CUSTODY AGREEMENT
THIS AGREEMENT, is made as of April 1, 1999, by and between THE
XXXXXXX FUNDS, INC., a corporation organized under the laws of the State of
Maryland (the "Company"), and THE FIFTH THIRD BANK, a banking trust organized
under the laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Company desires that the Securities and cash of each of
the investment portfolios identified in Exhibit A hereto (such investment
portfolios and individually referred to herein as a "Fund" and collectively as
the "Funds"), be held and administered by the Custodian pursuant to this
Agreement; and
WHEREAS, the Company is an open-end management investment Company
registered under the Investment Trust Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Company and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1. "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Directors to give Oral Instructions and
Written Instructions on behalf of the Company and named in Exhibit B hereto or
in such resolutions of the Board of Directors, certified by an Officer, as may
be received by the Custodian from time to time.
1.2. "Board of Directors" shall mean the directors from time to time
serving under the Company's Articles of Incorporation and Bylaws as from time to
time amended.
1.3. "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300.31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4. "Business Day" shall mean any day recognized as a settlement day
by The New York Stock Exchange, Inc. and any other day for which the Fund
computes the net asset value of the Fund.
1.5. "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.6. "Officer" shall mean the President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of
the Company.
1.7. "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Company shall cause
all Oral Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Company. If Oral Instructions
vary from the Written Instructions which purport to confirm them, the Custodian
shall notify the of such variance but such Oral Instructions will govern unless
the Custodian has not yet acted.
1.8. "Custody Account" shall mean any account in the name of the
Company, which is provided for in Section 3.2 below.
1.9. "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10. "Securities Depository" shall mean The Participants Trust
Company or The Depository Trust Company and (provided that Custodian shall have
received a copy of a resolution of the Board of Directors, certified by an
Officer, specifically approving the use of such clearing agency as a depository
for the Company) any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities and Exchange Act of 1934
(the "1934 Act"), which acts as a system for the central handling of Securities
where all Securities of any particular class or series of an issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11. "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities, other
money market instruments or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that the
Custodian has the facilities to clear and to service.
1.12. "Shares" shall mean the units of beneficial interest issued by
the Company.
1.13. "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by one or more persons as the
Board of Directors shall have from time to time authorized, or (ii)
communications by telex or any other such system from a person or persons
reasonably believed by the Custodian to be Authorized, or
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(iii) communications transmitted electronically through the Institutional
Delivery System (IDS), or any other similar electronic instruction system
acceptable to Custodian and approved by resolutions of the Board of Directors, a
copy of which, certified by an Officer, shall have been delivered to the
Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1. Appointment. The Company hereby constitutions and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Company at any time during the period of this Agreement, provided that
such Securities or cash at all times shall be and remain the property of the
Company.
2.2. Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as herein after set forth and
in accordance with the 1940 Act as amended. Except as specifically set forth
herein, the Custodian shall have no liability and assumes no responsibility for
any non-compliance by the Company or a Fund of any laws, rules or regulations.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1. Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2. Custody Account. The Custodian shall open and maintain in its
trust department a custody account in the name of each Fund, subject only to
draft or order of the Custodian, in which the Custodian shall enter and carry
all Securities, cash and other assets of the Fund which are delivered to it.
3.3. Appointment of Agents. In its discretion, the Custodian may
appoint, and at any time remove, any domestic bank or trust company, which has
been approved by the Board of Directors and is qualified to act as a custodian
under the 1940 Act, as sub-custodian to hold Securities and cash of the Funds
and to carry out such other provisions of this Agreement as it may determine,
and may also open and maintain one or more banking accounts with such a bank or
trust company (any such accounts to be in the name of the Custodian and subject
only to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4. Delivery of Assets to Custodian. The Fund shall deliver, or cause
to be delivered, to the Custodian all of the Fund's Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time
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during such period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5. Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Fund shall deliver to the
Custodian a resolution of the Board of Directors, certified by an
Officer, authorizing and instructing the Custodian on an ongoing
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral consisting
of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian and the Custodian's account on the
books of the Book-Entry System and Securities Depository as the
case may be, with respect to Securities of a Fund maintained in a
Book-Entry System or Securities Depository shall, by book-entry,
or otherwise identify such Securities as belonging to the Fund.
(d) If Securities purchases by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian shall
pay for such Securities upon (i) receipt of advice from the
Book-Entry System or Securities Depository that such Securities
have been transferred to the Depository 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. If
Securities sold by the Fund are held in a Book-Entry System or
Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that payment for such Securities has
been transferred to the Depository Account, and (ii) the making
of any entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund.
(e) Upon request, the Custodian shall provide the Fund with copies of
any report (obtained by the Custodian from a Book-Entry System or
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Securities Depository in which Securities of the Fund is kept) on
the internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Company for any loss or damage
to the Company resulting (i) from the use of a Book-Entry System
or Securities Depository by reason of any negligence or willful
misconduct on the part of the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
sub-custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Company shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person for any loss or
damage to the Funds arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Company has been made whole for any such loss or damage.
3.6. Disbursement of Moneys from Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any sub-custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below in proper form for transfer, or if the purchase
of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set
forth in Section 3.5 above; (ii) in the case of options on
Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such sub-custodian) of evidence of
title thereto in favor of the Company or any nominee referred to
in Section 3.9 below; and (iv) in the case of repurchase or
reverse repurchase agreements entered into between the Company
and a bank which is a member of the Federal Reserve System or
between the Company and a primary dealer in U.S. Government
securities, against delivery of the purchased Securities either
in certificate form or through an entry crediting the Custodian's
account at a Book-Entry System or Securities Depository for the
account of the Fund with such Securities;
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(b) In connection with the conversation, exchange or surrender, as
set forth in Section 3.7(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Company, including but not limited to the following payments for
the account of a Fund: interest; taxes; administration,
investment management, investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal fees; and other
operating expenses of a Fund; in all cases, whether or not such
expenses are to be in whole or in part capitalized or treated as
deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Company, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with 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 Company;
(g) For transfer in accordance with the provisions of any agreement
among the Company, 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 Company;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purposes, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7. Delivery of Securities from Fund Custody Accounts. Upon receipt
of Proper Instructions, the Custodian shall release and deliver Securities from
a Custody Account but only in the following cases:
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(a) Upon the sale of Securities for the account of a Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of a Fund; provided that, in
any such case, the cash or other consideration is to be delivered
to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Company, the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of 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;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of a
Fund, but only against receipt of such collateral as the Company
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Company on behalf of a Fund requiring a pledge of assets by such
Fund, but only against receipt by the Custodian of the amounts
borrowed;
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(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Company or a
Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Company, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the 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 Company on
behalf of a Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Company on behalf of a 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 Company on behalf
of a Fund; or
(n) For any other proper corporate purposes, but only upon receipt,
in addition to Proper Instructions, of a copy of a resolution of
the Board of Directors, certified by an Officer, 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 naming the person or persons to
whom delivery of such Securities shall be made.
3.8. Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Company, the Custodian shall with respect to all Securities
held for a Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Company is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Company, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Company at such time, in such manner
and containing such information as is prescribed by the IRS;
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(f) Hold for a Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with sale, exchange, substitution, purchase, transfer
and other dealings with Securities and assets of the Fund.
3.9. Registration and Transfer of Securities. All Securities held for
a Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Company on behalf of a Fund, if
eligible therefor. All other Securities held for a Fund may be registered in the
name of the Company on behalf of such Fund, the Custodian, or any sub-custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof; provided, however, that such Securities are held
specifically for the account of the Company on behalf of a Fund. The Company
shall 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
any of the nominees hereinabove referred to or in the name of a Book-Entry
System or Securities Depository, any Securities registered in the name of a
Fund.
3.10. Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other
property held for the Company, including (i) journals or other
records of original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other
records) reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and
monies and Securities loaned (together with a record of the
collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and
interest accrued; and (iii) canceled checks and bank records
related thereto. The Custodian shall keep such other books and
records of the Company as the Company shall reasonably request,
or as may be required by the 1940 Act, including, but not limited
to Section 3.1 and Rule 31a-1 and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Company and in
compliance with
9
rules and regulations of the Securities and Exchange Commission,
(ii) be the property of the Company and at all times during the
regular business hours of the Custodian be made available upon
request for inspection by duly authorized officers, employees or
agents of the Company and employees or agents of the Securities
and Exchange Commission, and (iii) if required to be maintained
by Rule 31a-1 under the 1940 Act, be preserved for the periods
prescribed in Rule 31a-2 under the 0000 Xxx.
3.11. Fund Reports by Custodian. The Custodian shall furnish the
Company with a daily activity statement by Fund and a summary of all transfers
to or from the Custody Account on the day following such transfers. At least
monthly and from time to time, the Custodian shall furnish the Company with a
detailed statement, by Fund, of the Securities and moneys held for the Company
under this Agreement.
3.12. Other Reports by Custodian. The Custodian shall provide the
Company with such reports, as the Company may reasonably request from time to
time, on the internal accounting controls and procedures for safeguarding
Securities, which are employed by the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above.
3.13. Proxies and Other Materials. The Custodian shall cause all
proxies, if any, relating to Securities which are not registered in the name of
a Fund, to be promptly executed by the registered holder of such Securities,
without indication of the manner in which such proxies are to be voted, and
shall include all other proxy materials, if any, promptly deliver to the Company
such proxies, all proxy soliciting materials, which should include all other
proxy materials, if any, and all notices to such Securities.
3.14. Information on Corporate Actions. Custodian will promptly notify
the Company of the corporate actions, limited to those Securities registered in
nominee name and to those Securities held at a Depository or sub-custodian
acting as agent for Custodian. Custodian will be responsible only if the notice
of such corporate actions is published by Xcitek, DTC, or received by first
class from the transfer agent. For market announcements not yet received and
distributed by Custodian's services, Company will inform its custody
representative with appropriate instructions. Custodian will, upon receipt of
Company's response within the required deadline, affect such action for receipt
or payment for the Company. For those responses received after the deadline,
Custodian will affect such action for receipt or payment, subject to the
limitations of the agent(s) affecting such actions. Custodian will promptly
notify Company for put options only if the notice is received by first class
mail from the agent. The Company will provide or cause to be provided to
Custodian with all relevant information contained in the prospectus for any
security which has unique put/option provisions and provide Custodian with
specific tender instructions at least ten business days prior to the beginning
date of the tender period.
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ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1. Purchase of Securities. Promptly upon each purchase of Securities
for the Company, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any) or other units purchased, (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 of the person to whom such amount
is payable. The Custodian shall upon receipt of such Securities purchased by a
Fund pay out of the moneys held for the account of such Fund the total amount
specified in such Written Instructions to the person named therein. The
Custodian shall not be under any obligation to pay out moneys to cover the cost
of a purchase of Securities for a Fund, if in the relevant Custody Account there
is insufficient cash available to the Fund for which such purchase was made.
4.2. Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt for the account of the
Fund of the Securities purchased but in the absence of specific Written or Oral
Instructions to so pay in advance, the Custodian shall be liable to the Fund for
such Securities to the same extent as if the Securities had been received by the
Custodian.
4.3. Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any) or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Company as specified in such Written Instructions,
the Custodian shall deliver such Securities to the person specified in such
Written Instructions. Subject to the foregoing, the Custodian 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.
4.4. Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Company shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
4.5. Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the relevant Custody Account, prior to
actual receipt of final
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payment thereof, with (i) proceeds from the sale of Securities which it has been
instructed to deliver against payment, (ii) proceeds from the redemption of
Securities or other assets of the Company, and (iii) income from cash,
Securities or other assets of the Company. Any such credit shall be conditional
upon actual receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. The Custodian may, in its sole
discretion and from time to time, permit the Company to use the funds so
credited to its Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.6. Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Company to
facilitate the settlement of a Company transaction on behalf of a Fund in its
Custody Account. Any such advance shall be repayable immediately upon demand by
Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
Transfer of Funds. From such funds as may be available for the purpose
in the relevant Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of a Fund, the Custodian
shall wire each amount specified in such Proper Instructions to or through such
bank as the Company may designate with respect to such amount in such Proper
Instructions. Upon effecting payment or distribution in accordance with Proper
Instruction, the Custodian shall not be under any obligation or have any
responsibility thereafter to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account.
(a) in accordance with the provisions of any agreement among the
Company, the Custodian and a broker-dealer registered under the
1934 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 arrangement in connection with
transactions by the Company,
12
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by a Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Company with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1. Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligation under this Agreement, and shall
be without liability to the Company for any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim unless such
loss, damages, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian's cumulative liability
within a calendar year shall be limited with respect to the Company or any party
claiming by, through or on behalf of the Company for the initial and all
subsequent renewal terms of this Agreement, to the lessor amount of (a) the
actual damages sustained by the Company, (actual damages for uninvested funds
shall be the overnight Feds fund rate), or (b) to an amount not to exceed
one-half of the net fees paid to the Custodian within the prior three calendar
months. The Custodian shall be entitled to rely on and may act upon advice of
counsel on all matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice. The Custodian shall promptly notify
the Company of any action taken or omitted by the Custodian pursuant to advice
of counsel. The Custodian shall not be under any obligation at any time to
ascertain whether the Company is in compliance with the 1940 Act, the
regulations thereunder, the provisions of the Company's charter documents or
by-laws, or its investment objectives and policies as then in effect.
7.2. Actual Collection Required. The Custodian shall not be liable
for, or considered to be the custodian of, any cash belonging to the Company or
any money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
13
7.3. No Responsibility for title, etc. 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 or delivered by it pursuant to this Agreement.
7.4. Limitation on duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Company if such Securities
are in default or payment is not made after due demand or presentation.
7.5. Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and/or any Written Instructions
actually received by it pursuant to this Agreement.
7.6. Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7. Cooperation. The Custodian shall cooperate with and supply
necessary information, by the Company, to the entity or entities appointed by
the Company to keep the books of account of the Company and/or compute the value
of the assets of the Company. The Custodian shall take all such reasonable
actions as the Company may from time to time request to enable the Company to
obtain, from year to year, favorable opinions from the Company's independent
accountants with respect to the Custodian's activities hereunder in connection
with (a) the preparation of the Company's report on Form N-1-A and Form N-SAR
and any other reports required by the Securities and Exchange Commission, and
(b) the fulfillment by the Company of any other requirements of the Securities
and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification. The Company shall indemnify and hold harmless
the Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and
any nominee of the Custodian or of such sub-custodian from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Company, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above, or in the case of any such sub-custodian, from
the performance of its obligations under such custody agreement, provided that
neither the Custodian nor any such sub-custodian shall be indemnified and held
harmless from and
14
against any such loss, damage, cost, expense, liability or claim arising from
the Custodian's negligence, bad faith or willful misconduct.
8.2. Indemnity to be Provided. If the Company requests the Custodian
to take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Company shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Company shall be liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes, acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1. Effective Period. This Agreement shall become effective as of
the date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2. Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall not be less than ninety (90) days after the date of the
giving of a notice. If a successor custodian shall have been appointed by the
Board of Directors, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Company and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of or for the
benefit of the Company at the successor custodian, provided the Company shall
have paid to the Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Company may at any time immediately terminate this Agreement in
the event
15
of the appointment of a conservator or receiver for the Custodian by regulatory
authorities in the State of Ohio or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3. Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Company on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held by Custodian under this Agreement and to transfer to an
account of or for the Company at such bank or trust company all Securities of
the Company held in a Book-Entry System or Securities Depository. Upon such
delivery and transfer, such bank or trust company shall be the successor
custodian under this Agreement and the Custodian shall be relieved of all
obligations under this Agreement. If, after reasonable inquiry, Custodian cannot
find a successor custodian as contemplated in this Section 10.3, then Custodian
shall have the right to deliver to the Company all Securities and cash then
owned by the Company and to transfer any Securities held in a Book-Entry System
or Securities Depository to an account of or for the Company. Thereafter, the
Company shall be deemed to be its own custodian with respect to the Company and
the Custodian shall be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Company and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Funds are set forth in Exhibit B
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Company is a corporation organized under the laws of the State of
Maryland. The obligations of the Company entered into in the name of the Company
or on behalf thereof by any of the Directors, officers, employees or agents are
made not individually, but in such capacities, and are not binding upon any of
the Directors, officers, employees, agents or shareholders of the Company or the
Funds personally, but bind only the assets of the Company, and all persons
dealing with any of the Funds of the Company must look solely to the assets of
the Company belonging to such Fund for the enforcement of any claims against the
Company.
16
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the receipt at the address set forth after its name herein
below:
To the Company:
--------------
The Xxxxxxx Funds, Inc.
0000 Xxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Custodian:
----------------
The Fifth Third Bank
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Area Manager - Trust Operations
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2. References to Custodian. The Company shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statement of additional information or its registration statement
for the Company and such other printed matter as merely identifies Custodian as
custodian for the Company. The Company shall submit printed matter requiring
approval to Custodian in draft form, allowing sufficient time for review by
Custodian and its counsel prior to any deadline for printing.
17
14.3. No Waiver. No failure by either party hereto to exercise and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4. Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5. Counterparts. This Agreement maybe executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6. Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
14.7. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8. Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunder duly authorized, all as of the day and year first
above written.
ATTEST: THE XXXXXXX FUNDS, INC.
______________________________ By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Its: Xxxxxx X. Xxxxxxx, President
ATTEST: THE FIFTH THIRD BANK
______________________________ By:________________________________
Its:_______________________________
18
Dated: 3-11 , 1999
-------
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
THE XXXXXXX FUNDS, INC.
AND THE FIFTH THIRD BANK
3-11 , 1999
------
Name of Fund Date
------------ ----
Xxxxxxx Growth Fund 3-11-99
THE XXXXXXX FUNDS, INC.
By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Its: Xxxxxx X. Xxxxxxx, President
THE FIFTH THIRD BANK
By:________________________________
Its:_______________________________
19
Dated: 3-11 , 1999
-----
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
THE XXXXXXX FUNDS, INC.
AND THE FIFTH THIRD BANK
3-11 , 1999
------
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Company to Administer each Custody Account.
Name Signature
---- ---------
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxx /s/ Xxxxxxx Xxxxx
-----------------------------------
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
------------------------------------ -----------------------------------
20
SIGNATURE RESOLUTION
--------------------
RESOLVED, That all of the following officers of THE XXXXXXX FUNDS, INC. and any
of them, namely the Chairman, President, Vice President, Secretary and
Treasurer, are hereby authorized as signers for the conduct of business for and
on behalf of the Funds with THE FIFTH THIRD BANK:
Xxxxxx X. Xxxxxxx CHAIRMAN /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxx X. Xxxxxxx PRESIDENT /s/ Xxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx Xxxxx VICE PRESIDENT /s/ Xxxxxxx Xxxxx
------------------------------
________________________ VICE PRESIDENT ______________________________
________________________ VICE PRESIDENT ______________________________
________________________ VICE PRESIDENT ______________________________
________________________ TREASURER ______________________________
________________________ SECRETARY ______________________________
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Company for the purpose of effecting securities transactions:
________________________ ASSISTANT TREASURER ______________________________
The undersigned officers of THE XXXXXXX FUNDS, INC. hereby certify that the
foregoing is within the parameters of a Resolution adopted by Directors of the
Company in a meeting held ______________, 1999, directing and authorizing
preparation of documents and to do everything necessary to effect the Custody
Agreement between THE XXXXXXX FUNDS, INC. and THE FIFTH THIRD BANK.
By:/s/ Xxxxxx X. Xxxxxxx
--------------------------------
Its: Xxxxxx X. Xxxxxxx, President
By:/s/ Xxxxxxx Xxxxx
--------------------------------
Its: Xxxxxxx Xxxxx, Vice Chairman
21
FIFTH THIRD BANK
MUTUAL FUND CUSTODY FEE SCHEDULE
XXXXXXX GROWTH FUND
-------------
PER UNIT
FEE
-------------
II Basic Per Account Fee
Annual Asset Based Fees
---------------------------------------------------------------------
Under $25 Million 1 bp
---------------------------------------------------------------------
$25 - $100 Million .75 bp
---------------------------------------------------------------------
$100 - $200 Million .5bp
---------------------------------------------------------------------
Over $200 Million .25bp
---------------------------------------------------------------------
Minimum $2,400.00
---------------------------------------------------------------------
II Security Transaction Fees
---------------------------------------------------------------------
DTC/Fed Eligible $9.00
---------------------------------------------------------------------
Physical 25.00
---------------------------------------------------------------------
Amortized Securities 25.00
---------------------------------------------------------------------
Options 25.00
---------------------------------------------------------------------
Mutual Funds 15.00
---------------------------------------------------------------------
Foreign - Euroclear & Cedel 50.00
---------------------------------------------------------------------
Foreign - Other TBD
--------------------------------------------------------------------
III Systems
---------------------------------------------------------------------
Automated Securities Workstation $150.00
$200.00 Initial Setup
---------------------------------------------------------------------
Mainframe-To-Mainframe 150.00
$200.00 Initial Setup
---------------------------------------------------------------------
ACCESS Single Account 50.00
Multiple Accounts 100.00
---------------------------------------------------------------------
IV Miscellaneous Fees
---------------------------------------------------------------------
Principal & Interest Collection (on amortized securities) $5.00
---------------------------------------------------------------------
Wire Transfers (In/Out) 7.00
---------------------------------------------------------------------
Check Requests 6.00
---------------------------------------------------------------------
Special Services - per hr. fee 75.00
---------------------------------------------------------------------
