CUSTODIAN CONTRACT
Between
QUASAR ASSOCIATES, INC.
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to
be Held By It.......................................
2. Duties of the Custodian with Respect to
Property of the Fund Held by the
Custodian in the United States......................
2.1 Holding Securities............................
2.2 Delivery of Securities........................
2.3 Registration of Securities....................
2.4 Bank Accounts.................................
2.5 Investment and Availability of
Federal Funds
2.6 Collection of Income..........................
2.7 Payment of Fund Moneys........................
2.8 Liability for Payment in Advance
of Receipt of Securities Purchased............
2.9 Appointment of Agents.........................
2.10 Deposit of Securities in
Securities System.............................
2.11 Segregated Account............................
2.12 Ownership Certificates for Tax
Purposes......................................
2.13 Proxies.......................................
2.14 Communications Relating to Fund
Portfolio Securities..........................
2.15 Reports to Fund by Independent
Public Accountants............................
3. Duties of the Custodian with Respect to
Property of the Fund Held Outside of the
United States.......................................
3.1 Appointment of Foreign Sub-
Custodians....................................
3.2 Assets to be Held.............................
3.3 Foreign Securities Depositories...............
3.4 Segregation of Securities.....................
3.5 Agreements with Foreign Banking
Institutions..................................
3.6 Access of Independent Accountants
of the Fund...................................
3.7 Reports by Custodian..........................
3.8 Transactions in Foreign Custody
Account.......................................
3.9 Liability of Foreign Sub-
Custodians....................................
2
3.10 Monitoring Responsibilities...................
3.11 Branches of U.S. Banks........................
4. Payments for Repurchases or Redemptions
and Sales of Shares of the Fund.....................
5. Proper Instructions.................................
6. Actions Permitted Without Express
Authority...........................................
7. Evidence of Authority...............................
8. Duties of Custodian with Respect to the
Books of Account and Calculations of Net
Asset Value and Net Income..........................
9. Records.............................................
10. Opinion of Fund's Independent Accountant............
11. Compensation of Custodian...........................
12. Responsibility of Custodian.........................
13. Effective Period, Termination and
Amendment...........................................
14. Successor Custodian.................................
15. Interpretive and Additional Provisions..............
16. Massachusetts Law to Apply..........................
17. Prior Contracts.....................................
3
CUSTODIAN CONTRACT
This Contract between. Quasar Associates, Inc., a
corporation organized and existing under the laws of Maryland,
having its principal place of' business at 000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, hereinafter called the "Fund", and State
Street Bank and Trust Company, a Massachusetts corporation,
having its principal place of business at 000 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual
covenants and agreements hereinafter contained, the parties
hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian
of its assets, including securities it desires to be held in
places within the United States ("domestic securities") and
securities it desires to be held outside the United States
("foreign securities") pursuant to the provisions of the Articles
of Incorporation. The Fund agrees to deliver to the Custodian all
securities and cash owned by It, and all payments of income,
payments of principal or capital distributions received by it
with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or
treasury shares of capital stock, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be
4
responsible for any property of the Fund held or received by the
Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the
meaning of Article 5), the Custodian shall from time to time
employ one or more sub-custodians located in the United States,
but only in accordance with an applicable voce by the Board of
Directors of the Fund, and provided that the Custodian shall have
no more or less responsibility or liability to the Fund on
account of any actions or omissions of any sub-custodian so
employed than any such sub-custodian has to the Custodian. The
Custodian may employ as sub-custodians for the Fund's securities
and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but
only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and
physically segregate for the account of the Fund all
non-cash property, to be held by it in the United
States, including all domestic securities owned by the
Fund, other than securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts
as a securities depository or in a book-entry system
5
authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and
deliver domestic securities owned by the Fund held by
the Custodian or in a Securities System account of the
Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed
appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account
of the Fund and receipt of payment therefor;
2) Upon the receipt of payment in connection
with any repurchase agreement related to such
securities entered into by the Fund;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.10 hereof;
4) To the depository agent in connection with
tender or other similar offers for portfolio
securities of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in
any such case, the cash or other consideration
is to be delivered to the Custodian;
6
6) To the issuer thereof, or its agent, for
transfer into the name of the Fund or into the
name of any nominee or nominees of the
Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-
custodian appointed pursuant to Article 1; or
for exchange for a different number of bonds,
certificates or other evidence representing
the same aggregate face amount or number of
units; provided, that, in any such case, the
new securities are to be delivered to the
Custodian;
7) To the broker selling the same for examination
in accordance with the "street delivery"
custom;
8) For exchange or conversion pursuant to any
plan of merger, consolidation,
recapitalization, reorganization or
readjustment of the securities of the issuer
of such securities, or pursuant to provisions
for conversion contained in such securities,
or pursuant to any deposit agreement; provided
that, in any such case, the new securities and
7
cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof In the
exercise of such warrants, rights or similar
securities or the surrender of interim
receipts or temporary securities for
definitive securities; provided that, in any
such case, the new securities and cash, if
any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, but only against
receipt of adequate collateral as agreed upon
from time to time by the Custodian and 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
authorized by the U.S. Department of the
Treasury, 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;
8
11) For delivery as security in connection with
any borrowings by the Fund requiring a pledge
of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions
of any agreement among the Fund, the Custodian
and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association
of Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options
Clearing Corporation and of any registered
national securities exchange, or of any
similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Fund;
13) For delivery in accordance with the provisions
of any agreement among the Fund, the
Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act,
relating to compliance with the rules of the
Commodity Futures Trading Commission and/or
any Contract Market, or any similar
organization or organizations, regarding
9
account deposits in connection with
transactions by the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for
delivery to such Transfer Agent or to the
holders of shares in connection with
distributions in kind, as may be described
from time to time in the Fund's currently
effective prospectus and statement of
additional information ("prospectus"), in
satisfaction of requests by holders of Shares
for repurchase or redemption; and
15) For any other proper corporate purpose, but
only upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution
of the Board of Directors or of the Executive
Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant
Secretary, specifying the securities to be
delivered, setting forth the purpose for which
such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and
10
naming the person or persons to whom delivery
of such securities shall be made.
2.3 Registration of Securities. Domestic securities
held by the Custodian (other than bearer
securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or
of any nominee of the Custodian which nominee shall
be assigned exclusively to the Fund, unless the
Fund has authorized in writing the appointment of a
nominee to be used in common with other registered
investment companies having the same investment
adviser as the Fund, or in the name or nominee name
of any agent appointed pursuant to Section 2.9 or
in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund
under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and
maintain a separate bank account or accounts in the
United States in the name of the Fund, subject only
to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in
11
such account or accounts, subject to the provisions
hereof, all cash received by it from or for the
account of the Fund, other than cash maintained by
the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment
Company Act of 1940. Funds held by the Custodian
for the Fund may be deposited by it to its credit
as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or
desirable; provided, however, that every such bank
or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940
and that each such bank or trust company and the
funds to be deposited with each such bank or trust
company shall be approved by vote of a majority of
the Board of Directors of the Fund. Such funds
shall be deposited by the Custodian in its capacity
as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Investment and Availability of Federal Funds. Upon
mutual agreement between the Fund and the
Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal funds available
12
to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of
the Fund which are deposited into the Fund's
account.
2.6 Collection of Income. The Custodian shall collect
on a timely basis all income and other payments
with respect to United States registered securities
held hereunder to which the Fund shall be entitled
either by law or pursuant to custom in the
securities business, and shall collect on a timely
basis all income and other payments with respect to
United States bearer securities if, on the date of
payment by the issuer, such securities are held by
the Custodian or its agent thereof and shall credit
such income, as collected, to the Fund's custodian
account. Without limiting the generality of the
foregoing, the Custodian shall detach and present
for payment all coupons and other income items
requiring presentation as and when they become due
and shall collect interest when due on securities
held hereunder. Income due the Fund on United
States securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of
13
the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than
to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging
for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.
2.7 Payment of Fund Moneys. Upon receipt of Proper
Instructions, which may be continuing instructions
when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the
following cases only:
1) Upon the purchase of domestic securities,
futures contracts or options on futures
contracts for the account of the Fund but only
(a) against the delivery of such securities,
or evidence of title to futures contracts or
options on futures contracts, to the Custodian
(or any bank, banking firm or trust company
doing business in the United States or abroad
which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the
Custodian as its agent for this purpose)
14
registered in the name of the Fund or in the
name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase
effected through a Securities System, in
accordance with the conditions set forth in
Section 2.10 hereof or (c) in the case of
repurchase agreements entered into between the
Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry crediting
the Custodian's account at the Federal Reserve
Bank with such securities or (11) against
delivery of the receipt evidencing purchase by
the Fund of securities owned by the Custodian
along with written evidence of the agreement
by the Custodian to repurchase such securities
from the Fund;
2) In connection with conversion, exchange or
surrender of securities owned by the Fund as
set forth in Section 2.2 hereof;
15
3) For the redemption or repurchase of Shares
issued by the Fund as set forth in Article 4
hereof;
4) For the payment of any expense or liability
incurred by the Fund, including but not
limited to the following payments for the
account of the Fund: interest, taxes,
management, accounting, transfer agent and
legal fees, and operating expenses of the Fund
whether or not such expenses are to be in
whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends declared
pursuant to the governing documents of the
Fund;
6) For payment of the amount of dividends
received in respect of securities sold short;
7) For any other proper purpose, but only upon
receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Board of Directors or of
16
the Executive Committee of the Fund signed by
an officer of the Fund and certified by its
Secretary or art Assistant Secretary,
specifying the amount of such payment,
setting forth the purpose for which such
payment is to be made, declaring such purpose
to be a proper purpose, and naming the person
or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. In any and every case where
payment for purchase of domestic securities for the
account of the Fund is made by the Custodian in advance
of receipt of the securities purchased in the absence of
specific written instructions from the Fund to so pay in
advance the Custodian shall be absolutely liable to the
Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the
17
Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or
liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The
Custodian may deposit and/or maintain domestic
securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the
book-entry system authorized by the U.S. Department of
the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep domestic securities of
the Fund in a Securities System provided that
such securities are represented in an account
("Account") of the Custodian in the Securities
System which shall not include any assets of
the Custodian other than assets held as a
18
fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to
domestic securities of the Fund which are
maintained in a Securities System shall
identify by book-entry those securities
belonging to the Fund;
3) The Custodian shall pay for domestic
securities purchased for the account of the
Fund upon (i) receipt of advice from the
Securities System that such securities have
been transferred to the Account, and (ii) the
making of an entry on the records of the
Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian
shall transfer domestic securities sold for
the account of the Fund upon (i) receipt of
advice from the Securities System that payment
for such securities has been transferred to
the Account, and (ii) the making of an entry
on the records of the Custodian to reflect
such transfer and payment for the account of
the Fund. Copies of all advices from the
19
Securities System of transfers of domestic
securities for the account of the Fund shall
identify the Fund, be maintained for the Fund
by the Custodian and be provided to the Fund
at its request. Upon request, the Custodian
shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in
the form of a written advice or notice and
shall furnish to the Fund copies of daily
transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Fund.
4) The Custodian shall provide the Fund with any
report obtained by the Custodian on the
Securities System's accounting system,
internal accounting control and procedures for
safeguarding domestic securities deposited in
the Securities System;
5) The Custodian shall have received the initial
or annual certificate, as the case may be,
required by Article 13 hereof;
20
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable
to the Fund for any loss or damage to the Fund
resulting from use of the Securities System by
reason of any negligence, misfeasance or
misconduct of the Custodian or any of its
agents or of any of its or their employees or
from failure of the Custodian or any such
agent to enforce effectively such rights as it
may have against the Securities System; at the
election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian
with respect to any claim against the
Securities System or any other person which
the Custodian may have as a consequence of any
such loss or damage if and to the extent that
the Fund has not been made whole for any such
loss or damage.
2.11 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or
securities, including securities maintained in an
account by the Custodian pursuant to Section 2.10
21
hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-
dealer registered under the Exchange Act and a member of
the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or
any registered contract market), or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or
government securities in connection with options
purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold
by the Fund, (iii) for the purposes of compliance by the
Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered ivestment companies and (iv) for other proper
corporate purposes, but only, in the case of clause
(iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee signed
22
by an officer of the Fund and certified by the Secretary
or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it
and in connection with transfers of such securities.
2.13 Proxies. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly
executed by the registered holder of such securities, if
the securities are registered otherwise than in the name
of the Fund or a nominee of the Fund, all proxies,
without indication of the manner in which such proxies
are to be voted, and shall promptly deliver to the Fund
such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.14 Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Fund all
written information (including, without limitation,
pendency of calls and maturities of domestic securities
and expirations of rights in connection therewith and
notices of exercise of call and put options written by
23
the Fund and the maturity of futures contracts purchased
or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the
Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund all
written information received by the Custodian from
issuers of the domestic securities whose tender or
exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the
Fund shall notify the Custodian at least three business
days prior to the date on which the Custodian is to take
such action.
2.15. Reports to Fund by Independent Public Accountants.
The Custodian shall provide the Fund, at such times as
the Fund may reasonably require, with reports by
independent public accountants on the accounting system,
internal accounting control and procedures for
safeguarding securities, futures contracts and options
on futures contracts, including domestic securities
deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under
this Contract; such reports shall be of sufficient scope
and in sufficient detail, as may reasonably be requited
24
by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such
examination, and, if there are no such inadequacy
reports shall so state.
3. Duties of the Custodian with Respect to Property Fund
Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians.
The Custodian is authorized and instructed to employ as
sub-custodians for the Fund's securities and other
assets maintained outside of the United States the
foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper
Instructions", together with a certified resolution of
the Fund's Board of Directors, the Custodian and the
Fund 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-custodians. Upon receipt of Proper Instructions
from the Fund the Custodian shall cease the employment
of any one or more of such sub-custodians for
maintaining custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the
securities and other assets maintained in the custody of
the foreign sub-custodians to: (a) "foreign securities",
25
as defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund
may determine to be reasonably necessary to effect the
Fund's foreign securities transactions.
3.3 Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Custodian and
the Fund, assets of the Fund shall be maintained in
foreign securities depositories only through
arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the
terms hereof.
3.4 Segregation of Securities. The Custodian shall identify
on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-
custodian. Each agreement pursuant to which the
Custodian employs a foreign banking institution shall
require that such institution establish a custody
account for the Custodian on behalf of the Fund and
physically segregate in that account securities and
other assets of the Fund, and, in the event that such
institution deposits the Fund's securities in a foreign
securities depository, that it shall identify on its
books as belonging to the Custodian, as agent for the
26
Fund, the securities so deposited (all collectively
referred to as the "Account").
3.5 Agreements with Foreign Banking Institutions. Each
agreement with a foreign banking institution shall be
substantially in the form set forth in Exhibit I hereto
and shall provide that: (a) the Fund's assets will not
be subject to any right, charge, security iterest, lien
or claim of any kind in favor of the foreign banking
institution or its creditors, except a claim of payment
for their safe custody or administration; (b) beneficial
ownership for the Fund's assets will be freely
transferable without the payment of money or value other
than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging
to the Fund; (d) officers of or auditors employed by, or
other representatives of the Custodian, including to the
extent permitted under applicable law the independent
public accountants for the Fund, will be given access to
the books and records of the foreign banking institution
relating to its actions under its agreement with the
Custodian; and (e) assets of the Fund held by the
foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon
request of the Fund, the Custodian will use its best
27
efforts to arrange for the independent accountants of
the Fund to be afforded access to the books and records
of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate
to the performance of such foreign banking institutions
under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the
Fund from time to time, as mutually agreed upon,
statements in respect of the securities and other assets
of the Fund held by foreign sub-custodians, including
but not limited to an identification of entities having
possession of the Fund's securities and other assets and
advices or notifications of any transfers of securities
to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf
of the Fund indicating, as to securities acquired for
the Fund, the identity of the entity having physical
possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Upon
receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the
Custodian shall make or cause its foreign sub-custodian
to transfer, exchange or deliver foreign securities
owned by the Fund, but except to the extent explicitly
28
provided herein only in any of the cases specified in
Section 2.2
(b) Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the
parties the Custodian shall pay out or cause its foreign
sub-custodians to pay out monies of the Fund, but except
to the extent explicitly provided herein only in any of
the cases specified in Section 2.7.
(c) Notwithstanding any provision of this Contract to
the contrary, settlement and payment for securities
received for the account of the Fund and delivery of
securities maintained for the account of the Fund may be
effected in accordance with the customary or 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.
(d) 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 in
Section 2.3 of this Contract and the Fund agrees to hold
29
any such nominee harmless from any liability as a holder
of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement
pursuant to which the Custodian 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, the Custodian and Fund from and against any
loss, damage, cost, expense, liability or claim arising
out of or in connection with the institution's
performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the
rights of the Custodian 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 Fund has not been
made whole for any such loss, damage, cost, expense,
liability or claim.
3.10 Monitoring Responsibilities. The Custodian shall
furnish annually to the Fund, during the month of June,
information concerning the foreign sub-custodians
employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund
in connection with the initial approval of this
Contract. In addition, the Custodian will promptly
30
inform the Fund in the event that the Custodian learns
of a material adverse change in the financial condition
of a foreign sub-custodian or is notified by a foreign
banking institution employed as a foreign sub-custodian
that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million
(U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in
each case computed in accordance with generally accepted
U.S. accounting principles).
3.11 Branches of U.S. Banks. Except as otherwise set forth
in this Contract, the provisions hereof shall not apply
where the custody of the Fund assets maintained in a
foreign branch of a banking institution which is a
"bank" as defined by Section 2(a) (5) of the Investment
Company Act of 1940 which meets the qualification set
forth in Section 26(a) of said Act. The appointment of
any such branch as a sub-custodian shall be governed by
Article 1 of this Contract.
4. Payments for Repurchases or Redemptions and Sales of
Shares of the Fund
From such funds as may be available for the purpose but
subject to the limitations of the Articles of Incorporation and
any applicable votes of the Board of Directors of the Fund
pursuant thereto, the Custodian shall, upon receipt of
31
instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the
Fund, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection
with the redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance
with such procedures and controls as are mutually agreed upon
from time to time between the Fund and the Custodian.
The Custodian shall receive from the distributor for the
Fund's Shares or from the Transfer Agent of the Fund and deposit
into the Fund's account such payments as are received for Shares
of the Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the
Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing
signed or initialled by one or more person or persons as the
Board of Directors shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
32
transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodia-n
reasonably believes them to have been given by a person
authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the
Secretary or an Assistant Secretary as to the authorization by
the Board of Directors of the Fund accompanied by a detailed
description of procedures approved by the Board of Directors,
Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that
the Board of Directors and the Custodian are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for minor
expenses of handling securities or other similar items relating
to its duties under this Contract, provided that all such
payments shall be accounted for to the Fund;
2) surrender securities in temporary form for
securities in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
33
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
the Fund except as otherwise directed by the Board of Directors
of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant
to the Articles of Incorporation as described in such vote, and
such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of
Directors of the Fund to keep the books of account of the Fund
and/or compute the net asset value per share of the outstanding
shares of the Fund or, if directed in writing to do so by the
Fund, shall itself keep such books of account and/or compute such
34
net asset value per share. If so directed, the Custodian shall
also calculate daily the net income of the Fund as described in
the Fund's currently effective prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of
the division of such net income among its various components.
The calculations of the net asset value per share and the daily
income of the Fund shall be made at the time or times described
from time to time in the Fund's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records
relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the
Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the
Fund. All such records shall be the property of the Fund and
shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Fund and employees and agents of the
Securities and Exchange Commission. The Custodian shall, at the
Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when
35
requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the
Fund may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the
preparation of the Fund'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.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as
agreed upon from time to time between the Fund and the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise
of reasonable care, the Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of
title thereto received by it or delivered by it pursuant to this
Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party
or parties. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract,
36
but shall be kept Indemnified by and shall be without liability
to the Fund for any action taken or initiated by it in good faith
without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to
redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the
Fund.
The Custodian shall be liable for the acts or omissions
of a foreign banking institution appointed pursuant to the
provisions of Article 3 to the same extent as set forth in
Article 1 hereof with respect to sub-custodians located in the
United States and, 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 paragraph 3.11 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting
from, or caused by, the direction of or authorization by the Fund
to maintain custody or any securities or cash of the Fund in a
foreign country including, but not limited to, losses resulting
from nationalization, expropriation, currency restrictions, or
acts of war or terrorism.
37
If the Fund requires the Custodian to take any action
with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the
Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or
securities for any purpose or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, 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 Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its
execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by
mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed,
38
postage prepaid to the other party, such termination to take
effect not sooner than thirty (30) days after the date of such
delivery or mailing; provided, however that the Custodian shall
not act under Section 2.10 hereof In the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary
that the Board of Directors of the Fund have approved the initial
use of a particular Securities System and the receipt of an
annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors have reviewed the use by the Fund of
such Securities System, as required in each case by Rule 17f-4
under the Investment Company Act of 1940, as amended; provided
further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Articles of Incorporation,
and further provided, that the Fund may at any time by action of
its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to
the Custodian, or (1i) immediately terminate this Contract in the
event of the appointment of a conservator or receiver for the
Custodian by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to
the Custodian such compensation as may be due as of the date of
39
such termination and shall likewise reimburse the Custodian for
its costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian shall be appointed by the Board
of Directors of the Fund, the Custodian shall, upon termination,
deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities
held in a Securities System.
If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy
of a vote of the Board of Directors of the Fund, deliver at the
office of the Custodian and transfer such securities, funds and
other properties in accordance with such vote.
In the event that no written order designating a
successor custodian or certified copy of a vote of the Board of
Directors shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company
Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided
profits, as shown by its last published report, of not less than
$125,000,000, all securities, funds and other properties held by
40
the Custodian and all instruments held by the Custodian relative
thereto and all other property held by it under this Contract and
to transfer to an account of such successor custodian all of the
Fund's securities held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties
remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to procure the
certified copy of the vote referred to or of the Board of
Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such
period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall
remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the
Custodian and the Fund may from time to time agree on such
provisions interpretive of or in addition to the provisions of
this Contract as may in their joint opinion be consistent with
the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any
41
applicable federal or state regulations or any provision of the
Articles of Incorporation of the Fund. No interpretive or
additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
16. Massachusetts Law to Apply
This Contract shall be construed and the provisions
thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
17. Prior Contracts
This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the Custodian
relating to the custody of the Fund's assets.
42
IN WITNESS WHEREOF, each of the parties has caused this
Instrument to be executed in its name and behalf by its duly
authorized representative and its seal to be hereunder affixed as
of the 13th day of November, 1986.
ATTEST QUASAR ASSOCIATES, INC.
/s/ Xxxxxx X. Xxxxxx, Xx. /s/ Xxxxxx X. Xxxxxx
_________________________ By__________________________
Xxxxxx X. Xxxxxx
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Xxxxxxxx Xxxxx /s/ (unidentifiable by State Street)
_________________________ By__________________________
Assistant Secretary Vice President
43
00250150.AS8
Schedule A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of
Directors of Quasar Associates, Inc. for use as sub-custodians
for the Fund's securities and other assets:
ANZ Banking Group Ltd. Australia
Banque Bruxelles Xxxxxxx Belgium
Canada Trust Company Canada
Kansallis-Osake Pankki Finland
Credit Commercial De France France
Berliner Handels Und Frankfurter Bank Germany
Standard Chartered Bank Hong Kong
Credito Italiano Italy
Sumitomo Trust & Banking Company Limited Japan
Bank Mees & Hope, N.V. Algemene Bank Nederland The Netherlands
Christiania Bank OG Kreditkasse Norway
DBS Trustee Ltd. Singapore
Skandinaviska Enskilda Banken Sweden
Union Bank of Switzerland Switzerland
44
00250150.AS8
