Exhibit (8)
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is effective as of the close of the sale of IBM Credit
Investment Management Corporation to Fleet National Bank pursuant to that
certain Stock Purchase Agreement dated April 1, 1994 between Fleet National Bank
and IBM Credit Corporation, and is among GALAXY FUND II (the "Trust"), an
open-end management investment company organized as a Massachusetts business
trust, on behalf of all of its existing Series and any and all Series it may
create in the future (individually, a "Fund" and collectively, the "Funds"), THE
CHASE MANHATTAN BANK, N.A. (the "Custodian"), a national bank incorporated under
the laws of the United States, and FLEET NATIONAL BANK (the "Administrator").
WITNESSETH
WHEREAS, the Trust is registered as an open-end diversified management
investment company under the Investment Company Act of 1940, as amended (the
1940 Act"); and
WHEREAS, the Trust desires to retain the Custodian to serve as the Trust's
custodian and the Custodian is willing to furnish such services; and
WHEREAS, the Administrator and the Trust have agreed that the Administrator
shall provide certain administrative services to the Trust and shall bear
certain expenses of the Trust's operations, including all amounts payable to the
Custodian under this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Custodian to act as custodian of its
Property during the period of this Agreement pursuant to the provisions of the
Declaration of Trust and to act as agent to perform certain recordkeeping
functions as may be agreed upon from time to time.
(b) The Custodian accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 20 of this Agreement. The Custodian agrees to comply with all
relevant provisions of the 1940 Act and rules and regulations thereunder
applicable to custodians. The Trust may from time to time issue separate Funds,
classes or classify and reclassify shares of such Funds or classes. Pursuant to
Instructions, the Custodian shall identify to each such Fund or class Property
belonging to such Fund or class and in such reports, confirmations and notices
to the Trust called for under this Agreement shall identify the Fund or class to
which such report, confirmation or notice pertains.
2. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means any of the Trust's officers, and any other person,
whether or not any such person is an officer or employee of the Trust duly
authorized by the Board of Trustees of the Trust to give Oral and Written
Instructions on behalf of the Trust, listed on the certification annexed hereto
as Schedule A or such other certification as may be received by the Custodian
time to time.
(b) "BOOK-ENTRY SYSTEM". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees and any book-entry system
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maintained by a clearing agency registered with the Securities and Exchange
Commission (the "SEC") under Section 17A of the Securities Exchange Act of 1934
(the "1934 Act").
(c) INSTRUCTIONS. The term Instructions shall include either Written or
Oral Instructions.
(d) "OFFICER'S CERTIFICATE". The term "Officer's Certificate" as used
in this Agreement means any notice, instruction or instrument in writing
authorized or required by this Agreement to be given to the Custodian, delivered
by hand, mail, tested telegram, cable, telex or facsimile sending device and
received by the Custodian signed on behalf of the Trust or an Authorized Person.
(e) "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by the Custodian from an
Authorized Person with respect to the transaction involved or from a person the
Custodian reasonably believed in good faith to be an Authorized Person with
respect to the transaction involved. The Trust agrees to deliver to the
Custodian, at the time and in the manner specified in Paragraph 8 of this
Agreement, Written Instructions confirming Oral Instructions.
(f) "PROPERTY". The term "Property", as used in this Agreement, means:
(i) any and all securities, cash and other property of the Trust owned
from time to time by the Trust acceptable to Custodian, which the Trust may
from time to time deposit, or cause to be deposited, with the Custodian or
which the Custodian may from time to time hold for the Trust;
(ii) all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Funds from time to time;
(iii) all proceeds of the sales of any of such securities or other
property; and
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(iv) all proceeds of the sale of new or treasury Shares issued or sold
by the Trust from time to time, which are received by the Custodian on
behalf of the Trust.
(g) "SECURITIES DEPOSITORY". As used in this Agreement, the term
"Securities Depository" shall mean The Depository Trust Company or Participants
Trust Company, each a clearing agency registered with the SEC under Section 17A
of the 1934 Act or, their successor or successors and their nominee or nominees;
and shall also mean any other registered or industry recognized clearing agency
authorized to act as a depository under the 1940 Act, its successor or
successors and nominee or nominees which has been duly approved by the Trust and
named in an Officer's Certificate.
(h) "SHARES". As used in this Agreement, the term "Shares" shall mean
the shares of beneficial interest of the Trust representing interests in the
Funds.
(i) "WRITTEN INSTRUCTIONS". As used in this Agreement, "Written
Instructions" means instructions delivered by hand, mail, tested telegram,
cable, telex, facsimile sending device, and received by the Custodian, signed by
an Authorized Person. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific statement of
the purpose for which such action is requested. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Trustees of the Trust accompanied by a detailed description of procedures
approved by the Board of Trustees, Written Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
such procedures afford adequate safeguards for the Funds' assets. Written
Instructions shall include instructions received by the
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Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Paragraph 12.
3. DELIVERY AND REGISTRATION OF THE PROPERTY. The Trust will deliver
or cause to be delivered to the Custodian all securities and all moneys owned by
it at any time during the period of this Agreement, except for securities and
monies to be delivered to any subcustodian appointed pursuant to Paragraph 6
hereof. The Custodian will not be responsible for such securities and such
monies until actually received by it. All securities delivered to the Custodian
or to any such subcustodian (other than in bearer form) shall be registered in
the name of the Fund or in the name of a duly appointed registered nominee of
the Trust on behalf of a Fund or in the name of the Custodian or any duly
appointed registered nominee of the Custodian (with or without indication of
fiduciary status) or in the name of any subcustodian or any nominee of such
subcustodian appointed pursuant to Paragraph 6 hereof or shall be properly
endorsed and in form for transfer satisfactory to the Custodian.
4. DOMESTIC CORPORATE ACTIONS AND PROXIES. With respect to all
securities, however registered, it is understood that the voting and other
rights and powers shall be exercised by the Trust. The Custodian shall transmit
promptly to the Trust any proxy statement, proxy materials, notice of a call or
conversion or similar communications received by it as Custodian for the Trust
as follows:
(a) With respect to domestic U.S. and Canadian securities (the latter
if held in DTC), the Custodian will send to the Trust or the proper
authorized person, such proxies (signed in blank, if issued in the name of
the Custodian's nominee or the nominees of a central depository) and
communications with respect to securities in an Account (as defined in
Paragraph 5) as call for voting or relate to legal proceedings within a
reasonable time
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after sufficient copies are received by the Custodian for forwarding to its
customers. In addition, the Custodian will follow coupon payments,
redemptions, exchanges or similar matters with respect to securities in an
Account and advise the Trust or the proper authorized person for such
Account of rights issued, tender offers or any other discretionary rights
with respect to such securities, in each case, of which the Custodian has
received notice from the issuer of the securities, or as to which notice is
published in publications routinely utilized by the Custodian for this
purpose.
Where warrants, options, tenders or other securities have fixed
expiration dates, the Trust understands that in order for the Custodian to
act, the Custodian must receive the Trust's instructions at its offices in
Brooklyn, addressed as the Custodian may from time to time request, by no
later than noon (NY City time) at least one business day prior to the last
scheduled date to act with respect thereto (or such earlier date or time as
the Custodian may reasonably notify the Trust). Absent the Custodian's
timely receipt of such instructions, such instructions will expire without
liability to the Custodian. Corporate reports need not be forwarded to the
Trust.
(b) The Custodian will deliver proxies to the Trust or its designated
agent pursuant to special arrangements which may have been agreed to in
writing. Such proxies shall be executed in the appropriate nominee name
relating to portfolio securities in the Custody Account registered in the
name of such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer securities are involved, proxies
will be delivered in accordance with Instructions.
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5. RECEIPT AND DISBURSEMENT OF MONEY.
(a) The Custodian shall open and maintain a separate custody account or
accounts in the name of each Fund of the Trust (each an "Account"), subject only
to draft or order by the Custodian acting pursuant to the terms of this
Agreement, and shall credit to and hold in such Account or Accounts, subject to
the provisions hereof, all cash received by it from or for each Fund of the
Trust. The Custodian shall make payments of cash to, or for the Account of,
each Fund of the Trust from such cash only upon Instructions (i) for the
purchase of securities for the Trust as provided in Paragraph 13 hereof; (ii)
for the payment of dividends on or other distributions of Shares as set forth in
subparagraph (c) below, or for the payment of any expense or liability incurred
by the Fund, including but not limited to the following payments for the Account
of the Fund: interest, taxes, administration, distribution or advisory fees or
operating expenses with respect to each Fund whether or not such expenses are to
be in whole or part capitalized or treated as deferred expenses; (iii) for
payments in connection with the conversion, exchange or surrender of securities
owned or subscribed to by the Trust and held by or to be delivered to the
Custodian; (iv) to a subcustodian pursuant to Paragraph 6 hereof; (v) for the
redemption or repurchase of Trust Shares; (vi) when securities are called,
redeemed or retired, or otherwise become payable; (vii) upon exercise of
subscription, purchase or other similar rights represented by securities; (viii)
for spot or forward foreign exchange transactions to facilitate security
trading, receipt of income from securities or related transactions; or (ix) for
other proper corporate purposes, BUT ONLY upon receipt of, in addition to
Written Instructions from the Trust on behalf of the Fund, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee of the Trust
signed by an officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the purpose for
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which such payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
(b) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the Trust.
(c) Except as specifically stated otherwise in this Agreement, in any
and every case where payment for purchase of securities for the account of a
Fund is made by the Custodian in advance of receipt of the securities purchased
in the absence of specific Written Instructions from the Trust on behalf of such
Fund 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; provided, however, that the Custodian shall not be liable for such
securities unless the Custodian acted negligently or in bad faith.
(d) From such funds as may be available for the purpose but subject to
any applicable votes of the Board of Trustees of the Trust, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares as directed by the Transfer Agent. In connection
with the redemption or repurchase of Shares of a Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to transmit
funds through the federal wire or ACH system to or through a commercial bank
designated by the redeeming shareholders.
(e) Upon mutual agreement between the Trust on behalf of each
applicable Fund and the Custodian, the Custodian shall, upon the receipt of
Written Instructions from the Trust on behalf of a Fund, make federal funds
available to such Fund as of specified times agreed upon from time to time by
the Trust and the Custodian in the amount of checks received in payment for
Shares of such Fund which are deposited into the Fund's account.
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6. RECEIPT OF SECURITIES.
(a) Except as provided herein and by Paragraph 7 hereof, the Custodian
shall hold and physically segregate in a separate account with respect to each
Fund, identifiable from those of any other person, all securities and non-cash
property received by it for the Trust. All such securities and non-cash
property are to be held or disposed of by the Custodian for each Fund of the
Trust pursuant to the terms of this Agreement. In the absence of Written
Instructions, the Custodian shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and investments, except in accordance with the express terms provided for in
this Agreement. In no case may any trustee, officer, employee or agent of the
Trust withdraw any securities except as provided in this Agreement and pursuant
to a duly adopted resolution of the Board of Trustees. In connection with its
duties under this Paragraph 6, the Custodian may, at its own expense, except to
the extent the Custodian is instructed by the Trust to engage a subcustodian,
enter into subcustodian agreements with other banks or trust companies for the
receipt of certain securities and cash to be held by the Custodian for the
account of a Fund of the Trust pursuant to this Agreement; provided that each
such bank or trust company has an aggregate capital, surplus and undivided
profits, as shown by its last published report, of not less than one million
dollars ($ 1,000,000) for a Custodian subsidiary or affiliate, or of not less
than twenty million dollars ($20,000,000) for a subcustodian that is not a
Custodian subsidiary or affiliate and that in either case such bank or trust
company agrees with the Custodian to comply with all relevant provisions of the
1940 Act and rules and regulations thereunder applicable to Custodians. The
Custodian will provide the Trust with a copy of each subcustodian agreement it
executes relating to the Trust. The Custodian will be liable for acts or
omissions of any such subcustodian, under the standards of care provided for
herein, except to
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the extent the Custodian is instructed by the Trust to engage a subcustodian and
the Trust is a party to the agreement with such subcustodian.
(b) Promptly after the close of business on each day, the Custodian
shall furnish the Trust with a summary of all transfers to or from the account
of each Fund of the Trust during said day. Where securities are transferred to
the account of any Fund of the Trust established at a Securities Depository or
the Book-Entry System pursuant to Paragraph 7 herein, the Custodian shall also
by book-entry or otherwise identify as belonging to such Fund the quantity of
securities in a fungible bulk of securities registered in the name of the
Custodian (or its nominee) or shown in the Custodian's account on the books of a
Securities Depository or the Book-Entry System. At least monthly and from time
to time, the Custodian shall furnish the Trust with a detailed statement of the
Property held for each Fund under this Agreement.
7. USE OF SECURITIES DEPOSITORY OR THE BOOK-ENTRY SYSTEM. The Trust
shall deliver to the Custodian a certified resolution of the Board of Trustees
of the Trust approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by Instructions
actually received by the Custodian (i) to deposit in a Securities Depository or
the Book-Entry System all securities of the Trust eligible for deposit therein
and (ii) to utilize a Securities Depository or the Book-Entry System to the
extent possible in connection with the performance of its duties hereunder,
including without limitation settlement of purchase and sales of securities by
the Trust, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with borrowings.
Without limiting the generality of such use, it is agreed that the following
provisions shall apply thereto:
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(a) Securities and any cash of the Trust deposited in a Securities
Depository or the Book-Entry System will at all times be segregated from any
assets and cash controlled by the Custodian in other than a fiduciary or
custodian capacity.
(b) All Books and records maintained by the Custodian that relate to
the Trust participation in a Securities Depository or the Book-Entry System will
at all times during the Custodian's regular business hours be open to the
inspection of the Trust's duly authorized employees or agents, and the Trust's
independent auditors in accordance with applicable regulations, and the Trust
will be furnished with all information in respect of the services rendered to it
as it may require.
(c) The Custodian will provide the Trust with copies of any report
obtained by the Custodian on the system of internal accounting control of the
Securities Depository or Book-Entry System promptly after receipt of such a
report by the Custodian. The Custodian will also provide the Trust with such
reports on its own system of internal control which relate directly to accounts
established hereunder as the Trust may reasonably request from time to time, as
well as the procedures for safeguarding securities deposited in the Book-Entry
System.
(d) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for the benefit of the Fund for any loss
or damage to the Fund resulting from use of the Securities Depository or
Book-Entry System by reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce effectively such rights as
it may have against the Securities Depository or Book-Entry System; at the
election of the Trust, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the Securities Depository or
Book-Entry System or any other person which the Custodian
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may have as a consequence of any such loss or damage if and to the extent that
the Fund has not been made whole for any such loss or damage.
8. INSTRUCTIONS CONSISTENT WITH THE CHARTER, ETC. Unless otherwise
provided in this Agreement, the Custodian shall act only upon Oral and Written
Instructions. The Custodian may assume that any Instructions received hereunder
are not in any way inconsistent with any provision of the Charter, By-Laws, any
prospectus pursuant to which shares of a Fund are offered for sale, any rule or
regulation of any applicable regulatory body or governmental agency or any vote
or resolution of the Trust's Board of Trustees, or any committee thereof. The
Custodian shall be entitled to rely upon any Instructions actually received by
the Custodian pursuant to this Agreement. The Trust agrees to forward to the
Custodian Written Instructions confirming Oral Instructions in such manner that
the Written Instructions are received by the Custodian at the close of business
on the same day that such Oral Instructions are given to the Custodian. The
Trust agrees that the Custodian shall incur no liability in acting upon
Instructions given to the Custodian hereunder concerning such transactions
provided that the Custodian reasonably believes in good faith that such
Instructions have been given by an Authorized Person. The Trust will hold the
Custodian harmless for the failure of an Authorized Person to send Written
Instructions confirming Oral Instructions or the failure of such confirmation to
conform to the Oral Instructions received. The Custodian may electronically
record any Instructions given by telephone, and any other telephone discussions
with respect to the Trust accounts. The Trust shall be responsible for
safeguarding any testkeys, identification codes or other security devices which
the Custodian shall make available to the Trust or its Authorized Person. In
accord with Instructions from the Trust, as required by accepted industry
practice or as the Custodian may elect in effecting the execution of Trust
Instructions, advances of cash or other Property made by
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the Custodian, arising from the purchase, sale, redemption, transfer or other
disposition of Property of the Trust, or in connection with the disbursement of
funds to any party, or in payment of claims or liabilities owed to the Custodian
by the Trust, or to any other party which has secured judgment in a court of law
against the Trust which creates an ovedraft in the accounts or over-delivery of
Property shall be deemed a loan by the Custodian to the Trust, payable on
demand, bearing interest at such rate customarily charged by the Custodian for
similar loans.
9. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. The Custodian is
authorized to take the following action without Instructions, unless otherwise
instructed to the contrary by Written Instructions:
(a) COLLECTION OF INCOME AND OTHER PAYMENTS. The Custodian shall:
(i) collect and receive for the account of any Fund of the Trust, all
income and other payments and distributions, including (without limitation)
stock dividends, rights, warrants and similar items, included or to be
included in the Property of any Fund of the Trust, and promptly advise the
Trust of such receipt and shall credit such income and other payments and
distributions, as collected, to such Fund of the Trust. From time to time,
the Custodian may elect, but shall not be so obligated, to credit the
account with interest, dividends or principal payments on payable or
contractual settlement date, in anticipation of receiving same from a
payor, central depository, broker or other agent employed by the Trust or
the Custodian. Any such crediting and posting shall be at the Trust's sole
risk, and the Custodian shall be authorized to reverse any such advance
positing in the event it does not receive good funds from any such payor,
central depository, broker or agent;
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(ii) endorse and deposit for collection in the name of the Trust and
each of its Funds, checks, drafts, or other orders for the payment of money
on the same day as received;
(iii) receive and hold for the account of each of the Funds all
securities received by the Trust as a result of a stock dividend, share
split-up or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar securities issued with
respect to any portfolio securities of the Trust held by the Custodian
hereunder;
(iv) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date such securities become payable;
(v) take any action which may be necessary and proper in connection
with the collection and receipt of such income and other payments and the
endorsement for collection of checks, drafts and other negotiable
instructions;
(vi) to effect an exchange of the shares where the par value of stock is
changed, and to surrender securities at maturity or when advised of earlier
call for redemption, in accordance with accepted local industry practice.
When fractional shares of stock of a declaring corporation are received as
a stock distribution, the Custodian shall, unless directed otherwise, sell
the fraction received and credit the Trust's account. Unless specifically
instructed to the contrary in writing, the Custodian is authorized to
exchange securities in bearer form for securities in registered form. If
any Property registered in the name of a nominee of the Custodian is called
for partial redemption by the issuer of such Property, the Custodian is
authorized to allot the called portion to the respective beneficial holders
of the Property in such manner deemed to be fair and equitable by the
Custodian in its sole discretion; and
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(vii) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as otherwise
directed by the Board of Trustees of the Trust.
(b) MISCELLANEOUS TRANSACTIONS. The Custodian is authorized to deliver
or cause to be delivered Property against payment or other consideration or
written receipt therefor in the following cases:
(i) upon the sale of such securities for the Account of the Trust, to
the broker or its clearing agent for examination by a broker in accordance
with local industry practice;
(ii) for the exchange of interim receipts or temporary securities for
definitive securities;
(iii) to the issuer thereof, or its agent, for transfer of securities
into the name of the Trust or the Custodian or a nominee of either, or for
exchange of securities for a different number of bonds, certificates, or
other evidence representing the same aggregate face amount of number of
units; provided that, in any such case, the new securities are to be
delivered to the Custodian.
10. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Instructions
and not otherwise, the Custodian, directly or through the use of a Securities
Depository or the Book-Entry System, shall:
(a) Deliver any securities upon sale of such securities for the account
of the Fund and receipt of payment therefor, or in accordance with customary
securities processing practices, to deliver such securities to the purchaser
thereof or dealer thereof (including to an agent for any such purchaser or
dealer) against a receipt, with the expectation of collecting payment from the
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dealer, purchaser or agent to whom the securities were so delivered before the
close of business on the same day;
(b) In the case of a sale effected through a Securities Depository or
Book-Entry System, deliver any securities, in accordance with the provisions of
Paragraph 7 hereof;
(c) Deliver any securities to the depository agent in connection with
tender or other similar offers for securities of the Fund;
(d) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash, if
any, are to be delivered to the Custodian;
(e) Deliver any securities in connection with any loans of securities
made by the Portfolio, BUT ONLY against receipt of collateral as directed by
Trust on behalf of the Fund, which may be in the form of cash or obligations
issued by the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be credited
to the Custodian's account in the Book-Entry System, the Custodian will not be
held liable or responsible for the delivery of securities owned by the Fund
prior to the receipt of such collateral;
(f) Execute and deliver to such persons as may be designated in such
Instructions, proxies, consents, authorizations, and any other instruments
whereby the authority of the Trust as owner of any securities may be exercised;
(g) Deliver any securities held for any Fund of the Trust in exchange
for or upon conversion to other securities or cash issued or paid in connection
with the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the
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exercise of any conversion privilege, provided, that in any such case, the cash
or other consideration is to be delivered to the Custodian;
(h) Deliver any securities held for any Fund of the Trust to any
protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, against receipt of such certificates or
deposit, interim receipts or other instructions or documents as may be issued to
it to evidence such delivery;
(i) Make such transfers or exchanges of the assets of any Fund of the
Trust and take such other steps as shall be stated in said Instructions to be
for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Trust;
(j) Release securities belonging to any Fund of the Trust to any bank
or trust company for the purpose of pledge or hypothecation to secure any loan
incurred by the Trust, but only against receipt of amounts borrowed;
(k) Deliver any securities held for the Trust upon the exercise of a
call option written by the Trust on such securities;
(l) Release and deliver securities owned by the Trust in connection
with any repurchase agreement entered into on behalf of any Fund of the Trust
upon receipt of payment in connection therefor, and pay out moneys of the Trust
in connection with such repurchase agreements;
(m) Deliver 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 National Association of Securities Dealers, Inc. ("NASD") (or any
futures commission merchant
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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 (an "Options Clearing Agreement");
(n) Release securities to designated brokers under covered call
options, provided, however, that such securities shall be released only upon
payment to the Bank of monies for the premium due and a receipt for the
securities which are to be held in escrow. Upon exercise of the option, or at
expiration, the Bank will receive from brokers the securities previously
deposited. The Bank will act strictly in accordance with Instructions in the
delivery of securities to be held in escrow and will have no responsibility or
liability for any such securities which are not returned promptly when due other
than to make proper request for such return;
(o) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Trust, deliver any securities to such Transfer Agent or to the
holders of Shares in connection with distributions in kind, as directed by the
Transfer Agent;
(p) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Written Instructions from the Trust on behalf of the applicable
Fund, a certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, specifying the securities of the Fund 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.
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11. SEGREGATED ACCOUNTS. The Custodian shall upon receipt of
Instructions establish and maintain a segregated account or accounts on its
records for and on behalf of any Fund of the Trust, into which account or
accounts may be transferred cash and/or securities, including securities in the
Book-Entry System (i) for the purposes of compliance by the Trust with the
procedures required by an Options Clearing Agreement, (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 regulations of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and (iv)
for other proper corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Written Instructions from the Trust on behalf of the
applicable Fund, a certified copy of a resolution of the Board of Trustees or of
the Executive Committee signed by an officer of the Trust and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper corporate
purposes.
12. CUSTODIAL AGREEMENTS WITH FCM. The Custodian may enter into
separate custodial agreements among the Trust, the Custodian and any of the
various futures commission merchants ("FCMs") registered under the Commodity
Exchange Act that the Trust uses (each an "FCM Agreement"), pursuant to which
the Trust's margin deposits in any transactions involving futures contracts and
options on futures contracts will be held by Custodian in accounts (each an "FCM
Account") subject to the disposition by the FCM involved in such contracts in
accordance with the customer contract between FCM and the Trust ("FCM
Contract"), SEC rules governing such segregated accounts, Commodity Futures
Trading Commission rules and the rules of the
-19-
applicable commodities exchange. Such FCM Agreements shall only be entered into
upon receipt of Written Instructions from the Trust. Transfers of initial
margin shall be made into an FCM Account only upon Written Instructions;
transfers of premium and variation margin may be made into an FCM Account
pursuant to Oral Instructions. Transfers of funds from an FCM Account to the
FCM for which Custodian holds such an account may only occur upon certification
by the FCM to the Custodian that pursuant to the FCM Agreement and the FCM
Contract, all conditions precedent to its right to give the Custodian such
instruction have been satisfied.
13. PURCHASE OF SECURITIES. Promptly after each purchase of securities
by any Fund, the Trust shall deliver to the Custodian Instructions specifying
with respect to each such purchase: (a) the name of the issuer and the title of
the securities, (b) the number of shares or the principal amount purchased and
accrued interest, if any, (c) the dates of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon such purchase, (f)
the name of the person from whom or the broker through whom the purchase was
made, (g) the Fund for which the purchase was made and (h) the cusip number or
other industry standard identification when available. The Custodian shall upon
receipt by the Custodian of securities purchased by or for the Trust registered
in the name of the Fund or the Custodian or its nominee referred to in Section 3
hereof, or otherwise in accord with market practice, pay out of the moneys held
for the account of such Trust the total amount payable to the person from whom
or the broker through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Instructions.
14. SALES OF SECURITIES. Promptly after each sale of securities by the
Trust, the Trust shall deliver to the Custodian Instructions, specifying with
respect to each such sale: (a) the name
-20-
of the issue and the title of the security, (b) the number of shares or
principal amount sold, and accrued interest, if any, (c) the date of sale, (d)
the sale price per unit, (e) the total amount payable to the Trust upon such
sale, (f) the name of the broker through whom or the person to whom the sale was
made, (g) the Fund for which the sale was made and the cusip number or other
industry standard identification when available. The Custodian shall deliver
the securities upon receipt of the total amount payable to the Trust upon such
sale, or otherwise in accord with market practice, provided that the same
conforms to the total amount payable as set forth in such Instructions.
15. REPORTS.
(a) The Custodian shall furnish the Trust the following reports:
(i) such periodic and special reports as the Trust may reasonably
request;
(ii) a monthly statement summarizing all transactions and entries for
the account of each Fund;
(iii) a monthly report of portfolio securities belonging to each Fund
showing the adjusted average cost of each issue and the market value at the
end of such month;
(iv) a monthly report of the cash account of each Fund showing
disbursements; and
(v) such other information as may be agreed upon from time to time
between the Trust and the Custodian.
(b) Unless the information necessary to perform the above functions is
furnished in writing or its electronic equivalent to the Custodian in a timely
manner prior to the next calculation of each Fund's net asset value, the
Custodian shall incur no liability and the Trust shall indemnify and hold the
Custodian harmless from and against any liability arising from any
-21-
discrepancy between the information received by the Custodian and used in such
calculation and any subsequent information received from the Trust.
(c) The Custodian shall assist the Trust's independent auditors, or
upon approval of the Trust or upon demand, any regulatory body, in any requested
review of the Trust's accounts and records maintained by the Custodian but shall
be reimbursed by the Administrator for all expenses and employee time invested
in any such review outside of routine and normal periodic reviews.
(d) Upon receipt from the Trust of the necessary information, the
Custodian shall provide information for tax returns, questionnaires, or periodic
reports to shareholders and such other reports and information requests as the
Trust and the Custodian shall agree upon from time to time.
16. COOPERATION WITH ACCOUNTANTS. The Custodian shall cooperate with
the Trust's independent certified public accountants and shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their unqualified opinion with respect to audits required each
year in connection with the preparation of the Trust's Form N-1A, and Form N-SAR
or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission and will endeavor to
require each sub-custodian appointed pursuant to Paragraph 6 hereof to grant
such access to the information to the Trust's independent certified public
accountant. The Custodian shall require any subcustodian it appoints with
respect to the Trust to comply with the provisions of this Paragraph 16.
17. REPORTS TO TRUST BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian
shall provide the Trust, on behalf of each of the Funds at such times as the
Trust may reasonably
-22-
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities Depository and Book-Entry System
relating to the services provided by the Custodian under this Agreement; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Trust to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
18. CONFIDENTIALITY. The Custodian agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential shareholders and relative to the managers and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Custodian
is requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
19. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF TRUST. If the Custodian shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from the
Trust clarification or advice, including Instructions.
(b) ADVICE OF COUNSEL. If the Custodian shall be in doubt as to any
question of law involved in any action to be taken or omitted by the Custodian,
it may request and rely upon written advice from counsel of its own choosing
(who may be counsel for the Trust or the Custodian, at the option of the
Custodian).
-23-
(c) CONFLICTING ADVICE. In case of conflict between directions, advice
or Instructions received by the Custodian pursuant to subparagraph (a) of this
paragraph and advice received by the Custodian pursuant to subparagraph (b) of
this paragraph, the Custodian shall be entitled to rely on and follow the advice
received pursuant to the latter provision alone.
(d) PROTECTION OF THE CUSTODIAN. The Custodian shall be protected in
any action or inaction which it takes or omits to take in reliance on any
directions, advice or Instructions received pursuant to subparagraphs (a) or (b)
of this section which the Custodian, after receipt of any such directions,
advice or Instructions, in good faith reasonably believes to be consistent with
such directions, advice or Instructions, as the case may be. Nothing in this
paragraph shall be construed as imposing upon the Custodian any obligation to
seek such directions, advice or Instructions, or to act in accordance with such
directions, advice or Instructions when received, unless, under the terms or
another provision of this Agreement, the same is a condition to the Custodian's
properly taking or omitting to take such action. Nothing in this subparagraph
shall excuse the Custodian when an action or omission on the part of the
Custodian constitutes willful misfeasance, bad faith, negligence or reckless
disregard by the Custodian of its duties under this Agreement.
20. COMPENSATION. The Administrator agrees to pay the Custodian for
its services under this Agreement such amount as may be agreed upon in writing,
together with the Custodian's reasonable out-of-pocket or incidental expenses,
including, but not limited to, legal fees.
21. INDEMNIFICATION. The Trust, as sole owner of the Property, agrees
to indemnify and hold harmless the Custodian and its nominees from all taxes,
charges, expenses, assessments, claims, and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the
-24-
1934 Act, the 1940 Act, the Commodity Exchange Act and any state and foreign
securities and blue sky laws, all as or to be amended from time to time) and
expenses, including (without limitation) attorney's fees and disbursements,
arising directly or indirectly (a) from the fact that securities included in the
Property are registered in the name of any such nominee or (b) without limiting
the generality of the foregoing clause (a) from any action or thing which the
Custodian takes or does or omits to take or do (i) at the request or on the
direction of or in reliance on the advice of the Trust, or (ii) upon
Instructions, PROVIDED, that neither the Custodian nor any of its nominees or
subcustodian shall be indemnified against any liability to any Fund of the Trust
or to its shareholders (or any expenses incident to such liability) arising out
of (a) the Custodian's or such nominee's or subcustodian's own willful
misfeasance, bad faith, negligence or reckless disregard of its duties under
this Agreement or (b) the Custodian's own negligent failure to perform its
duties under this Agreement. In the event of any advance of cash for any
purpose made by the Custodian resulting from Instructions of the Trust, or in
the event that the Custodian or its nominee or subcustodian shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's or subcustodian's own negligent action, negligent failure
to act, willful misconduct, or reckless disregard, the Trust shall promptly
reimburse the Custodian for such advance of cash or such taxes, charges,
expenses, assessment claims or liabilities. Notwithstanding anything to the
contrary, any one Fund shall not provide indemnification to the Custodian for
any loss or liability resulting from actions with respect to any other Fund.
22. RECORDS. The Custodian shall with respect to each Fund create and
maintain all records relating to its activities and obligations under this
Agreement as agreed upon by the Trust
-25-
and the Custodian. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Trust and
employees and agents of the Securities and Exchange Commission.
23. RESPONSIBILITY OF THE CUSTODIAN. The Custodian shall be under no
duty to take any action on behalf of the Trust except as specifically set forth
herein or as may be specifically agreed to by the Custodian in writing. In the
performance of its duties hereunder, the Custodian shall be obligated to
exercise reasonable care and diligence and to act in good faith to insure the
accuracy of all services performed under this Agreement. The Custodian shall be
responsible for its own negligent failure or that of any subcustodian it shall
appoint in its own discretion to perform its duties under this Agreement but to
the extent that duties, obligations and responsibilities are not expressly set
forth in this Agreement, the Custodian shall not be liable for any act or
omission which does not constitute willful misfeasance, bad faith, or negligence
on the part of the Custodian or reckless disregard of such duties, obligations
and responsibilities. Without limiting the generality of the foregoing or of
any other provision of this Agreement, the Custodian in connection with its
duties under this Agreement shall not be under any duty or obligation to inquire
into and shall not be liable for or in respect of (a) the validity or invalidity
or authority or lack thereof of any advice, direction, notice or other
instrument which conforms to the applicable requirements of this Agreement, if
any, and which the Custodian reasonably believes in good faith to be genuine,
(b) the validity of the issue of any securities purchased or sold by the Trust,
the legality of the purchase or sale thereof or the propriety of the amount paid
or received therefore, (c) the legality of the issue or sale of any Shares, or
the sufficiency of the amount to be received therefore, and (d) delays or errors
or loss of data occurring by reason of
-26-
circumstances beyond the Custodian's control, including acts of civil or
military authority, national emergencies, strikes or work stoppages, fire,
mechanical breakdown, flood or catastrophe, acts of God, insurrection, acts of
war or terrorism, rots, revolutions, nuclear fusion, fission or radiation, or
failure of the mail, transportation, communication or power supply. Without
limiting the foregoing, the Custodian shall not be liable for any loss which
results from: (1) the general risk of investing, or (2) investing or holding
Fund assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of assets.
24. COLLECTION. All collections of monies or other property in respect
of, or which are to become part of the Property (but not the safekeeping thereof
upon receipt by the Custodian) shall be at the sole risk of the Trust. In any
case in which the Custodian does not receive any payment due the Trust within a
reasonable time after the Custodian has made proper demands for the same, it
shall so notify the Trust in writing, including copies of all demand letters,
any written responses thereto, and memoranda of all oral responses thereto, and
to telephonic demands, and await instructions from the Trust. The Custodian
shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. The Custodian shall also notify the
Trust as soon as reasonably practicable whenever income due on securities is not
collected in due course.
25. ADDITIONAL FUNDS. In the event that the Trust establishes one or
more series of Shares in addition to the Large Company Index Fund, the Small
Company Index Fund, the Utility Index Fund and the U.S. Treasury Index Fund with
respect to which it desires to have the
-27-
Custodian render services as custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a Fund
hereunder.
26. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS. A copy
of the Agreement and Declaration of Trust of the Trust is on file with the
Secretary of the Commonwealth of Massachusetts, and notice is hereby given that
this instrument is executed on behalf of the Trustees of the Trust as Trustees
and not individually and that the Obligations of this instrument are not binding
upon any of the Trustees or Shareholders individually but are binding only upon
the assets and property of the Trust.
27. SYSTEM REDUNDANCY. The Custodian shall make reasonable efforts to
maintain telecommunication and computer system redundancy in order to facilitate
resumption of systems operations in the event of a systems failure to the extent
reasonably practicable.
28. DURATION AND TERMINATION. This Agreement shall be effective as of
the date hereof and shall continue until termination by the Trust or by the
Custodian on 60 days' written notice. Upon any termination of this Agreement,
pending appointment of a successor to the Custodian, the Custodian may deliver
cash, securities or other property of the Trust to a bank or trust company of
its own selection (which shall be a person qualified to so act under the 1940
Act), having aggregate capital, surplus and undivided profits, as shown by its
last published report of not less than twenty million dollars ($20,000,000) as a
custodian for the Trust to be held under terms similar to those of this
Agreement, PROVIDED, HOWEVER, that the Custodian shall not be required to make
any such delivery or payment until full payment shall have been made by the
Trust of all liabilities constituting a charge on or against the properties then
held by the Custodian or on or against the Custodian.
-28-
29. NOTICES. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall be in
writing or by confirm in telegram, cable, telex, or facsimile sending device.
Notices shall be addressed
(a) IF TO THE CUSTODIAN
The Chase Manhattan Bank, N.A.
Custodian for the Galaxy Fund II
4 Chase Metrotech Center 18th Fl.
Xxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
(b) IF TO THE TRUST
Galaxy Fund 11
c/o 440 Financial Group of Worcester, Inc.
000 Xxxxxxx Xxxxxx, Xxx 0
Xxxxxxxxx, XX 00000-0000
Attn: President
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
(c) IF TO ADMINISTRATOR
Fleet National Bank
000 Xxxxxxxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx
Tel. No. (000) 000-0000
Fax No. (000) 000-0000
to, in either case, such other address as shall have been designated in writing
by the other party. Notice shall be deemed to have been given when actually
received by the other party. All postage, cable, telegram, telex and facsimile
sending device charges arising from the sending of a Notice hereunder shall be
paid by the sender.
-29-
30. FURTHER ACTIONS. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purpose
hereof.
31. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
32. MISCELLANEOUS. This Agreement embodies the entire Agreement and
understanding between the parties hereto; and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
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. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors.
-30-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year first
above written.
GALAXY FUND II
By:
--------------------------------
Title
ATTEST:
--------------------------------
Title
With Respect to Section 19 Only
FLEET NATIONAL BANK
By: /S/ XXXXXX X. XXXX
--------------------------------
Title: Senior Vice Pesident
ATTEST:
/S/ XXXX X. XXXXXX
--------------------------------
Title
Xxxx X. Xxxxxx
Assistant Secretary
THE CHASE MANHATTAN BANK, N.A.
By:
--------------------------------
Title
ATTEST:
--------------------------------
Title
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
above written.
GALAXY FUND II
By:
--------------------------------
Title
ATTEST:
--------------------------------
Title
FLEET NATIONAL BANK
By: /S/ XXXXXXXX X. XXXXX
--------------------------------
Title: Vice President
ATTEST:
/S/ XXXXX XXXXXX
--------------------------------
Title
THE CHASE MANHATTAN BANK, N.A.
By:
--------------------------------
Title
Vice-President
ATTEST:
--------------------------------
Title
-32-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
GALAXY FUND II
By: /S/ XXXX X. X' XXXXX
--------------------------------
Title
ATTEST:
/S/ W. XXXXX XXXXXXXX, III
--------------------------------
Title
FLEET NATIONAL BANK
By:
-------------------------------
Title
ATTEST:
--------------------------------
Title
THE CHASE MANHATTAN BANK, N.A.
By:
-------------------------------
Title
ATTEST:
--------------------------------
Title
-33-