the
"1934 Act") and a member of the NASD (or any futures commission merchant
registered under the Commodities Exchange Act), relating to compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange (or the Commodities 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
Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
corporate purposes.
4.3 CONFIRMATIONS AND STATEMENTS. Promptly after the close of business each
day, the Bank shall make available to the Fund information with respect to all
transfers to and from the account of each Portfolio during that day. The Bank
need not send written confirmation or a summary of all such transfers to or from
the account of each Portfolio. Provided, however that upon the written request
the Fund, the Bank shall provide within 5 business days of such written request
a copy of any confirmations which include transactions of the Fund. Where
securities purchased by a Portfolio are in a fungible bulk of Securities
registered in the name of the Bank (or its nominee) or shown on the Bank's
account on the books of the Depository or the Book-Entry System, the Bank shall
by book entry or otherwise identify the quantity of those securities belonging
to such Portfolio. At least monthly, the Bank shall furnish the Fund with a
detailed statement of the Securities and moneys held for each Portfolio under
this Agreement.
4.4 REGISTRATION OF SECURITIES AND PHYSICAL SEPARATION.
All Securities held for a Portfolio which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Bank in that form; all other Securities held for a Portfolio may
be registered in the name of any duly appointed registered nominee of the Bank
as the Bank may from time to time determine, or in the name of the Book-Entry
System or the Depository or their successor or successors, or their nominee or
nominees. When a reference is made in this Agreement to an action to be taken by
the Bank it is understood by the parties that the action may be taken directly
or in the case of book-entry securities, through the appropriate depository. The
Fund agrees to furnish to the Bank appropriate instruments to enable the Bank to
hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the
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name of the Book-Entry System or the Depository, any Securities which it may
hold for the account of a Portfolio. The Bank (or its sub-custodians) shall hold
all such Securities specifically allocated to a Portfolio which are not held in
the Book-Entry System or the Depository in a separate account for such Portfolio
in the name of such Portfolio and physically segregated at all times from those
of any other person or persons.
4.5 COLLECTION OF INCOME AND OTHER MATTERS AFFECTING SECURITIES. Unless
otherwise instructed to the contrary by Written Instructions, the Bank shall
with respect to all Securities held for a Portfolio in accordance with this
Agreement:
4.5.1 Collect all income due or payable and credit such income
promptly on the contractual settlement date, whether or not actually received,
to the account of the appropriate Portfolio, except for income from foreign
issues (which shall be collected as soon as reasonably practicable and shall be
credited when actually received). Income which has not been collected after
reasonable effort, within a time agreed upon between the parties, shall be
repaid to the Bank pending final collection at such date as may be mutually
agreed upon by the Fund and the Bank.
4.5.2 Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired, or otherwise
become payable. The Bank shall make a good faith effort to inform the Fund of
any call, redemption or retirement date with respect to securities which are
owned by a Portfolio and held by the Bank or its nominee. Notwithstanding the
foregoing, the Bank shall have no responsibility to the Fund or a Portfolio for
monitoring or ascertaining of any call, redemption or retirement date with
respect to securities which are owned by a Portfolio and held by the Bank or its
nominee. Nor shall the Bank have any responsibility or liability to the Fund or
to a Portfolio for any loss by a Portfolio for any missed payment or other
default resulting therefrom with respect to any put security owned by a
Portfolio and held by the Bank or its nominee unless the Bank received timely
general notification, which shall not be less than 5 business days, from the
Fund or the Portfolio specifying the time, place and manner for the presentment
of any such put security. The Bank shall not be responsible and assumes no
liability to the Fund or a Portfolio for the accuracy or completeness of any
notification the Bank shall provide to the Fund or a Portfolio with respect to
put securities;
4.5.3 Execute 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
4.5.4 Hold for the account of each Portfolio all rights and other
Securities issued with respect to any Securities held by the Bank hereunder for
such Portfolio.
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4.6 DELIVERY OF SECURITIES AND EVIDENCE OF AUTHORITY. Upon receipt of
Written Instructions, or Oral Instructions confirmed by Written instructions,
the Bank shall:
4.6.1 Execute and deliver or cause to be executed and delivered, to
such persons as may be designated in such Written Instructions, proxies,
consents, authorizations, and any other instruments whereby the authority of the
Fund as owner of any Securities may be exercised;
4.6.2 Deliver or cause to be delivered any Securities held for a
Portfolio in exchange for other Securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
4.6.3 Deliver or cause to be delivered any Securities held for a
Portfolio to any protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence such
delivery;
4.6.4 Make or cause to be made such transfers or exchanges of assets
and take such steps as shall be stated in said Written Instructions, or Oral
Instructions confirmed by Written Instructions, to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund or a Portfolio;
4.6.5 Deliver Securities owned by any Portfolio upon sale of such
Securities for the account of such Portfolio pursuant to Section 5;
4.6.6 Deliver Securities owned by any Portfolio upon the receipt of
payment in connection with any repurchase agreement related to such Securities
entered into by such Portfolio;
4.6.7 Deliver Securities owned by any Portfolio to the issuer thereof
or its agent when such Securities are called, redeemed, retired or otherwise
become payable; provided, however, that in any such case the cash or other
consideration is be delivered to the Bank;
4.6.8 Deliver Securities owned by any Portfolio upon receipt of
instructions from such Portfolio for delivery to the Transfer Agent or to the
holders of Shares of such Portfolio in connection with distributions in kind, as
may be described from time to time in the Fund's Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption; and
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4.6.9 Deliver Securities owned by any Portfolio for any other proper
business purpose, but only upon receipt of, in addition to Written Instructions,
a certified copy of a resolution of the Board of Trustees signed by an
Authorized Person and certified by the Secretary or Assistant Secretary of the
Fund, 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
business purpose, and naming the person or persons to whom delivery of such
Securities shall be made.
4.7 ENDORSEMENT AND COLLECTION OF CHECKS. ETC. The Bank is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Bank for the account of a Portfolio.
5. PURCHASE AND SALE OF INVESTMENTS OF THE PORTFOLIO.
5.1 Promptly after each purchase of Securities for a Portfolio, the Fund
shall deliver to the Bank Written Instructions or Oral Instructions confirmed by
Written Instructions, specifying with respect to each purchase: (1) the name of
the Portfolio to which such Securities are to be specifically allocated; (2) the
name of the issuer and the title of the Securities; (3) the number of shares or
the principal amount purchased and accrued interest, if any; (4) the date of
purchase and settlement; (5) the purchase price per unit; (6) the total amount
payable upon such purchase; (7) the name of the person from whom or the broker
through whom the purchase was made, if any; (8) whether or not such purchase is
to be settled through the Book-Entry System or the Depository; and (9) whether
the Securities purchased are to be deposited in the Book-Entry System or the
Depository. The Bank shall receive all Securities purchased by or for a
Portfolio and upon receipt of such Securities shall pay out of the moneys held
for the account of such Portfolio the total amount payable upon such purchase,
provided that the same conforms to the total amount payable as set forth in such
Written Instructions, or Oral Instructions confirmed by Written Instructions.
5.2 Promptly after each sale of Securities of a Portfolio, the Fund shall
deliver to the Bank Written Instructions, or Oral Instructions confirmed by
Written Instructions, specifying with respect to such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2) the name
of the issuer and the title of the Securities; (3) the number of shares or
principal amount sold, and accrued interest, if any; (4) the date of sale; (5)
the sale price per unit; (6) the total amount payable to the Portfolio upon such
sale; (7) the name of the broker through whom or the person to whom the sale was
made; and (8) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Bank shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Fund upon receipt of
the total amount payable to such Portfolio upon such sale, provided that the
same conforms to the total amount payable to such Portfolio as set forth in such
written Instructions, or Oral Instructions confirmed by Written Instructions.
Subject to the foregoing, the
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Bank may accept payment in such form as shall be satisfactory to it, and may
deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
6. PAYMENT OF DIVIDENDS OR DISTRIBUTIONS.
6.1 The Fund shall furnish to the Bank the resolution of the Board of
Directors of the Fund certified by the Secretary or Assistant Secretary (i)
authorizing the declaration of dividends or distribution with respect to a
Portfolio on a specified periodic basis and authorizing the Bank to rely on
Written Instructions specifying the date of the declaration of each dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of the record date and the total amount
payable per share to the shareholders of record as of the record date and the
total amount payable to be transferred to an appropriate deposit account that
the transfer agent may write checks against on the payment date, or (ii) setting
forth the date of declaration of any dividend or distribution by a Portfolio,
the date of payment thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per share to the shareholders
of record as of the record date and the total amount payable to the appropriate
deposit account on the payment date.
6.2 Upon the payment date specified in such resolution or Written
Instructions the Bank shall pay out the moneys specifically allocated to and
held for the account of the appropriate Portfolio the total amount payable to
the appropriate deposit account.
7. SALE AND REDEMPTION OF SHARES OF A PORTFOLIO.
7.1 Whenever the Fund shall sell or redeem any Shares of a Portfolio, the
Fund shall deliver or cause to be delivered to the Bank Written Instructions, or
Oral Instructions confirmed by Written Instructions, duly specifying:
7.1.1 The name of the Portfolio whose Shares were sold or redeemed;
7.1.2 The number of Shares sold or redeemed, trade date, and price;
and
7.1.3 The amount of money to be received or paid by the Bank for the
sale or redemption of such Shares.
7.2 Upon receipt of such money from the Transfer Agent, the Bank shall
credit such money to the separate account of the Portfolio.
7.3 Upon issuance of any Shares of a Portfolio in accordance with the
foregoing provisions of this Section 7, the Bank shall pay, out of the moneys
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specifically allocated and held for the account of such Portfolio, all original
issue or other taxes required to be paid in connection with such issuance upon
the receipt of Written Instructions, or Oral instructions confirmed by Written
Instructions, specifying the amount to be paid.
7.4 Upon receipt from the Transfer Agent of advice setting forth the number
of Shares of a Portfolio received by the Transfer Agent for redemption and that
such Shares are valid and in good form for redemption, the Bank shall transfer
to the appropriate deposit account out of the moneys specifically allocated to
and held for the account of the Portfolio.
8. INDEBTEDNESS.
8.1 The Fund will cause to be delivered to the Bank, by any bank (excluding
the Bank) from which the Fund borrows money for temporary administrative or
emergency purposes using Securities as collateral for such borrowings, a notice
or undertaking in the form currently employed by such bank setting forth the
amount which such bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Bank Written Instructions,
or Oral instructions confirmed by Written Instructions, stating with respect to
each such borrowing: (1) the name of the Portfolio for which the borrowing is to
be made; (2) the name of the bank; (3) the amount and terms of the borrowing,
which may be set forth by incorporating by reference an attached promissory
note, duly endorsed by the Fund, or other loan agreement; (4) the time and date,
if known, on which the loan is to be entered into (the "borrowing date"); (5)
the date on which the loan becomes due and payable; (6) the total amount payable
to the Fund for the separate account of the Portfolio on the borrowing date; (7)
the market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities; (8) whether the Bank is to
deliver such collateral through the Book-Entry System or the Depository; and (9)
a statement that such loan is in conformance with the 1940 Act and the Fund's
Prospectus.
8.2 Upon receipt of the Written Instructions, or Oral Instructions
confirmed by Written Instructions, referred to above, the Bank shall deliver on
the borrowing date the specified collateral and the executed promissory note, if
any, against delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount payable as set
forth in the Written Instructions, or Oral Instructions confirmed by Written
Instructions. The Bank may at the option of the lending bank keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Bank shall deliver as additional collateral in the manner
directed by the Fund from time to time such Securities specifically allocated to
such Portfolio as may be specified in Written Instructions, or Oral Instructions
confirmed by Written Instructions, to collateralize further any transaction
described in this Section 8. The Fund shall cause all Securities released from
collateral status to be returned directly to the Bank, and the Bank shall
receive from time to time such return of collateral as may be
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tendered to it. In the event that the Fund fails to specify in written
Instructions, or Oral Instructions confirmed by Written Instructions, all of the
information required by this Section 8, the Bank shall not be under any
obligation to deliver any Securities. Collateral returned to the Bank shall be
held hereunder as it was prior to being used as collateral.
9. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
9.1 No Trustee, officer, employee or agent of the Fund, and no officer,
director, employee or agent of the Fund's investment advisor, shall have
physical access to the assets of any Portfolio held by the Bank or be authorized
or permitted to withdraw any investments of any Portfolio, nor shall the Bank
deliver any assets of any Portfolio to any such person. No officer, director,
employee or agent of the Bank who holds any similar position with the Fund or
the Fund's investment advisor shall have access to the assets of the Fund.
9.2 The individual employees of the Bank initially duly authorized by the
Board of Directors of the Bank to have access to the assets of the Fund are
listed on Schedule C which is attached and made a part of this Agreement by this
reference. The Bank shall advise the Fund of any change in the individuals
authorized to have access to the assets of the Fund by written notice to the
Fund.
9.3 Nothing in this Section 9 shall prohibit any officer, employee or agent
of the Fund, or any officer, director, employee or agent of the Fund's
investment advisor, from giving Written Instructions, or Oral Instructions
confirmed by Written Instructions, to the Bank so long as it does not result in
delivery of or access to assets of any Portfolio prohibited by this Section 9.
10. CONCERNING THE BANK.
10.1 STANDARD OF CONDUCT, The Bank shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received by
it or delivered by it pursuant to this Agreement and reasonably believed by it
to be valid or genuine and shall be held harmless in acting upon proper
instructions, resolutions, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties and shall be entitled to receive as conclusive proof of
any fact or matter required to be ascertained by it hereunder a certificate
signed by the President, a Vice President, the Treasurer, the Secretary or an
Assistant Secretary of the Fund. The Bank may receive and accept a resolution as
conclusive evidence (a) of the authority of any person to act in accordance with
such resolution or (b) of any determination or of any action by the Board of
Trustees pursuant to the Declaration of Trust as described in such resolution,
and such resolution may be considered as in full force and effect until receipt
by the Bank of written notice from the Secretary or an Assistant Secretary of
the Fund to the contrary.
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The Bank shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for the Fund) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice. Provided,
however, that if such reliance involves a potential material loss to the Fund,
the Bank shall advise the Fund in advance and in writing of any such actions to
be taken in accordance with such advice of counsel to the Bank.
The Bank shall be held to the exercise of reasonable care in carrying out
the provisions of this Agreement but shall be liable only for its own negligent
or bad faith acts or willful misconduct or willful failures to act by the Bank
and its agents or employees. The Bank shall have no responsibility for reviewing
or questioning the acts or records of any prior custodian. The Fund shall
indemnify the Bank and hold it harmless from and against all losses,
liabilities, demands, claims, actions, expenses, attorneys' fees, and taxes with
respect to each Portfolio which the Bank may suffer or incur on account of being
Custodian hereunder except to the extent that such losses, liabilities, demands,
claims, actions, expenses, attorneys fees or taxes arise from the Bank's own
negligence or bad faith or willful misconduct or willful failure to act.
If the Fund requires the Bank to take any action with respect to Securities
of a Portfolio, which action involves the payment of money or which action may,
in the opinion of the Bank, result in the Bank or its nominee assigned to such
Portfolio being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Bank to take such
action, shall, prior to the Bank taking such action, provide indemnity in
writing to the Bank in an amount and form satisfactory to it.
The Bank shall not be liable for any loss of data or any delay in its
performance under this Agreement to the extent such loss or delay is due to
causes beyond its control, including but not limited to: acts of God,
interruption in, loss of or malfunction in power, significant computer hardware
or systems software or telephone communication service; act of civil or military
authority, sabotage; war or civil commotion; fire; explosion; or strike (except
that the Bank shall at all time be required to maintain minimum critical
activities). The Bank shall use its best efforts to minimize any such loss or
delay by all practical steps and to replace any lost data promptly. The Bank
agrees not to discriminate against the Fund in favor of any other customer of
the Bank in making computer time and its personnel available to input and
process transactions hereunder when such a loss of data or delay occurs.
10.2 LIMIT OF DUTIES. Without limiting the generality of the foregoing, the
Bank shall be under no duty or obligation to inquire into, and shall not be
liable for:
10-2.1 The validity of the issue of any Securities purchased by any
Portfolio, the legality of the purchase thereof, the permissibility of the
purchase thereof under the Fund's governing documents, or the propriety of the
amount paid therefor;
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10.2.2 The legality of the sale of any Securities by any Portfolio,
the permissibility of such sale under the Fund's governing documents, or the
propriety of the amount for which the same are sold;
10.2.3 The legality of the issue or the sale of any Shares of any
Portfolio, or the sufficiency of the amount to be received therefor;
10.2.4 The legality of the redemption of any Shares of any Portfolio,
or the propriety of the amount to be paid therefor;
10.2.5 The legality of the declaration or payment of any dividend or
other distribution of any Portfolio;
10.2.6 The legality of any borrowing for temporary or emergency
administrative purposes.
10.3 NO LIABILITY UNTIL RECEIPT. The Bank shall not be liable for, or
considered to be the custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by it on
behalf of any Portfolio until the Bank actually receives and collects such money
directly or by the final crediting of the account representing the Fund's
interest in the Book-Entry System or the Depository.
10.4 COLLECTION WHERE PAYMENT REFUSED. The Bank shall not be under any duty
or obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (a) it shall be
directed to take such action by Written Instructions, or Oral Instructions
confirmed by Written Instructions, and (b) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with any
such action.
10.5 APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Bank may appoint one or
more banking institutions, including but not limited to banking institutions
located in foreign countries, to act as depository or depositories or as
sub-custodian or as sub-custodians of Securities and moneys at any time owned by
any Portfolio, upon terms and conditions specified in Written Instructions, or
Oral Instructions confirmed by Written Instructions. As such depository or
sub-custodian shall be approved in advance by the Board of Trustees of the
Trust. The Custodians shall remain primarily responsible for the Securities of
the Fund held by any one depository or sub-custodian in the same manner as if
held directly by the Custodian.
10.6 NO DUTY TO ASCERTAIN: AUTHORITY. The Bank shall not be under any duty
or obligation to ascertain whether any Securities at any time delivered to or
held by it for the Fund and specifically allocated to a Portfolio are such as
may properly be held by the Portfolio and specifically allocated to such
Portfolio under the provisions of the Articles of Incorporation and the Fund's
Prospectus.
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10.7 RELIANCE ON CERTIFICATES AND INSTRUCTIONS. The Bank shall be entitled
to rely upon any Written Instructions or Oral Instructions actually received by
the Bank pursuant to the applicable Sections of this Agreement and reasonably
believed by the Bank to be genuine and to be given by an Authorized Person. The
Fund agrees to forward to the Bank Written Instructions from an Authorized
Person confirming such Oral Instructions in such manner so that such Written
Instructions are received by the Bank, whether by hand delivery, telex, or
otherwise, by the close of business on the same day that such Oral Instructions
are given to the Bank. The Fund agrees that the fact that such confirming
instructions are not received by the Bank shall in no way affect the validity
for the transactions or enforceability of the transactions hereby authorized by
the Fund. The Fund agrees that the Bank shall incur no liability to the Fund in
acting upon Oral Instructions given to the Bank hereunder concerning such
transactions provided such instructions reasonably appear to have been received
from a duly Authorized Person.
10.8 MAINTENANCE AND INSPECTION OF BOOKS AND RECORDS.
The Bank will create, maintain, preserve for the specified periods and make
available upon request, all records relating to its activities and obligations
under this Agreement in such a manner as will meet the obligations of the Fund
under the Investment Company Act of 1940, including records required by Rule
3la-I of the General Rules and Regulations under the 1940 Act and under other
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All such records shall be the
property of the Fund. The books and records of the Bank regarding the Fund shall
be open to inspection and audit at reasonable times by officers and auditors
employed by the Fund and by employees of the Securities and Exchange Commission.
The Bank shall provide the Fund, upon request, with any report obtained by the
Bank on the system of internal accounting control of the Book-Entry System or
the Depository and with such reports on its own systems of internal accounting
control (including reports by the Bank's independent accountants for
distribution generally to customers of the Bank) as the Fund may reasonably
request from time to time.
10.9 Neither the Bank nor any nominee of the Bank shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with Written Instructions, or Oral Instructions confirmed by Written
Instructions, from the Fund. The Bank shall promptly deliver, or cause to be
executed and delivered, to the Fund all notices, proxies and proxy soliciting
materials with relation to such Securities (if registered otherwise than in the
name of the Fund), but without indicating the manner in which such proxies are
to be voted. The Bank shall also promptly deliver to the Fund all other
communications it may receive with respect to the Securities held by it
hereunder.
The Bank shall also transmit promptly to 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
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purchased or sold by the Fund) received by the Bank from issuers of the
securities being held for the Fund. With respect to capital changes or
reorganizations the Bank shall transmit promptly to the Fund or its advisors all
information received from issuers or their agents which requires an action by
the Fund or its advisor. If the Fund desires to take action with respect to any
tender offer, exchange offer or any other similar transactions, the Fund shall
notify the Bank at least three business days prior to the date on which the Bank
is to take such action.
11. TERM AND TERMINATION.
11.1 This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as the
parties may mutually agree.
11.2 Either of the parties hereto may terminate this Agreement with respect
to any Portfolio by giving to the other party a notice in writing specifying the
date of such termination, which shall be not less than 90 days after the date of
receipt of such notice. In the event such notice is given by the Fund, it shall
designate a successor custodian or custodians, which shall be a person qualified
to so act under the 1940 Act. In the event such notice is given by the Bank, the
Fund shall, on or before the termination date, deliver to the Bank, Written
Instructions, or Oral Instructions confirmed by Written Instructions,
designating a successor Custodian or Custodians. In the absence of such
designation by the Fund, the Bank may designate a successor Custodian, which
shall be a person qualified to so act under the 0000 Xxx. If the Fund fails to
designate a successor Custodian for any Portfolio, the Fund shall upon the date
specified in the notice of termination of this Agreement and upon the delivery
by the Bank of all Securities (other than Securities held in the Book-Entry
System which cannot be delivered to the Fund) and moneys then owned by such
Portfolio, be deemed to be its own Custodian and the Bank shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System which
cannot be delivered to the Fund.
11.3 Upon the date set forth in such notice under Section 11.2, this
Agreement shall terminate to the extent specified in such notice, and the Bank
shall upon receipt of a notice of acceptance by the successor Custodian on that
date deliver directly to the successor Custodian all Securities and moneys then
held by the Bank and specifically allocated to the Portfolio specified, after
deducting all fees, expenses and other amounts for the payment or reimbursement
of which it shall then be entitled with respect to such Portfolio.
12. ADDITIONAL SERVICES BY BANK.
12.1 If allowed by the Prospectus, the Fund's investment adviser may direct
that the assets of any Portfolio be invested in deposits in the Bank or its
affiliates bearing a reasonable rate of interest.
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12.2 Any Authorized Person may direct the Bank to utilize other services or
facilities provided by BanCal Tri-State Corp. ("BanCal"), its subsidiaries or
affiliates including the Bank. Such services shall include, but not be limited
to (1) the placing of orders for the purchase, sale exchange, investment or
reinvestment of securities through any brokerage service conducted by, or (2)
the purchase of units of any investment company managed or advised by the Bank,
BanCal, or their subsidiaries or affiliates and/or for which the Bank, BanCal,
or their subsidiaries or affiliates act as custodian or provide investment
advice or other services for a fee, including, without limitation, the HighMark
Group of Funds. The Fund hereby acknowledges that the Bank, BanCal or their
subsidiaries or affiliates will receive fees for such services in addition to
the fees payable under this Agreement. Fee Schedules for such additional
directed services shall be delivered to the Authorized Person before provision
of such services.
13. MISCELLANEOUS.
13.1 Annexed hereto as Schedule C is a certification signed by two of the
present officers of the Fund setting forth the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to the Bank a new
certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Bank shall be fully protected in acting
under the provisions of this Agreement upon signatures of the present Authorized
Persons as set forth in the last delivered certification.
13.2 Annexed hereto as Appendix B is a certification signed by two of the
present officers of the Fund setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the Bank a new
certification in similar form in the event any such present officer ceases to be
an officer of the Fund or in the event that other or additional officers are
elected or appointed. Until such new certification shall be received, the Bank
shall be fully protected in acting under the provisions of this Agreement upon
the signature of the officers as set forth in the last delivered certification.
13.3 Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Bank, shall be sufficiently given if addressed
to the Bank and mailed or delivered to it at its offices at:
The Bank of California, N.A.
Mutual Fund Services Dept., Fund Group
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
or such other place as the Bank may from time to time designate in writing.
-16-
13.4 Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund, shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its offices at:
Xxxxxxxxx Associates, Inc.
000 Xxxxx Xx. Xxxx, XX 00, Xxxxx 0000
Xxxxxx, Xxxxx 00000
or at such other place as the Fund may from time to time designate in writing.
13.5 This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement, and as may be permitted or required by the 0000 Xxx.
13.6 This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Bank, or by the Bank without the written consent of the Fund authorized
or approved by a resolution of the Board of Directors of the Fund, and any
attempted assignment without such written consent shall be null and void.
13.7 This Agreement shall be construed in accordance with the laws of the
State of California (with regard to principles of conflicts of law).
13.8 It is expressly agreed to that the obligations of the Fund hereunder
shall not be binding upon any of the Directors, shareholders, nominees,
officers, agents, or employees of the Fund, personally, but bind only the
property of the Fund, as provided in the Articles of Incorporation of the Fund.
The execution and delivery of this Agreement have been authorized by the
Directors of the Fund and signed by an authorized officer of the Fund, acting as
such, and neither such authorization by such Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the Fund property of the Fund as provided in its Articles of
Incorporation.
13.9 The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
13.10 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
13.11 The Bank represents and warrants to the Fund that it is a national
banking association duly organized and existing and in good standing under the
laws of the United States; it is duly qualified to carry on its business in the
State of California; it is empowered under applicable laws and by its
-17-
charter and by-laws to enter into and perform this Agreement; all requisite
corporate proceedings have been taken to authorize it to enter into and perform
this Agreement; all requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement; and it is duly authorized to act as
a custodian under the 1940 Act.
The Fund represents and warrants to the Bank that it is a corporation duly
organized and existing and in good standing under the laws of the State of
Texas; it is empowered under applicable laws and by its Articles of
Incorporation to enter into and perform this Agreement; all proceedings required
by said Articles of Incorporation have been taken to authorize it to enter into
and perform this Agreement; and it is an open-end, diversified investment
company registered under the Investment Company Act of 1940.
14. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement or
any related agreements or instruments, including any claim based on or arising
from any alleged tort, will be determined by arbitration in accordance with
either the Commercial Arbitration Rules of the American Arbitration Association
or the Rules of Judicial Arbitration and Mediation Service, Inc. (at the option
of the party initiating the arbitration) and the Federal Arbitration Act Title 9
of the U.S. Code. The parties agree that related arbitration proceedings may be
consolidated and the arbitrator shall prepare written reasons for the award.
Judgment upon the award rendered may be entered into any court having
jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
XXXXXXXXX ASSOCIATES, INC.
By: /s/ X.X. Xxxxxx
-----------------------------
Title: President
--------------------------
Date: 9/9/94
---------------------------
THE BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxxxx
-----------------------------
Xxxx Xxxxxx
Title: Vice President
Date: 9/9/94
---------------------------
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Schedule A - Funds
XXXXXXXXX ASSOCIATES, INC.
XXXXXXXXX ASSOCIATES, INC.
By: /s/ X.X. Xxxxxx
-----------------------------
Title: President
--------------------------
Date: 9/9/94
---------------------------
THE BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxxxx
-----------------------------
Xxxx Xxxxxx
Title: Vice President
Date: 9/9/94
---------------------------
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Shedule B
MUTUAL FUNDS
ANNUAL ADMINISTRATION
First $50 Million 4 Basis Points
Next $50 Million 2 Basis Points
Over $1 00 Million Negotiable
Custodian fees for services rendered under a Custodian-Depository Agreement
are as follows:
ITEMIZED FEES
Transaction Fee $15 Depository Eligible
$40 Depository Ineligible
$40 Options
$50.00 United Kingdom, Canada
Monthly Holding Fee $ 2 Depository eligible
$ 4 Depository Ineligible
Fedwires $10
CMO Paydowns $20
Additional Asset/Cash Statements $10
Out-of-Pocket Expenses As incurred
MINIMUM ANNUAL AGGREGATE FEE $2,500
This fee schedule is guaranteed for two years.
Portfolios, Inc.
by: /s/ X.X. Xxxxxx
-----------------------------
Date: 9/9/94
---------------------------
The Bank of California, N.A.
by: /s/ Xxxx Xxxxxx
-----------------------------
Date: 9/9/94
---------------------------
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Schedule C
Authorized Persons
Part I - Access Persons of Bank
Xxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxxxx
Xxxxxx Xxxxx
Part II - Authorized Persons of the Fund
Xxxxxxx X. Xxxx
X.X. Xxxxxx
Part III - Officers
XXXXXXXXX ASSOCIATES, INC.
By: /s/ X.X. Xxxxxx
---------------------------
Title: President
------------------------
Date: 9/9/94
-------------------------
THE BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx
Title: Vice President
Date: 9/9/94
-------------------------
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