Exhibit 8(a)(1)
CUSTODIAN AGREEMENT
THIS AGREEMENT made as of August 22, 1988 between Xxxxxxx Mutual Funds,
Inc., a corporation under the laws of Maryland with its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter called the
"Fund"), and The First National Bank of Boston, a national banking association
with its principal place of business in Boston, Massachusetts (hereinafter
called "Custodian").
WHEREAS, the Fund desires that the securities, precious metals or
negotiable receipts representing ownership of precious metals (hereinafter
"precious metals receipts") and cash (unless otherwise designated, hereinafter
referred to collectively as "Assets") of its one investment fund, Xxxxxxx Gold
Fund (the "Portfolio"), shall be hereafter held and administered by Custodian as
the Fund's agent pursuant to the terms of this Agreement; and
WHEREAS, the Custodian, directly and through its sub-custodian network,
provides services in the ordinary course of its business which will meet the
Fund's needs as provided for hereinafter;
NOW THEREFORE in consideration of the mutual promises herein made, the Fund
and Custodian agree as follows:
Section 1. Definitions.
"Bank" shall mean a bank as defined in Section 2(a)5 of the Investment
Company Act of 1940, as amended (the "1940 Act").
"Security" shall mean security as defined in Section 2(1) of the Securities
Act of 1933, as amended, and, unless otherwise indicated herein, shall mean both
U.S. and "foreign securities", as the latter term is defined in Rule 17f-5 under
the 1940 Act.
"Proper Instructions" as used throughout this Agreement shall mean a
writing signed or initialed by one or more persons as the Board of Directors of
the Fund shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered "Proper Instructions" if the Custodian
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 promptly in writing and in no event later than
one Business Day, which shall mean a day other than a Saturday or Sunday on
which the Custodian is open for custody business. If authorized by the Board of
Directors of the Fund, as evidenced by a certificate of the Secretary or an
Assistant Secretary
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of the Fund and accompanied by a description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices. Such communications shall be
confirmed by the Fund in writing which may include a tested telex.
Section 2. Custodian as Agent.
The Custodian is authorized to act under the terms of this Agreement as the
Fund's agent and shall be representing the Fund whenever acting within the scope
of the Agreement. The Custodian is authorized further to appoint sub-custodians
from time to time to carry out some or all of the duties which the Custodian is
authorized to perform hereunder; provided, however, that the appointment of any
sub-custodian shall not relieve the Custodian of any of its responsibilities or
liabilities hereunder.
The Custodian acknowledges that additional portfolios of the Fund may be
established and that such portfolios, including the Portfolio, may be
terminated, from time to time by action of the Board of Directors of the Fund.
If the context requires and unless otherwise specifically provided herein, the
term "Fund" as used in this Agreement shall mean, in addition to the Portfolio,
each subsequently created separate portfolio as the Board of Directors of the
Fund shall designate at its discretion and as to which such Board shall have
appointed the Custodian as Custodian and as to which the Custodian shall have
accepted such appointment.
Section 3. Names, Titles and Signatures of Fund's Officers.
The Secretary or any Assistant Secretary of the Fund will certify to the
Custodian a list containing the names, titles, and signatures of those persons
authorized to sign or give Proper Instructions ("Authorized Persons"). Said
Secretary or Assistant Secretary, or his or her successor, will provide the
Custodian promptly with any changes to such list which may occur from time to
time.
The Custodian is authorized to rely and act upon Proper Instructions from
any person or persons (if more than one, so indicated) who are Authorized
Persons. The Fund will provide the Custodian with a list of authenticated
specimen signatures of Authorized Persons and will promptly incorporate any
changes to such list as may occur from time to time. Should the Fund fail to
inform the Custodian that an Authorized Person has ceased to be an Authorized
Person, the Custodian shall be entitled to rely upon the signature of that
person as if such person were still an Authorized Person, until notified to the
contrary by the Fund.
The Custodian is further authorized to rely upon any instructions received
by any other means and identified as having been given or authorized by any
Authorized Person, regardless of whether such instructions shall in fact have
been authorized or given by any of
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such persons; provided, that, (a) the Custodian and the Fund shall have
previously agreed in writing upon the means of transmission and the method of
identification for such instructions; (b) the Custodian has not been notified by
the Fund to cease to recognize such means and methods, and (c) such means and
methods have in fact been used.
If the Fund should so choose to have dial-up or other means of direct
access to the Custodian's accounting system for securities in custodial
accounts, the Custodian is also authorized to rely and act upon any instructions
received by the Custodian through the terminal device, regardless of whether
such instructions shall in fact have been given or authorized by the Fund
provided that such instructions are accompanied by passwords which have been
mutually agreed to in writing by the Custodian and the Fund and the Custodian
has not been notified by the Fund to cease to recognize such passwords.
Where dial-up or other direct means of access to the Custodian's accounting
system for cash or securities is utilized, the Fund agrees to indemnify the
Custodian and hold it harmless from and against any and all liabilities, losses,
damages, costs, reasonable counsel fees, and other reasonable expenses of every
nature suffered or incurred by the Custodian by reason of or in connection with
the improper use, unauthorized use and misuse by the Fund or its employees of
any terminal device with access to the Custodian's Accounting System for
Securities in Custodial Accounts, unless such losses, damages, costs and
expenses, result from the negligence of the Custodian, its employees,
sub-custodians, or agents.
Section 4. Receipt and Disbursement of Money.
A. The Custodian shall open and maintain a separate account or accounts in
the name of the Fund (the "Account"), subject to debit only by a draft or order
by Custodian acting pursuant to the terms of this Agreement. The Custodian shall
hold in such Account, subject to the provisions hereof, all cash received by it
from or for the account of the Fund.
1. The Custodian shall debit or credit the Account, as the case may
be, only (a) for the purchase of securities for the Portfolio upon the delivery
(which term shall include "transfer" as that term is used with respect to
"book-entry" securities) of such securities to the Custodian, registered in the
name of the Fund or of the nominee of the Custodian referred to in Section 8,
below (it being understood and agreed that, in any and every case when payment
for the purchase of securities for the account of the Portfolio (or any other
portfolio which is part of the Fund) is made by the Custodian in advance of
delivery to it of the securities purchased, in the absence of Proper
Instructions to so pay in advance, the Custodian shall be absolutely liable for
such securities to the same extent as if the securities had been actually
delivered to the Custodian, provided, however, that in connection with any
repurchase agreement transaction in which the selected securities are to be
delivered in "book-entry" form to the
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account of the Custodian at the Federal Reserve Bank of Boston (the "Fed"), the
Custodian conclusively may rely on any communication from the Fed that such
securities have been so delivered); (b) for the purchase of precious metals or
precious metals receipts upon delivery of such precious metals or precious
metals receipts to the Custodian or a sub-custodian; (c) for the purchase or
redemption of shares of the capital stock of the Fund, (d) for payments in
connection with the conversion, exchange or surrender of securities owned or
subscribed to by the Fund held by or to be delivered to the Custodian; (e) for
the payment of interest, dividends, taxes, management or supervisory fees or
operating expenses (including without limitation thereto, fees for legal,
accounting and auditing services); (f) for payments in connection with the
return of the cash collateral received in connection with securities lent by the
Fund; or (g) for other proper Fund purposes.
2. The Custodian conclusively may rely upon receipt of a written or
oral request from an Authorized Person requesting such payment and stating that
it is for a purpose permitted under the terms of this subsection A. Any oral
request shall be confirmed in writing (which may include a tested telex) within
one business day. Any discrepancy between such oral request and written
confirmation shall be resolved in favor of the oral request upon which the
Custodian relied.
3. In respect of item 1(g), the Custodian shall receive, in addition
to Proper Instructions, a certified copy of a resolution of the Board of
Directors or, if applicable, of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an 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 corporate purpose,
and naming the person or persons to whom such payment is to be made. The
Custodian may rely on an oral request from an Authorized Person and his or her
representation that such payment is for an authorized corporate purpose and that
the documents provided for herein will be forthcoming within twenty-four (24)
hours of such oral request. Receipt of Proper Instructions or written or oral
notice from an Authorized Person shall be deemed to establish that payment of
cash pursuant to such order is for a valid corporate purpose. In the event that
a payment which the Fund has declared to be for a valid corporate purpose,
pursuant to the above, is not in fact for a valid corporate purpose, the Fund
will indemnify and hold the Custodian harmless from any and all taxes, charges,
expenses, assessments, claims and liabilities which the Custodian may incur in
conjunction with such payment.
B. The Custodian is hereby authorized to (a) collect on a timely basis all
income and other payments with respect to securities held hereunder to which the
Fund shall be entitled either by law or pursuant to custom in the securities
business, and to credit such income to the Fund's custodian account. Without
limiting the
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generality of the foregoing, the Custodian is hereby authorized to (a) detach
and present for payment all coupons and other income items requiring
presentation as and when they become due, (b) collect interest when due on
securities held hereunder and (c) endorse and collect all checks, drafts or
other orders for the payment of money received by the Custodian for the account
of the Fund.
Section 5. Receipt of Assets
The Custodian shall hold in a separate account, and physically segregated
at all times from those of any other persons, firms or corporations, pursuant to
the provisions hereof, all Assets received by it from or for the account of the
Fund. All such Assets are to be held or disposed of by the Custodian for, and
subject at all times to the instructions of, the Fund pursuant to the terms of
this Agreement. The Custodian shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such Assets, except pursuant to
the directive of the Fund and only for the account of the Fund as set forth in
Section 7 of this Agreement.
The Custodian may make arrangements with Depository Trust Company ("DTC")
and other depositories, including the Federal Reserve Bank and qualifying
foreign sub-custodians as provided for in Section 6 hereof, for the central
handling of securities, whereby certain securities of the Fund may be deposited
for the purpose of allowing transactions to be made by bookkeeping entry without
physical delivery of such securities, subject to such restrictions as may be
agreed upon by the Custodian and the Fund. The securities held by the Custodian
shall be held with the same degree of care exercised by the Custodian with
respect to its own securities. The Custodian shall immediately commence
procedures to replace securities lost due to robbery, burglary or theft while
such securities are within its control or that of its agents or employees upon
discovery of such loss.
Section 6. Foreign Sub-Custodians.
(a) In the event the Custodian places Assets pursuant to this Agreement and
pursuant to approval by the Board of Directors of the Fund in accordance with
Section 17(f) of the 1940 Act and Rule 17f-5 thereunder, with any foreign
sub-custodian, the Custodian agrees that it shall place the Assets only with
those foreign sub-custodians which either satisfy the requirements of "eligible
foreign custodian" under Rule 17f-5, or with respect to which exemptive relief
or a no-action determination has been granted by the U.S. Securities and
Exchange Commission from the requirements of Section 17(f). The Custodian agrees
further that in placing Assets with and in entering into sub-custodian
agreements with such foreign sub-custodians, the sub-custodial agreement shall
provide, either directly to the Fund or indirectly to the Fund through the
Custodian, that: (i) the Fund will be adequately indemnified and the Assets so
placed adequately insured in the event of loss, as provided in part (b) of this
section, (ii) the Assets will not be subject to any right, charge security
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interest, lien or claim of any kind in favor of the foreign sub-custodian or its
creditors except a claim for payment for their safe custody or administration,
(iii) beneficial ownership of the Assets will be freely transferable without
payment of money or value other than for safe custody or administration, (iv)
adequate records will be maintained identifying the Assets as belonging to the
Fund, (v) the Fund's independent public accountants will either be given access
to those records or the confirmation of the contents of those records; and (vi)
the Fund will receive periodic reports with respect to the safekeeping of the
Assets, including but not necessarily limited to, notification of any transfer
to or from the Fund's Account.
(b) With respect to any Assets to be placed with foreign sub-custodians
pursuant to this section, the Custodian commits that it shall obtain Bankers
Blanket Bond or similar insurance for losses incurred as a result of such
sub-custodial arrangements. Within the normal course of business, the Custodian
shall also seek to ensure that all such sub-custodians carry comparable Bankers
Blanket Bond or similar insurance.
(c) The Fund authorizes the Custodian to release any and all information
regarding Assets placed with foreign sub-custodians hereunder as may be required
by court order of a court within the United States.
Section 7. Transfer, Exchange, Redelivery of Securities.
The Custodian or sub-custodian or any agent thereof shall have sole power
to release or deliver any Assets of the Fund held by it pursuant to this
Agreement. The Custodian agrees to transfer, exchange or deliver Assets held by
it hereunder only (a) for sales of securities for the account of the Fund in
accordance with "New York Street Practice", (b) when securities are called,
redeemed or retired or otherwise become payable, (c) for examination by any
broker selling any securities in accordance with "street delivery" custom, (d)
in exchange for or upon conversion into other securities and cash whether
pursuant to any plan of merger, consolidation, reorganization, recapitalization
or readjustment, or otherwise, (e) upon conversion of such securities pursuant
to their terms into other securities, (f) upon exercise of subscription,
purchase or other similar rights represented by such securities, pursuant to
their terms; (g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities, (h) for the purpose of redeeming in kind
shares of capital stock of the Fund upon delivery thereof to Custodian or the
Transfer Agent of the Fund; (i) for the purpose of tendering shares; (j) for the
purpose of delivering securities lent by the Fund, or (k) for sales of precious
metals and precious metals receipts, or (1) for other proper Fund purposes. As
to any deliveries made by Custodian pursuant to items (b), (d), (e), (f), (g),
(h) and (i), securities or cash receivables in exchange therefor shall be
deliverable to the Custodian. The Custodian may rely upon Proper Instructions
relating thereto as provided for in Sections 3 and 4 above.
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Section 8. The Custodian's Acts without Instructions.
Unless and until the Custodian receives instructions to the contrary, the
Custodian shall:
(a) present for payment all coupons and other income items held by it for
the account of the Fund which call for payment upon presentation and hold the
cash received by it upon such payment for the Account; (b) collect interest and
cash dividends received, provide notice to the Fund of receipts, and deposit to
the Account; (c) hold for the account of the Fund all stock dividends, rights
and similar securities issued with respect to any securities held by the
Custodian under the terms of this Agreement; and (d) execute as agent on behalf
of the Fund all necessary ownership certificates required by the Internal
Revenue Code or the Income Tax Regulations of the United States Treasury
Department, the laws of any State or territory of the United States, or, in the
case of securities held by foreign sub-custodians, the laws of the jurisdiction
in which such securities are held, now or hereafter in effect, inserting the
Fund's name on such certificates as the owner of the securities covered thereby,
to the extent it may lawfully do so.
Section 9 Options and Futures Transactions
a. Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter
1. The Custodian shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund regarding escrow or
other arrangements (i) in accordance with the provisions of any agreement
between the Custodian, any broker-dealer registered under the Securities
Exchange Act of 1934 and a member of the National Association of Securities
Dealers, Inc. and, if necessary, the Fund relating to the compliance with the
rules of the Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or organizations, or (ii)
alternatively, in accordance with Section 10 as to covered call options written
by the Fund.
2. The Custodian shall be under no duty or obligation to see that the
Fund has deposited or is maintaining adequate margin, if required, with any
broker in connection with any option to the broker for exercise unless it
receives Proper Instructions from the Fund. The Custodian shall have no
responsibility for the legality of any put or call purchased or sold on behalf
of the Fund, the propriety of any such purchase or sale, or the adequacy of any
collateral delivered to a broker in connection with an option or deposited to or
withdrawn from a Segregated Account as described in sub-paragraph c of this
Section 9. The Custodian specifically, but not by way of limitation, shall not
be under any duty or obligation to: (i) periodically check or notify the Fund
that the amount of such collateral held by a broker or held in a Segregated
Account as described in sub-paragraph c of
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this Section 9 is sufficient to protect such broker of the Fund against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has expired or is about to expire.
Such duties or obligations shall be the sole responsibility of the Fund.
b. Puts, Calls and Futures Traded on Commodities Exchanges
1. The Custodian shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund 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 account
deposits in connection with transactions by the Fund.
2. The responsibilities and liabilities of the Custodian as to
Futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
sub-paragraph (a) (2) of this Section 9 as if such sub-paragraph referred to
Futures Commission Merchants rather than brokers, and Futures, puts and calls
traded on commodities exchanges instead of options.
c. 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 4
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, and (ii) for the purpose of
segregating cash or securities in connection with options purchased or written
by the Fund or commodity futures purchased or written by the Fund, and (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the maintenance of
Segregated Accounts by registered investment companies and (iv) for other proper
corporate purposes, 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 of the Fund, or of the Executive Committee signed 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.
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Section 10. Escrow Receipts and Deposit Forms
Upon receipt of instructions from an Authorized Person to do so, Custodian
will execute, or cause a sub-custodian or depository to execute, an escrow
receipt relating to a call option written by the Fund and will deliver such
escrow receipt against receipt of payment of the premium therefor or, in the
case of call option contracts issued by the Options Clearing Corporation
("OCC"), an escrow deposit form of OCC pursuant to the Escrow Deposit Agreement
in effect from time to time between the Custodian and OCC. Such aforesaid
instruction shall contain all information necessary for the issuance of such
receipt or deposit form and will authorize the deposit of the securities
specified therein into an escrow account which will be held by Custodian or a
depository subject to the terms of such escrow receipt or deposit form. However,
Custodian agrees that it will not deliver or cause a depository to deliver any
securities deposited in an escrow account pursuant to an exercise notice unless
Custodian has received Proper Instruction to do so or (i) Custodian has duly
requested the issuance of such instruction; (ii) at least two business days have
elapsed since the receipt of such request by the Fund; and (iii) the Fund has
not advised Custodian that it has purchased securities that are to be delivered
pursuant to the exercise notice. The Fund agrees that it will not issue an
instruction which shall conflict with the terms of any escrow receipt executed
by Custodian or any depository in relation to the Fund which is then in effect.
Custodian need not maintain any written evidence of any call written by the Fund
as part of its duties under this Agreement. The Fund may write calls on
securities ("underlying securities") which are not owned by the Fund and issue
an instruction to Custodian to execute or cause a depository to execute, an
escrow receipt or deposit form on securities ("convertible securities") which
are, or are to be, owned by the Fund and are convertible into the underlying
securities.
In such event, any instruction as to the execution of the escrow receipt or
deposit form will relate only to such convertible securities but any instruction
as to the delivery of such securities may direct Custodian to convert the same.
Section 11. Registration of Assets
Except as otherwise directed by Proper Instructions, the Custodian shall
register all Assets, except such as are in bearer form, in the name of the Fund
or a registered nominee of the Fund or a registered nominee of the Custodian or
sub-custodian. Securities deposited with DTC may be registered in the nominee
name of DTC. The Custodian shall execute and deliver all such certificates in
connection therewith as may be required by the applicable provisions of the
Internal Revenue Code, the laws of any State or territory of the United States,
or, in the case of securities placed with foreign sub-custodians, the laws of
the jurisdiction in which such securities are held. The Custodian shall use its
best efforts to the end that the specific Assets held by it hereunder shall be
at all times identifiable in its records.
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The Fund shall from time to time furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any securities
which it may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Section 12. Voting and Other Action.
Neither the Custodian nor any nominee of the Custodian or of DTC shall vote
any of the securities held hereunder by or for the account of the Fund except in
accordance with the instructions contained in an Officers' Certificate.
The Custodian shall deliver or have delivered to the Fund all notices,
proxies and proxy soliciting materials with relation to such securities, such
proxies to be executed by the registered holder of such securities (if
registered otherwise than in the name of the Fund), but without indicating the
manner in which such proxies are to be voted.
With respect to securities deposited with DTC or any other depository,
including a foreign sub-custodian, as provided for in section 6 hereof, where
such securities may be registered in the nominee name of DTC, or other such
depository, the Custodian shall request that the nominee shall not vote any of
such deposited securities or execute any proxy to vote thereon or give any
consent or take any other action with respect thereto unless instructed to do so
by the Custodian following receipt by the Custodian of Proper Instructions.
Section 13. Transfer Tax and Other Disbursements.
The Fund shall pay or reimburse the Custodian from time to time for any
transfer taxes payable upon transfers of Assets made hereunder and for all other
necessary and proper disbursements and expenses made or incurred by the
Custodian in the performance of this Agreement, as required by U.S. law or the
laws of the jurisdiction in which the Assets are held, as the case may be.
The Custodian shall execute and deliver such certificates in connection
with Assets delivered to it or by it under this Agreement as may be required
under the laws of any jurisdiction to exempt from taxation any exemptible
transfers and/or deliveries of any such Assets.
Section 14. Compensation and the Custodian's Expenses.
The Custodian shall be compensated for its services hereunder according to
the Fee Schedule set forth in Exhibit A hereof.
The Fund agrees to indemnify and hold harmless the Custodian and its
employees, sub-custodians, agents and nominees from all taxes, charges,
expenses, assessments, claims and liabilities (including
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attorneys' fees) incurred or assessed against them in connection with the
performance of the Agreement, except such as may arise from their own
negligence. Without limiting the generality of the foregoing, the Custodian
shall be liable to the Fund with respect to Assets held by a sub-custodian, if
and only to the extent that such sub-custodian is liable to the Custodian. In
the event of any advance of cash for any purpose made by the Custodian resulting
from orders or instructions of the Fund, 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
Agreement, except such as may arise from its or its nominee's own negligence,
any property at any time held for the account of the Fund shall be security
therefor.
The foregoing notwithstanding, the Custodian will in no event be liable for
any loss resulting from the acts, omissions, lack of financial responsibility,
or failure to perform its obligation of any person or organization designated by
the Fund to be an authorized agent of the Fund as a party to any transaction.
Within a reasonable time after receipt by an indemnified party of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party, notify in writing
the indemnifying party of the commencement thereof; and the omission so to
notify the indemnifying party will not relieve it from any liability hereunder
as to the particular item for Which indemnification is then being sought, unless
such omission is a result of the failure to exercise reasonable care on the part
of the indemnified party.
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and to assume the defense thereof
with counsel who shall be to the reasonable satisfaction of such indemnified
party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. Any such indemnifying party shall not be
liable to any such indemnified party on account of any settlement of any claim
or action effected without the consent of such indemnifying party. The foregoing
notwithstanding, the Custodian will in no event be liable for any loss resulting
from the acts, omissions, lack of financial responsibility, or failure to
perform its obligations of any person or organization designated by the Fund to
be the authorized agent of the Fund as a party to any transaction.
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Section 15. Reports by the Custodian.
a) The Custodian shall furnish the Fund daily with a statement of all
transactions and entries for the Account of the Fund. The Custodian shall
furnish the Fund with such reports covering Assets held by it or under its
control as may be agreed upon from time to time. The Custodian shall create and
maintain records relating to its activities under this Agreement in such manner
as will permit the Fund to meet the usual and ordinary obligations of an
investment company with respect to such activities under the Investment Company
Act of 1940, as amended, including under Section 31 thereof and Rules 31a-l and
31a-2 thereunder, and under such federal and state tax laws and other laws or
administrative rules or procedures which may be applicable to a fund generally,
which have been specifically identified to the Custodian in writing by the Fund
from time to time and which would be usual and appropriate for a custodian
performing custodial services for an investment company established under and
regulated pursuant to the aforesaid Act. The books and records of the Custodian
pertaining to its actions under this Agreement shall be open to inspection and
audit at reasonable times and upon reasonable notice to the Custodian, by duly
authorized officers, employees or agents of and auditors employed by the Fund.
All such books and records shall be the property of the Fund (and such other
persons as the Fund may designate from time to time) and the Custodian shall
forthwith upon the Fund's request, turn over to the Fund and cease to retain in
its files, records and documents created and maintained by the Custodian
pursuant to this Agreement, which are no longer needed by the Custodian in the
performance of its services; provided, however, the Custodian in its discretion
may make and retain copies of any and all such records and documents which it
determines appropriate or for its protection.
b) The Custodian shall take, as the Fund may from time to time reasonably
request, such reasonable actions, to permit the Fund to obtain from the Fund's
independent accountants unqualified opinions with respect to the Custodian1s
activities hereunder, in connection With the preparation of the Fund's Form
N-1A, Form N-SAR or other reports to the Securities and Exchange Commission.
C) The Custodian during the course of this Agreement shall provide the
Fund, at such times as the Fund from time to time may reasonably request, with
reports which may have been prepared by the Custodian's independent public
accountants in the ordinary course of business on the accounting system,
internal accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities deposited
and/or maintained in a securities system, relating to the services provided by
the Custodian under this Agreement and which include a description of any
material inadequacies disclosed by such examination.
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Section 16. Termination of Assignment.
This Agreement may be terminated by the Fund, or by the Custodian, on
ninety (90) days' notice, given in writing and sent by registered mail to the
Custodian or the Fund as the case may be. Any termination date is to be no
earlier than six months from the date of this Agreement. Upon termination of
this Agreement, pending appointment of a successor to the Custodian, the
Custodian shall not deliver Assets of the Fund to the Fund; however, the
Custodian may, but shall not be obligated to, deliver to any Bank doing business
in Boston, Massachusetts, of its own selection, having aggregate capital,
surplus and undivided profits, as shown by such bank's last published report, of
not less than twenty-five million dollars ($25,000,000), as the Custodian for
the Fund, all securities, funds and other properties of the Fund then held by
the Custodian under this Agreement to be held under terms similar to those of
this Agreement. The Custodian shall not be required to make any delivery of Fund
Assets until full payment shall have been made by the Fund of all liabilities
constituting a charge on or against the properties then held by the Custodian or
on or against the Custodian, and until full payment shall have been made to the
Custodian of all its fees, compensation, costs and expenses, subject to the
provisions of Section 14 of this Agreement.
This Agreement may not be assigned by the Custodian without the consent of
the Fund, authorized or approved by a resolution of the Fund's Board of
Directors.
Section 17. Miscellaneous.
The Custodian shall not be liable or accountable for any loss or damage
resulting from war, civil war, insurrection, military or usurped powers,
earthquake, storm or other disturbance of nature, or from any execution,
attachment, restraint, or other process, or from the payment of any taxes or
imposts asserted by any governmental authority. The Custodian shall be entitled
to receive and act upon advice of counsel (which may be counsel for the Fund)
and shall be without liability for any action taken or thing done in good faith
in reliance upon such advice.
Custodian has not ascertained and is not responsible or liable for the
authenticity or correctness of markings on, or the weight contents or fineness
of precious metals or precious metals receipts held for the account of the Fund
hereunder.
Nothing in this Agreement shall give or be construed to give any
stockholder of the Fund any rights against the Custodian.
The Custodian may at any time at its discretion appoint (and may at any
time remove) any other bank, including First National Boston Clearance
Corporation, or any sub-custodian, as provided hereunder, as its agent to carry
out such of the provisions of this Agreement, as the Custodian may from time to
time direct; provided, however, that
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any such agent shall be approved in writing by the Board of Director's of the
Fund and that such approval shall not exempt the Custodian from using reasonable
care and diligence in selecting, monitoring, and or retaining such agent or
relieve the Custodian of its responsibilities or liabilities hereunder.
In connection with the operation of this Agreement, the Fund and the
Custodian may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by both parties and annexed hereto, but
no such provision shall be deemed to be an amendment of this Agreement.
This Agreement shall be governed and construed in accordance with the laws
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
This Agreement may be executed in several counterparts, each of which is an
original.
XXXXXXX MUTUAL FUNDS, INC.
By /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
Title: President
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ X.X. Mac[Illegible]
----------------------------------
Name: X.X. Mac[Illegible]
Title: Director Client Administration
