EXHIBIT 8
SUPPLEMENT TO CUSTODIAN AGREEMENT
THIS SUPPLEMENT TO THE CUSTODIAN AGREEMENT is made as of February 1, 1994
(this "Supplement") by and between XXXXXXX FUND, INC., a Maryland corporation
(the "Company"), and LTCB TRUST COMPANY, a New York corporation ("LTCB").
W I T N E S S E T H :
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company and LTCB have entered into a custodian agreement dated
as of September 28, 1993 (the "Custodian Agreement"); and
WHEREAS, the Company has requested and LTCB has agreed to supplement the
Custodian Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized terms used
herein which are defined in the Custodian Agreement, as supplemented hereby, are
used herein as therein defined.
2. APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Company hereby authorizes
and instructs LTCB to employ as sub-custodians for the Company's securities and
other assets maintained outside the United States the foreign banking
institutions and foreign securities depositories designated on Schedule A hereto
("foreign sub-custodians"). Upon receipt by LTCB of Written Instructions
2
satisfactory to it, LTCB and the Company may agree to amend Schedule A hereto
from time to time to designate additional foreign banking institutions and
foreign securities depositories to act as sub-custodian. By Written
Instructions, the Company may instruct LTCB to cease the employment of any one
or more of such sub-custodians for maintaining custody of the Company's assets,
in which case the Company will, in consultation with LTCB, provide Written
Instructions as to where any assets held by such sub-custodian shall be
transferred.
3. ASSETS TO BE HELD. LTCB shall limit the securities and other assets
maintained in the custody of foreign sub-custodians to: (a) "foreign
securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment
Company Act of 1940, as amended, and (b) cash and cash equivalents in such
amounts as LTCB or the Company may determine to be reasonably necessary to
effect the Company's foreign securities transactions. LTCB shall identify on its
books as belonging to the Company the foreign securities of the Company held by
each foreign sub-custodian.
4. FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon
in writing by LTCB and the Company, assets of the Company shall be maintained in
foreign securities depositories only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant to the terms
3
hereof or directly by LTCB. Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 5 hereof.
5. AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the Company's assets will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of the foreign banking institution or its creditors or agents,
except a claim of payment for their safe custody or administration or for funds
advanced on behalf of the Company by the foreign banking institution; (b)
beneficial ownership of the Company's assets will be freely transferable without
the payment of money or value other than for custody or administration or for
funds advanced on behalf of the Company by the foreign banking institution; (c)
adequate records will be maintained identifying the assets as belonging to the
Company; (d) officers of or auditors employed by, or other representatives of
LTCB, including to the extent permitted under applicable law the independent
public accountants for the Company, will be given access to the books and
records of the foreign banking institution relating to its actions under its
agreement with LTCB; and (e) assets of the Company held by the foreign
sub-custodian will be subject only to the instructions of LTCB or its agents.
6. ACCESS OF INDEPENDENT ACCOUNTANTS OF THE COMPANY. Upon the request of
the Company, LTCB will use its best efforts to arrange for the independent
accountants of the Company to be afforded access to the books and records of any
foreign banking institution employed as a foreign sub-custodian insofar as such
4
books and records relate to the performance of such foreign banking institution
under its agreement with LTCB.
7. REPORTS BY LTCB. LTCB will supply to the Company from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of the Company held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Company's securities and
other assets and advises or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institution for LTCB
on behalf of the Company indicating, as to securities acquired for the Company,
the identity of the entity having physical possession of such securities.
8. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Notwithstanding any
provision of the Custodian Agreement to the contrary, settlement and payment for
securities received for the account of the Company and delivery of securities
maintained for the account of the Company may be effected in accordance with the
customary established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.
(b) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set forth
5
in Section 4 of the Custodian Agreement, and the Company agrees to hold any such
nominee harmless from any liability as a holder of record of such securities.
9. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
LTCB employs a foreign banking institution as a foreign sub-custodian shall
require the institution to exercise reasonable care in the performance of its
duties and to indemnify, and hold harmless, LTCB and the Company from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the institutions performance of such obligations by reason of
the negligence (whether through action or inaction), fraud or willful misconduct
of such institution or any of its officers or employees. At the election of the
Company, it shall be entitled to be subrogated to the rights of LTCB with
respect to any claims against a foreign banking institution as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Company has not been made whole for any such loss, damage, cost,
expense, liability or claim.
10. LIABILITY OF LTCB. LTCB shall be liable for the acts or omissions of a
foreign banking institution to the same extent as set forth with respect to
sub-custodians generally in the Custodian Agreement but, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by Section 13
6
hereof, LTCB shall not be liable for any loss, damage, cost, expense, liability
or claim resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has otherwise
exercised reasonable care.
11. REIMBURSEMENT FOR ADVANCES. If LTCB advances cash or securities for any
purpose including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that LTCB or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of the Custodian Agreement, except such as may
arise from its or its nominee's own negligent action, negligent failure to act
or willful misconduct, any property at any time held for the account of the
Company shall be security therefor and should the Company fail to repay LTCB
promptly, LTCB shall be entitled to utilize available cash and to dispose of the
Company's assets to the extent necessary to obtain reimbursement.
12. MONITORING RESPONSIBILITIES. LTCB shall furnish annually to the
Company any information it receives from a foreign sub-custodian concerning such
foreign sub-custodian. Each agreement with a foreign sub-custodian shall provide
that the foreign sub-custodian shall furnish annually information similar in
kind and scope to that furnished to the Company in connection with the initial
approval of each foreign custodian. In addition, LTCB will promptly inform the
Company in the event that LTCB learns of (i) a material adverse change in the
financial
7
condition of a foreign subcustodian, (ii) any material loss of the assets of the
Company, or (iii) in the case of any foreign sub-custodian not the subject of an
exemptive order from the Securities and Exchange Commission with respect to the
minimum shareholder's equity requirements under Rule 17f-5, if LTCB is notified
by such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholder's equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholder's equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
13. BRANCHES OF U.S. BANKS. The provisions of this Supplement shall not
apply where the custody of the Company's assets is maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section 2(a)(5)
of the 1940 Act meeting the qualifications set forth in Section 26(a) of the
1940 Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 6(a) of the Custodian Agreement.
14. COUNTERPARTS. This Supplement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. GOVERNING LAW. This Supplement shall be governed by the laws of the
State of New York.
8
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
executed by their officers designated below on the day and year first above
written.
XXXXXXX FUND, INC.
Attest: /s/ Xxxxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxx
--------------------- ------------------------
Xxxxxxx Xxxxxxxx Name: Xxxx X. Xxxxxxx
Title: President
LTCB TRUST COMPANY
Attest: /s/ Xxxxxxx Berelaqua By: /s/ Xxxxxx Xxxxxxxxx
-------------------------- ------------------------
Xxxxxxx Berelaqua Name: Xxxxxx Xxxxxxxxx
Vice President Title: Executive Vice President
9
SCHEDULE A
Royal Bank of Canada
The Canadian Depository for Securities Ltd.
XXXXXXX FUND, INC.
CUSTODIAN AGREEMENT
TABLE OF CONTENTS
Page
----
1. Appointment ......................................................... 1
2. Delivery of Documents ............................................... 2
3. Definitions ......................................................... 4
4. Delivery and Registration of the Property ........................... 6
5. Receipt and Disbursement of Money ................................... 6
6. Receipt of Securities ............................................... 7
7. Use of Book-Entry System ............................................ 9
8. Instructions Consistent with Articles, etc........................... 1O
9. Transactions Not Requiring Instructions ............................. 11
10. Transactions Requiring Instructions ................................. 13
11. Segregated Accounts ................................................. 14
12. Dividends and Distributions ......................................... 16
13. Purchases of Securities ............................................. 16
14. Sales of Securities ................................................. 17
15. Records ............................................................. 17
16. Reports ............................................................. 18
17. Cooperation with Accountants ........................................ 18
18. Confidentiality ..................................................... 19
19. Right to Receive Advice ............................................. 19
20. Compliance with Governmental Rules and Regulations .................. 20
21. Compensation ........................................................ 21
22. Indemnification ..................................................... 21
23. Responsibility of LTCB .............................................. 23
24. Collections ......................................................... 25
25. Duration and Termination ............................................ 26
i
Page
----
26. Notices.............................................................. 27
27. Further Actions ..................................................... 28
28. Amendments .......................................................... 28
29. Delegation .......................................................... 28
30. Counterparts ........................................................ 28
31. Miscellaneous ....................................................... 29
32. Governing Law ....................................................... 29
ii
CUSTODIAN AGREEMENT
THIS AGREEMENT is made as of September 28, 1993 by and between XXXXXXX
FUND, INC., a Maryland corporation (the "Company"), and LTCB TRUST COMPANY, a
New York corporation ("LTCB").
W I T N E S S E T H :
WHEREAS, the Company is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Company desires to retain LTCB to serve as the Company's
custodian and LTCB is willing to serve as the Company's custodian;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Company hereby appoints LTCB to act as custodian of the
portfolio securities of the Company's two existing investment portfolios: the
Equity Portfolio and the Fixed Income Portfolio (collectively, the "Funds"),
cash and other property belonging to the Company for the period and on the terms
set forth in this Agreement. In the event that the Company establishes one or
more portfolios other than the Funds with respect to which the Company decides
to retain LTCB to serve as custodian hereunder, the Company shall so notify LTCB
in writing. If LTCB is willing to render such services, LTCB shall promptly so
notify the Company in writing whereupon such portfolio shall be deemed to be a
2
Fund hereunder. LTCB agrees to comply with all relevant provisions of the 1940
Act and applicable rules and regulations thereunder.
2. DELIVERY OF DOCUMENTS. The Company has furnished LTCB with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing the
appointment of LTCB as custodian of the portfolio securities, cash and other
property belonging to the Company and approving this Agreement;
(b) Appendix A identifying and containing the signatures of the Company's
officers and/or other persons authorized to issue Oral Instructions and to sign
Written Instructions, as hereinafter defined, on behalf of the Company;
(c) The Company's Articles of Incorporation filed with the Department of
Assessments and Taxation of the State of Maryland on June 28, 1993 and all
amendments thereto (the "Articles");
(d) The Company's By-Laws and all amendments thereto (the "By-Laws");
(e) The Investment Management Agreement between LTCB-MAS Investment
Management, Inc. ("LTCB-MAS") and the Company with respect to the Equity
Portfolio and the Fixed Income . Portfolio, and (ii) the Investment Services
Agreement between LTCB-MAS and Xxxxxx, Xxxxxxxx & Xxxxxxxx ("MA&S") with respect
to the Equity Portfolio and the Fixed Income Portfolio (LTCB-MAS, MA&S or such
other entity as may in the future provide
3
investment advisory services to the Company being referred to herein as the
"Adviser");
(f) The Transfer Agency Agreement between Xxxxxx Xxxx, Incorporated (the
"Transfer Agent") and the Company dated as of September 28, 1993 (the "Transfer
Agency Agreement");
(g) The Distribution Agreement between Xxxxxx Xxxx Incorporated ("Xxxxxx
Xxxx") and the Company dated as of September 28, 1993 (the "Distribution
Agreement");
(h) The Fund Administration Agreement between Xxxxxx Xxxx and the Company
dated as of September 28 , 1993 (the "Fund Administration Agreement");
(j) The Company's most recent Registration Statement on Form N-1A under the
Securities Act of 1933 (the "1933 Act"), and under the 1940 Act (File Nos.
33-65568 and 8117828) as filed with the SEC relating to shares of the Company's
Capital Stock, $.001 par value ("Shares"), and all amendments thereto;
(k) The Company's most recent prospectus and statement of additional
information and all amendments and supplements thereto (the "Prospectus"); and
(l) Before the Company engages in any transactions regulated by the
Commodity Futures Trading Commission ("CFTC"), a copy of either (i) a filed
notice of eligibility to claim the exclusion from the definition of "commodity
pool operator" contained in Section 2(a)(1)(A) of the Commodity Exchange Act;
("CEA") that is provided in Rule 4.5 under the CEA, together with all
supplements as are required by the
4
Commodity Exchange Act ("CEA") that is provided in Rule 4.5 under the CEA,
together with all supplements as are required by the CFTC, or (ii) a letter
which has been granted the Company by the CFTC which states that the Company
will not be treated as a "pool" as defined in section 4.10(d) of the CFTC's
General Regulations, or (iii) a letter which has been granted the Company by the
CFTC which states that the CFTC will not take any enforcement action if the
Company does not register as a "commodity pool operator"; and
The Company will furnish LTCB from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means any of the officers of the Company and any other
person, whether or not any such person is an officer or employee of the Company,
duly authorized by the Board of Directors of the Company to give Oral and
Written Instructions on behalf of the Company and listed on the Certificate
annexed hereto as Appendix A or any amendment thereto as may be received by LTCB
from 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 maintained by a clearing
5
agency registered with the SEC under Section 17A of the Securities Exchange Act
of 1934 (the "1934 Act").
(c) "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by LTCB from an
Authorized Person or from a person reasonably believed by LTCB to be an
Authorized Person. The Company agrees to deliver to LTCB, at the time and in the
manner specified in Paragraph 8(b) of this Agreement, Written Instructions
confirming Oral Instructions.
(d) "PROPERTY". The term "Property", as used in this Agreement, means:
(i) any and all securities and other property which the Company
may from time to time deposit, or cause to be deposited, with LTCB or
which LTCB may from time to time hold for the Company:
(ii) all income in respect of any of such securities or other
property;
(iii) all proceeds of the sale of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the
Company, which are received by LTCB from time to time from or on
behalf of the Company.
(e) "WRITTEN INSTRUCTIONS". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by hand, mail,
tested telegram, cable, telex or facsimile sending device, including buy or sell
tickets
6
and computer transmissions and received by LTCB and signed by two Authorized
Persons.
4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Company will deliver
or cause to be delivered to LTCB all securities and all moneys owned by it,
including cash received for the issuance of its Shares, at any time during the
period of this Agreement. LTCB will not be responsible for such securities and
such moneys until actually received by it. All securities delivered to LTCB
(other than in bearer form) shall be registered in the name of the Company or in
the name of a nominee of the Company or in the name of any nominee of LTCB (with
or without indication of fiduciary status), or in the name of any sub-custodian
or any nominee of any such sub-custodian appointed pursuant to Paragraph 6
hereof or shall be properly endorsed and in form for transfer satisfactory to
LTCB.
5. RECEIPT AND DISBURSEMENT OF MONEY.
(a) LTCB shall open and maintain a separate custodial account or
accounts in the name of each Fund, subject only to draft or order by LTCB acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Company. LTCB shall make payments of cash to, or for the
account of, the Company from such cash only (i) for the purchase of securities
for the Company's portfolio as provided in Paragraph 13 hereof; (ii) upon
receipt of Written Instructions stating they are for the payment of interest,
dividends, taxes, administration, accounting, distribution,
7
advisory or management fees or expenses which are to be borne by the Company
under the terms of this Agreement, the Investment Management Agreement, the Fund
Administration Agreement, the Transfer Agency Agreement and the Distribution
Agreement; (iii) upon receipt of Written Instructions, for payments in
connection with the conversion, exchange or surrender of securities owned or
subscribed to by the Company and held by or to be delivered to LTCB; (iv) to a
sub-custodian pursuant to Paragraph 6 hereof; (v) for the redemption of Company
Shares; (vi) for payment of the amount of dividends received in respect of
securities sold short; or (vii) upon receipt of Written Instructions stating
they are for other proper Company purposes. No payment pursuant to (i) above
shall be made unless LTCB has received a copy of the broker's or dealer's
confirmation or the payee's invoice, as appropriate.
(b) LTCB is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received as custodian for the
account of the Company.
6. RECEIPT OF SECURITIES.
(a) Except as provided by Paragraph 7 hereof, LTCB shall hold and
physically segregate in a separate account, identifiable at all times from those
of any other persons, firms, or corporations; all securities and non-cash
property received by it for the account of the Company. All such securities and
non-cash property are to be held or disposed of by LTCB for the Company pursuant
to the terms of this Agreement. In the absence of Written Instructions LTCB
shall have no power or authority to
8
withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any such
securities and investments. In no case may any Director, officer, employee or
agent of the Company withdraw any securities other than pursuant to this
Agreement. In connection with its duties under this Xxxxxxxxx 0, XXXX may, at
its own expense, enter into sub-custodian agreements with other banks or trust
companies for the receipt of certain securities and cash to be held by LTCB for
the account of the Company 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 LTCB subsidiary or affiliate, or of not less than twenty
million dollars ($20,000,000) if such bank or trust company is not a LTCB
subsidiary or affiliate and that in either case such bank or trust company
agrees with LTCB to comply with all relevant provisions of the 1940 Act and
applicable rules and regulations thereunder. LTCB shall remain responsible for
the performance of all of its duties under this Agreement and shall hold the
Company harmless from the acts and omissions, under the standards of care
provided for herein, of any bank or trust company that it might choose pursuant
to this Paragraph 6.
(b) Where securities are transferred to an account of the Company
established pursuant to Paragraph 7 hereof, LTCB shall also by book-entry or
otherwise identify as belonging to the Company the quantity of securities in a
fungible bulk of securities registered in the name of LTCB (or its
9
nominee) or shown in LTCB's account on the books of the Book Entry System. At
least monthly and from time to time, LTCB shall furnish the Company with a
detailed statement of the Property held for the Company under this Agreement.
7. USE OF BOOK-ENTRY SYSTEM. The Company shall deliver to LTCB
certified resolutions of the Board of Directors of the Company approving,
authorizing and instructing LTCB on a continuous and on-going basis until
instructed to the contrary by Oral or Written Instructions actually received by
LTCB (a) to deposit in the Book-Entry System all securities belonging to the
Company eligible for deposit therein and (b) to utilize the Book-Entry System to
the extent possible in connection with settlements of purchases and sales of
securities by the Company, 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:
(a) Securities and any cash of the Company deposited in the Book-Entry
System will at all times be segregated from any assets and cash controlled by
LTCB in other than a fiduciary or custodian capacity but may be commingled with
other assets held in such capacities. LTCB and its sub-custodian, if any, will
pay out money only upon receipt of securities and will deliver securities only
upon the receipt of money.
(b) All books and records maintained by LTCB which relate to the
Company's participation in the Book-Entry
10
system will at times during LTCB's regular business hours be open to the
inspection of the Company's duly authorized employees or agents, and the Company
will be furnished with all information in respect of the services rendered to it
as it may require.
(c) LTCB will provide the Company with copies of any report obtained
by LTCB on the system of internal accounting control of the Book-Entry System
promptly after receipt of such a report by LTCB. LTCB will also provide the
Company with such reports on its own system of internal control as the Company
may reasonably request from time to time.
8. INSTRUCTIONS CONSISTENT WITH ARTICLES. ETC.
(a) Unless otherwise provided in this Agreement, LTCB shall act only
upon Oral and Written Instructions. Although LTCB may know of the provisions of
the Articles and By-Laws of the Company, LTCB may assume that any Oral or
Written Instructions received hereunder are not in any way inconsistent with any
provisions of such Articles or By-Laws or any vote, resolution or proceeding of
the Shareholders, or of the Board of Directors, or of any committee thereof.
(b) LTCB shall be entitled to rely upon any Oral Instructions and any
Written Instructions actually received by LTCB pursuant to this Agreement. The
Company agrees to forward to LTCB Written Instructions confirming Oral
Instructions in such manner that the Written Instructions are received by LTCB
by the close of business of the same day that such Oral Instructions are given
to LTCB. The Company agrees that the fact that such confirming Written
Instructions are not received by LTCB shall in
11
no way affect the validity of the transactions or enforceability of the
transactions authorized by the Company by giving Oral Instructions. The Company
agrees that LTCB shall incur no liability to the Company in acting upon Oral
Instructions given to LTCB hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
9. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, LTCB is authorized to take the following actions:
(a) COLLECTION OF INCOME AND OTHER PAYMENTS. LTCB shall:
(i) collect and receive for the account of the Company, all income and
other payments and distributions, including (without limitation) stock
dividends, rights, bond coupons, option premiums and similar items,
included or to be included in the Property, and promptly advise the Company
of such receipt and shall credit such income, as collected, to the
Company's custodian account;
(ii) endorse and deposit for collection on the same day as received,
in the name of the Company, checks, drafts, or other orders for the payment
of money;
(iii) receive and hold for the account of the Company all securities
received as a distribution on the Company's portfolio securities as a
result of a stock dividend, share split-up or reorganization,
recapitalization, readjustment or other rearrangement or distribution of
rights or similar
12
securities issued with respect to any portfolio securities belonging to the
Company HELD BY LTCB 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; and
(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
instruments as described in Paragraph 24 of this Agreement.
(b) MISCELLANEOUS TRANSACTIONS. LTCB is authorized to deliver or
cause to be delivered Property against payment or other consideration or
written receipt therefor in the following cases:
(i) for examination by a broker selling for the account of the Company
in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary SECURITIES FOR
definitive securities; and
(iii) for transfer of securities into the name of the Company or LTCB
or nominee of either, or for exchange of -securities for a different number
of bonds, certificates, or other evidence, representing the same aggregate
face amount or number of units bearing the same interest rate, maturity
date and call provisions, if any; provided that, in any such case, the new
securities are to be delivered to LTCB.
13
l0. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral or
Written Instructions and not otherwise, LTCB, directly or through the use of the
Book-Entry System, shall:
(a) execute and deliver to such persons as may be designated in
such Oral or Written Instructions, proxies, consents, authorizations, and any
other instruments whereby the authority of the Company as owner of any
securities may be exercised;
(b) deliver any securities held for the Company against receipt of
other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) deliver any securities held for the Company to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) make such transfers or exchanges of the assets of the Company
and take such other steps as shall be stated in said Oral or Written
Instructions to be for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recapitalization of the
Company;
14
(e) release securities belonging to the Company to any bank or
trust company for the purpose of pledge or hypothecation to secure any loan
incurred by the Company; provided, however, that securities shall be released
only upon payment to LTCB of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for that purpose;
and repay such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes evidencing the
loan;
(f) release and deliver securities owned by the Company in
connection with any repurchase agreement entered into on behalf of the Company,
but only on receipt of payment therefor; and pay out moneys of the Company in
connection with such repurchase agreements, but only upon the delivery of the
securities; and
(g) otherwise transfer, exchange or deliver securities in
accordance with Oral or Written Instructions.
11. SEGREGATED ACCOUNTS. LTCB shall upon receipt of Written or Oral
Instructions establish and maintain a segregated account or accounts on its
records for and on behalf of the Company, 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 Company with the procedures
required by a securities or option exchange, providing
15
such procedures comply with the 1940 Act and Release No. 10666 or any subsequent
release or releases of the SEC relating to the maintenance of segregated
accounts by registered investment companies, and (ii) for other proper corporate
purposes, but only, in the case of clause (ii), upon receipt of Written
Instructions.
LTCB may enter into separate custodial agreements with various futures
commission merchants ("FCMs") that the Company uses (each an "FCM Agreement"),
pursuant to which the Company's margin deposits in any transactions involving
futures contracts and options on futures contracts will be held by LTCB 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
Company ("FCM Contract"), SEC rules governing such segregated accounts, CFTC
rules and the rules of the applicable commodities exchange. Such FCM Agreements
shall only be entered into upon receipt of Written Instructions from the Company
which state that (i) a customer agreement between the FCM and the Company has
been entered into; and (ii) the Company is in compliance with all the rules and
regulations of the CFTC. 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 LTCB holds such an account may
only occur upon certification by the FCM to LTCB that pursuant to the FCM
16
Agreement and the FCM Contract, ALL CONDITIONS PRECEDENT TO ITS right to give
LTCB such instruction have been satisfied.
12. DIVIDENDS AND DISTRIBUTIONS. Upon receipt by LTCB of Written
Instruction with respect to dividends and distributions declared by the
Company's Board of Directors and payable to Shareholders who have elected in the
proper manner to RECEIVE their distributions or dividends in cash, and in
conformance with procedures mutually agreed upon by LTCB, the Company and the
Company's Transfer Agent, LTCB shall pay to the Company's Transfer Agent, as
agent for the Shareholders, an amount equal to the amount indicated in said
Written Instructions as payable by the Company to such Shareholders for
distribution in cash by the Transfer Agent to such Shareholders. In lieu of
paying the Company's Transfer Agent cash dividends and distributions, LTCB may
arrange for the direct payment of cash dividends and distributions to
Shareholders by LTCB in accordance with such procedures and controls as are
mutually agreed upon from time to time by and among the Company, LTCB and the
Company's Transfer Agent
13. PURCHASES OF SECURITIES. Promptly after each decision to purchase
securities by the Adviser, the Company shall deliver to LTCB Oral or Written
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 date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase and (f) the name
17
of the person from whom or the broker through whom the purchase was made. LTCB
shall upon receipt of securities purchased by or for the Company pay out of the
moneys held for the account of the Company 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 Oral or
Written Instructions.
14. SALES OF SECURITIES. Promptly after each decision to sell
securities by the Adviser or exercise of an option written by the Company, the
Company shall deliver to LTCB Oral or Written Instructions, specifying with
respect to each such sale: (a) the name of the issuer 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 Company upon such sale, and (f) the name of the
broker through whom or the person to whom the sale was made. LTCB shall deliver
the securities upon receipt of the total amount payable to the Company upon such
sale, provided that the same conforms to the total amount payable as set forth
in such Oral Instructions. Subject to the foregoing, LTCB 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.
15. RECORDS. The books and records pertaining to the Company which are
in the possession of LTCB shall be prepared and maintained as required by the
1940 Act and other applicable securities laws and regulations. The Company, or
the Company's
18
authorized representatives, shall have access to such books and records at all
times during LTCB's normal business hours. Upon the reasonable request of the
Company, copies of any such books and records shall be provided by LTCB to the
Company or the Company's authorized representative at the Company's expense.
16. REPORTS.
(a) LTCB shall furnish the Company the following reports:
(1) such periodic and special reports as the Company may
reasonably request;
(2) a monthly statement summarizing all transactions and entries
for the account of the Company, listing the portfolio securities and
stating the cash account of the Company;
(3) the reports to be furnished to the Company pursuant to Rule
17f-4; and
(4) such other information as may be agreed upon from time to
time between the Company and LTCB.
(b) LTCB shall transmit promptly to the Company any proxy
statement, proxy materials, notice of a call or conversion or similar
communications received by it as Custodian of the Property.
17. COOPERATION WITH ACCOUNTANTS. LTCB shall cooperate with the
Company's independent 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
19
expression of their opinion, as such may be required from time to time by the
Company.
18. CONFIDENTIALITY. LTCB agrees on behalf of itself and its employees
to treat confidentially all records and other information relative to the
Company and its prior, present, or potential Shareholders and relative to the
Adviser and its prior, present or potential customers, except, after prior
notification to and approval in writing by the Company or the Adviser as
appropriate, which approval shall not be unreasonably withheld and may not be
withheld where LTCB may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company or the Adviser as
appropriate.
19. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF COMPANY. If LTCB shall be in doubt as to any action
to be taken or omitted by it, it may request, and shall receive, from the
Company directions or advice, including Oral or Written Instructions where
appropriate.
(b) ADVICE OF COUNSEL. If LTCB shall be in doubt as to any question
of law involved in any action to be taken or omitted by LTCB, it may request
advice at its own cost from counsel of its own choosing (who may be counsel
for the Adviser, the Company or LTCB, at the option of LTCB).
(c) CONFLICTING ADVICE. In case of conflict between directions,
advice or Oral or Written Instructions received by LTCB pursuant to subparagraph
(a) of this paragraph
20
and advice received by LTCB pursuant to subparagraph (b) of this paragraph, LTCB
shall be entitled to rely on and follow the advice received pursuant to the
latter provision alone.
(d) PROTECTION OF LTCB. LTCB shall be protected in any action or
inaction which it takes in reliance on any directions, advice or Oral or Written
Instructions received pursuant to subparagraphs (a) or (b) of this paragraph
which LTCB, after receipt of any such directions, advice or Oral or Written
Instructions, in good faith believes to be consistent with such directions,
advice or Oral or Written Instructions, as the case may be. However, nothing in
this paragraph shall be construed as imposing upon LTCB any obligation (i) to
seek such directions, advice or Oral or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral or Written Instructions when
received, unless, under the terms of another provision of this Agreement, the
same is a condition to LTCB's properly taking or omitting to take such action.
Nothing in this subsection shall excuse LTCB when an action or omission on the
part of LTCB constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by LTCB of any duties or obligations under this Agreement.
20. COMPLIANCE WITH GOVERNMENTAL RULES AND REOULATIONS. LTCB
undertakes to comply with all applicable laws, rules and regulations of
governmental authorities having jurisdiction including without limitation the
1940 Act and the rules and regulations thereunder.
21
21. COMPENSATION. For the services provided and the expenses assumed
by LTCB under this Agreement, the Company will pay to LTCB a monthly fee as
agreed upon between LTCB and the Company from time to time.
22. INDEMNIFICATION. The Company, as sole owner of the Property,
agrees to indemnify and hold harmless LTCB and its nominees from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the 1933 Act, the 1934 Act, the 1940 Act,
the CEA, and any state and foreign securities and blue sky laws, all as or to be
amended from time to time) and expenses, including attorneys' fees and
disbursements (as long as such attorney has been retained with the consent of
the Company, which consent shall not be unreasonably withheld), 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 LTCB 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 Company or (ii) upon Oral or Written Instructions,
provided, that neither LTCB nor any of its nominees shall be indemnified against
any liability to the Company or to its Shareholders (or any expenses incident to
such liability) arising out of LTCB's or such nominee's own willful misfeasance,
bad faith, negligence or reckless disregard of its duties or responsibilities
specifically described in this Agreement. In order that the indemnification
provision contained in this
22
Paragraph 22 shall apply, it is understood that if in any case the Company may
be asked to indemnify or save LTCB harmless, the Company shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that LTCB wilL use all reasonable care to identify
and notify the Company promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Company. The Company shall have the option to defend LTCB against
any claim which may be the subject of this indemnification and, in the event
that the Company so elects, it will so notify LT CB and thereupon the Company
shall take over complete defense for the claim, and LTCB shall in such situation
incur no further legal or other expenses for which it shall seek indemnification
under this Paragraph 22. LTCB shall in no case confess any claim or make any
compromise or settlement in any case in which the Company will be asked to
indemnify LTCB, except with the Company's prior written consent.
In the event of any advance of cash for any purpose made by LTCB
resulting from Oral or Written Instructions of the Company, or in the event that
LTCB or its nominee 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 own negligent
action, negligent failure to act or willful misconduct, any Property at any time
held for the account of the Company shall be security therefor.
23
23. RESPONSIBILITY OF LTCB. LTCB shall be under no duty to take any
action on behalf of the Company except as specifically set forth herein or as
may be specifically agreed to by LTCB in writing. In the performance of its
duties hereunder, LTCB shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to insure
the accuracy and completeness of all services performed under this Agreement.
LTCB shall be responsible for and shall hold the Company harmless from all loss,
cost, damage and expense, including reasonable attorney fees (as long as such
attorney has been retained with the consent of LTCB, which consent shall not be
unreasonably withheld), incurred by it resulting from any claim, demand, action
or suit arising out of LTCB's own negligent failure to perform its duties under
this Agreement. In order that the indemnification provision contained in this
Paragraph 23 shall apply, it is understood that if in any case LTCB may be asked
to indemnify or save the Company harmless, LTCB shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Company will use all reasonable care to identify and
notify LTCB promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification against LTCB.
LTCB shall have the option to defend the Company against any claim which may be
the subject of this indemnification and, in the event that LTCB elects, it will
so notify the Company and thereupon LTCB shall take over complete defense for
the claim, and the Company shall
24
in such situation incur no further legal or other expense for which it shall
seek indemnification under this paragraph 23. The Company shall in no case
confess any claim or make any compromise or settlement in any case in which LTCB
will be asked to indemnify the Company, except with LTCB's prior written
consent.
To the extent that duties, obligations and responsibilities are not
expressly set forth in this Agreement, however, LTCB shall not be liable for any
act or omission which does not constitute willful misfeasance, bad faith or
gross negligence on the part of LTCB or reckless disregard of such duties,
obligations and responsibilities. Without limiting the generality of the
foregoing or of any other provision of this Agreement, LTCB 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 Oral or Written Instruction,
notice or other instrument which conforms to the applicable requirements of this
Agreement, if any, and which LTCB reasonably believes to be genuine; (b) the
validity or invalidity of the issuance of any securities included or to be
included in the Property, the legality or illegality of the purchase of such
securities, or the propriety or impropriety of the amount paid therefore (c) the
legality or illegality of the sale (or exchange) of any Property or the
propriety or impropriety of the amount for which such Property is sold (or
exchanged); or (d) delays or errors or loss of data occurring by reason of
circumstances beyond LTCB's control, including acts of
25
civil or military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply,
nor shall LTCB be under any duty or obligation to ascertain whether any Property
at any time delivered to or held by LTCB may properly be held by or for the
Company. Notwithstanding the foregoing, LTCB shall use its best efforts to
mitigate the effects of the events in clause (d) above, although such efforts
shall not impute any liability thereto. LTCB expressly disclaims all
responsibility for consequential damages, including but not limited to any that
may result from performance or non-performance of any duty or obligation whether
express or implied in this Agreement, and also expressly disclaims any express
or implied warranty of products or services provided in connection with this
Agreement.
24. COLLECTIONS. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by LTCB) shall be at the sole risk of the Company. In any
case in which LTCB does not receive any payment due the Company within a
reasonable time after LTCB has made proper demands for the same, it shall so
notify the Company 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 Company. LTCB shall not be
obliged to take legal action for collection unless and until reasonably
indemnified to its satisfaction. LTCB shall also notify the
26
Company as soon as reasonably practicable whenever income due on securities is
not collected in due course.
25. DURATION AND TERMINATION. This Agreement shall continue in effect
until two years from the date thereof and thereafter for successive annual
periods, provided that such continuance is specifically approved at least
annually (a) by the Company's Board of Directors and (b) by the vote, cast in
person at a meeting called for the purpose, of a majority of the Company's
Directors who are not parties to this Agreement or "interested persons" (as
defined in the 0000 Xxx) of any such party. This Agreement may be terminated at
any time, without the payment of any penalty, by a vote of a majority of the
Company's outstanding voting securities (as defined in the 0000 Xxx) or by a
vote of a majority of the Company's entire Board of Directors on 60 days'
written notice to LTCB or by 60 days' written notice to the Company, except as
provided in paragraph 29. Upon any termination of this Agreement, pending
appointment of a successor to LTCB or vote of the Shareholders of the Company to
dissolve or to function without a custodian of its cash, securities or other
property, LTCB shall not deliver cash, securities or other property of the
Company to the Company, but may deliver them to a bank or trust company of its
own selection, having an 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 Company to be held under terms similar to
those of this Agreement, provided, however, that LTCB shall not be required to
make any such delivery or payment
27
until full payment shall have been made by the Company of all liabilities
constituting a charge on or against the properties of the Company then held by
LTCB or on or against LTCB and until full payment shall have been made to LTCB
of all of its fees, compensation, costs and expenses.
26. NOTICES. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notices shall be addressed (a) if to LTCB at
LTCB's address, 000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, marked for the attention
of Trust Administration and Operation Division (or its successor); (b) if to the
Company, at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; or (c) if to neither of
the foregoing, at such other address as shall have been notified to the sender
of any such Notice or other communication. A Notice may be sent by first-class
mail, in which case it shall be deemed to have BEEN GIVEN five days after it is
sent, if sent by facsimile sending device, it shall be deemed to have been given
immediately, or if sent by messenger, it shall be deemed to have been given on
the day it is delivered, or if sent by confirming telegram, cable, telex or
facsimile sending device, it shall be deemed to have been given immediately. All
postage, cable, telegram, telex and facsimile sending device charges arising
from the sending of a Notice hereunder shall be paid by the sender.
28
27. FURTHER ACTIONS. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
28. 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.
29. DELEGATION. On thirty (30) days' prior written notice to the
Company, LTCB may assign its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of LTCB, provided (i) the delegate
agrees with LTCB to comply with all relevant provisions of the 1940 Act; (ii)
LTCB and such delegate shall promptly provide such information as the Company
may request, and respond to such questions as the Company may ask, relative to
the delegation, including (without limitation) the capabilities of the delegate;
(iii) the delegation of such duties shall not relieve LTCB of any of its duties
hereunder; and (iv) if the Company notifies LTCB within such thirty (30) day
period of its objection to such delegation and LTCB, notwithstanding such
notification of objection, assigns its rights and delegates, its duties
thereunder, then the Company may terminate this Agreement immediately or upon
such notice as the Company, in its sole discretion determines, without complying
with the sixty (60) days' notice prescribed by Paragraph 25 hereof.
30. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an
29
original, but all of which together shall constitute one and the same
instrument.
31. 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, PROVIDED that the PARTIES
HERETO MAY EMBODY in one or more separate documents their agreement, if any,
with respect to delegated and/or Oral Instructions. 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. 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 and shall inure
to the benefit of the parties hereto and their respective successors.
32. GOVERNING LAW. This Agreement shall be governed by the laws of
the State of New York.
30
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below on the day and
year first above written.
XXXXXXX FUND, INC.
Attest: /s/ Xxxxxxx Appetton By: /s/ Xxxx X. Xxxxxxx
--------------------- ------------------------
Xxxxxxx Appetton Xxxx X. Xxxxxxx
Title: President and Treasurer
LTCB TRUST COMPANY
Attest: /s/ Xxxxxxx Berelaqua By: /s/ Xxxxxx Xxxxxxxxx
-------------------------- ------------------------
Xxxxxxx Berelaqua Xxxxxx Xxxxxxxxx
Vice President Title: Executive Vice President
