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CUSTODIAN CONTRACT
Between
IMPERIAL SPECIAL INVESTMENTS, INC.
and
IMPERIAL BANK
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TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held by It ...............4
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2. Duties of the Custodian With Respect to Property of the Funds Held By the
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Custodian ...........................................................4
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2.1 Holding Securities ............................................4
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2.2 Delivery of Securities ........................................5
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2.3 Registration of Securities ....................................7
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2.4 Bank Accounts .................................................7
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2.5 Payments for Shares ...........................................7
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2.6 Availability of Federal Funds ................................8
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2.7 Collection of Income ..........................................8
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2.8 Payment of Fund Moneys.........................................8
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2.9 Liability for Payment in Advance of Receipt of Securities
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Purchased. ....................................................9
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2.10 Payments for Repurchases or Redemptions of Shares of a Fund....9
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2.11 Appointment of Agents..........................................10
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2.12 Deposit of Fund Assets in Securities System....................10
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2.13 Segregated Account.............................................11
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2.14 Joint Repurchase Agreements....................................11
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2.15 Ownership Certificates for Tax Purposes........................12
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2.16 Proxies........................................................12
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2.17 Communications Relating to Fund Portfolio Securities...........12
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2.18 Proper Instructions............................................12
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2.19 Actions Permitted Without Express Authorization................13
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2.20 Evidence of Authority..........................................13
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2.21 Notice to Fund by Custodian Regarding Cash Movement............13
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3. Duties of Custodian With Respect to the Books of Account and Calculation
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of Net Asset Value and Net Income....................................13
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4. Records..............................................................14
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5. Opinion of Fund's Independent Public Accountants.....................14
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6. Reports to Fund by Independent Public Accountants....................14
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7. Compensation of Custodian............................................15
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8. Responsibility of Custodian..........................................15
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9. Effective Period, Termination and Amendment..........................16
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10. Successor Custodian..................................................17
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11. Interpretive and Additional Provisions...............................17
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12. California Law to Apply..............................................17
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13. Notices..............................................................18
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14. Counterparts.........................................................18
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15. Limitations of Liability.............................................18
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CUSTODIAN CONTRACT
This Contract between IMPERIAL SPECIAL INVESTMENTS, INC., (the "Fund"), a
California corporation, organized and existing under the laws of the state of
California, having its principal place of business at 0000 X. Xx Xxxxxxx Xxxx.,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, and IMPERIAL BANK, a California banking
corporation, having its principal place of business at 0000 X. Xx Xxxxxxx Xxxx.,
Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, hereinafter called the "Custodian,"
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Fund. Except as otherwise expressly provided herein, the securities
and other assets of the Fund shall be segregated from all other persons
and entities. The Fund will deliver to the Custodian all securities and
cash owned by the Fund and all payments of income, payments of principal
or capital distributions received by the Fund with respect to all
securities owned by the Fund from time to time, and the cash consideration
received by the Fund for shares ("Shares") of common stock of the Fund as
may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Fund held or received by the Fund and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more
sub-custodians upon the terms specified in the Proper Instructions.
2. Duties of the Custodian With Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than securities which are maintained pursuant to
Section 2.12 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System," or securities
which are subject to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall maintain records of all
receipts, deliveries and locations of such securities, together with a
current inventory thereof, and shall conduct periodic physical inspections
of certificates representing stocks, bonds and other securities held by it
under this Contract in such manner as the Custodian shall determine from
time to time to be advisable in order to verify the accuracy of such
inventory. With respect to securities held by any agent appointed pursuant
to Section 2.11 hereof, and with respect to securities held by any
sub-custodian appointed pursuant to Section 1 hereof, the Custodian may
rely upon certificates from such agent as to the
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holdings of such agent and from such sub-custodian as to the holdings of
such sub-custodian, it being understood that such reliance in no way
relieves the Custodian of its responsibilities under this Contract. The
Custodian will promptly report to the Fund the results of such
inspections, indicating any shortages or discrepancies uncovered thereby,
and take appropriate action to remedy any such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only
in the following cases:
(1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund, in accordance with the
provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery custom"; provided that in any such
case, the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own failure to act in accordance with the standard of
reasonable care or any higher standard of care imposed upon the
Custodian by any applicable law or regulation if such above-stated
standard of reasonable care were not part of this Contract;
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(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
(9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(10) For delivery in connection with any loans of portfolio securities of
the Fund, but only against receipt of adequate collateral in the
form of (a) cash, in an amount specified by the Fund, (b)
certificated securities of a description specified by the Fund,
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, or (c) securities of a description specified by the
Fund, transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings requiring
a pledge of assets by the Fund, but only against receipt of amounts
borrowed, except that in cases where additional collateral is
required to secure a borrowing already made, further securities may
be released for the purpose;
(12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under
the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") and a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions for the Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transaction for a
Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
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(15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Executive Committee of the Fund signed by an officer of the Fund
and certified by its Secretary or an Assistant Secretary, specifying
the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery
of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies affiliated with the Fund, or in
the name or nominee name of any agent appointed pursuant to Section 2.11
or in the name or nominee name of any sub-custodian appointed pursuant to
Section 1. All securities accepted by the Custodian on behalf of the Fund
under the terms of this Contract shall be in "street names" or other good
delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained in a joint repurchase account with other affiliated funds
pursuant to Section 2.14 of this Contract or by a particular Fund in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended, (the "1940 Act"). Funds held
by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Board of
Directors ("Board") of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian for the Fund and shall be
withdrawable by the Custodian only in that capacity. If requested by the
Fund, the Custodian shall furnish the Fund, not later than twenty (20)
days after the last business day of each month, an internal reconciliation
of the closing balance as of that day in all accounts described in this
section to the balance shown on the daily cash report for that day
rendered to the Fund.
2.5 Payments for Shares. The Custodian shall make such arrangements with the
Transfer Agent of the Fund as will enable the Custodian to receive the
cash consideration due to the Fund and will deposit into the Fund's
account such payments as are received from the Transfer Agent. The
Custodian will provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the respective Fund.
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2.6 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall make federal funds available to the
Fund as of specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks, clearing house funds, and other
non-federal funds received in payment for Shares of the Fund which are
deposited into the Fund's accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to
which the Fund shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. The collection of income due
the Fund on securities loaned pursuant to the provisions of Section
2.2 (10) shall be the responsibility of the Fund. The Custodian will
have no duty or responsibility in connection therewith, other than
to provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely delivery to
the Custodian of the income to which the Fund is properly entitled.
(2) The Fund shall promptly notify the Custodian whenever income due on
securities is not collected in due course and will provide the
Custodian with monthly reports of the status of past due income. The
Fund will furnish the Custodian with a weekly report of accrued/past
due income for the Fund. Once an item is identified as past due and
the Fund has furnished the necessary claim documentation to the
Custodian, the Custodian will then initiate a claim on behalf of the
Fund. The Custodian will furnish the Fund with a status report
monthly unless the parties-otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of the Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the 1940 Act to act as a custodian and has been
designated by the Custodian as its agent for this purpose) "pursuant
to Section 2.11 hereof" registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer, (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth
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in Section 2.12 hereof or (c) in the case of repurchase agreements
entered into between the Fund and any other party, (i) against
delivery of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities owned
by the Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of the Fund issued by the
Fund as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest; taxes; management, accounting, transfer agent
and legal fees; and operating expenses of the Fund, whether or not
such expenses are to be in whole or part capitalized or treated as
deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the
Board of Directors 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
purpose, and naming the person or persons to whom such payment is to
be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased, in the absence of specific written instructions from
the Fund to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the securities had
been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose of repurchasing or redeeming
Shares of the Fund, but subject to the limitations of the Certificate of
Incorporation and any applicable votes of the Board of the Fund pursuant
thereto, the Custodian shall, upon receipt of instructions from the
Transfer Agent, make funds available for payment to holders of shares of
the Fund who have delivered to the Transfer Agent a request for redemption
or repurchase
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of their shares including without limitation through bank drafts,
automated clearing-house facilities, or by other means. In connection with
the redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act and any applicable
state law or regulation, to act as a custodian, as its agent to carry out
such of the provisions of this Section 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Exchange Act, which acts as a securities depository, or
in the book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies, collectively referred to herein as
"Securities System", in accordance with applicable Federal Reserve Board
and SEC rules and regulations, if any, and subject to the following
provisions:
(1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund in the form of a written advice
or notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System
for the account of the Fund.
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(4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System;
(5) The Custodian shall have received the initial certificate, required
by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not relieve
the Custodian from using reasonable care and diligence in making use
of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Custodian pursuant to Section 2.12 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 for
the Fund, (ii) for purpose of segregating cash or government securities in
connection with options purchased, sold or written for the Fund or
commodity futures contracts or options thereon purchased or sold for the
Fund, (iii) for the purpose of compliance by the Fund with the procedures
required by any release or releases of the SEC 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 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.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper Instructions, the
Custodian shall deposit and/or maintain any assets of the Fund and any
affiliated funds which are
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subject to joint repurchase transactions in an account established solely
for such transactions for the Fund and its affiliated funds. For purposes
of this Section 2.14, "affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries or affiliates of
Federated Investors serve as investment advisers, distributors or
administrators in accordance with applicable exemptive orders from the
SEC. The requirements of segregation set forth in Section 2.1 shall be
deemed to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund and the investment adviser of the Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund) received
by the Custodian from issuers of the securities being held for the Fund.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Fund and the investment adviser of the Fund all written
information received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Fund or the investment adviser of the
Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the
Custodian in writing at least three business days prior to the date on
which the Custodian is to take such action. However, the Custodian shall
nevertheless exercise its best efforts to take such action in the event
that notification is received three business days or less prior to the
date on which action is required. For securities which are not held in
nominee name, the Custodian will act as a secondary source of information
and will not be responsible for providing corporate action notification to
the Fund.
2.18 Proper Instructions. Proper Instructions as used throughout this Section 2
means a writing signed or initialed by one or more person or persons as
the Board shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person previously
authorized in Proper Instructions to give such instructions with respect
to the
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transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of the Fund
accompanied by a detailed description of procedures approved by the Board,
Proper Instructions may include communications effected directly between
electromechanical or electronic devices provided that the Board and the
Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
2.19 Actions Permitted Without Express Authorization. The Custodian may in its
discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund in such form that it may be allocated to the Fund;
(2) surrender securities in temporary form for securities in definitive
form;
(3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Fund.
2.20 Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or
paper reasonably believed by it to be genuine and to have been properly
executed on behalf of the Fund. The Custodian may receive and accept a
certified copy of a vote of the Board of the Fund as conclusive evidence
(a) of the authority of any person to act in accordance with such vote or
(b) of any determination of or any action by the Board pursuant to the
Certificate of Incorporation as described in such vote, and such vote may
be considered as in full force and effect until receipt by the Custodian
of written notice to the contrary.
2.21 Notice to Fund By Custodian Regarding Cash Movement. The Custodian will
provide timely notification to the Fund of any receipt of cash, income or
payments to the Fund and the release of cash or payment by the Fund.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of the Fund to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding Shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net
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asset value per share. If so directed, the Custodian shall also calculate daily
the net income of the Fund as described in the Fund's currently effective
private offering memorandum ("Memorandum") and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to Section
31 thereof and Rules 3la-1 and 3la-2 thereunder, and specifically including
identified cost records used for tax purposes. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and upon notice to the Fund, employees and agents of the SEC.
In the event of termination of this Contract, the Custodian will deliver all
such records to the Fund to a successor Custodian, or to such other person as
the Fund may direct. The Custodian shall supply daily to the Fund a tabulation
of securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations. In addition, the Custodian shall electronically transmit daily to
the Fund information pertaining to security trading and other investment
activity and all other cash activity of the Fund.
5. Opinion of Fund's Independent Public Accountants.
The Custodian shall take all reasonable action to obtain from year to year
favorable opinions from independent public accountants with respect to its
activities hereunder in connection with the preparation of the Fund's
registration statement, periodic reports, or any other reports to the SEC and
with respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants for the Fund
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 for the Fund under this
Contract; such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Fund, to provide reasonable assurance that any
material inadequacies would be disclosed by such examination and, if there are
no such inadequacies, the reports shall so state.
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7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian, and as reflected on Schedule A attached hereto.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the Custodian shall
be held to any higher standard of care which would be imposed upon the Custodian
by any applicable law or regulation if such above stated standard of reasonable
care was not part of this Contract. The Custodian shall be entitled to rely on
and may act upon advice of counsel for the Fund on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice, provided that such action is not in violation of applicable federal or
state laws or regulations, and is in good faith and without negligence. Subject
to the limitations set forth in Section 15 hereof, the Custodian shall be kept
indemnified by the Fund but only from the assets of the Fund involved in the
issue at hand and be without liability for any action taken or thing done by it
that is reasonably related to its responsibility to carry out the terms and
provisions of this Contract in accordance with the above standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Fund may be asked
to indemnify or save the Custodian harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification.
The Fund shall have the option to defend the Custodian against any claim which
may be the subject of this indemnification, and in the event that the Fund so
elects it will so notify the Custodian and thereupon the Fund shall take over
complete defense of the claim, and the Custodian shall in such situation
initiate no further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund. If the Fund requires
the Custodian to take any action with respect to securities, which action
involves the payment of money or which action may, in the reasonable opinion of
the Custodian, result in the Custodian or its nominee assigned to the Fund being
liable for the payment of money or incurring liability of some other form, the
Custodian may request the Fund, as a prerequisite to requiring the Custodian to
take such action, to provide indemnity to the Custodian in an amount and form
satisfactory to the Custodian. Subject to the limitations set forth in Section
15 hereof, the Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including reasonable counsel fees) (referred to herein as
authorized charges) incurred
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or assessed against it or its nominee in connection with the performance of this
Contract, except such as may arise from it or its nominee's own failure to act
in accordance with the standard of care set forth herein or any higher standard
of care which would be imposed upon the Custodian by any applicable law or
regulation if such above-stated standard of care were not part of this Contract.
To secure any authorized charges and any advances of cash or securities made by
the Custodian to or for the benefit of the Fund for any purpose which results in
the Fund incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the Fund hereby
grants to the Custodian a security interest in and pledges to the Custodian
securities held for the Fund by the Custodian in an amount not to exceed 10
percent of the Fund's gross assets, the specific securities to be designated in
writing from time to time by the Fund or the Fund's investment adviser. Should
the Fund fail to make such designation, or should it instruct the Custodian to
make advances exceeding the percentage amount set forth above and should the
Custodian do so, the Fund hereby agrees that the Custodian shall have a security
interest in all securities or other property purchased for the Fund with the
advances by the Custodian, which securities or property shall be deemed to be
pledged to the Custodian, and the written instructions of the Fund instructing
their purchase shall be considered the requisite description and designation of
the property so pledged for purposes of the requirements of the Uniform
Commercial Code. Should the Fund fail to repay promptly any authorized charges
or advances of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian shall be
entitled to use available cash and to dispose of pledged securities and property
as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System as required in each case by Rule 17f-4 under the
1940 Act; provided further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
or any provision of the Certificate of Incorporation, and further provided, that
the Fund may at any time by action of its Board (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its reasonable costs, expenses and disbursements
incurred in connection with its performance of this agreement through the date
of termination.
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10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Fund, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder for the Fund and shall transfer to separate
accounts of the successor custodian all of the Fund's securities held in a
Securities System. If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote. In the
event that no written order designating a successor custodian or certified copy
of a vote of the Board shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the Custodian shall
have the right to deliver to a bank or trust company, which is a 'bank' as
defined in the 1940 Act, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $100,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract for the Fund and to transfer to
separate accounts of such successor custodian all of the Fund's securities held
in any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Certificate of Incorporation. No interpretive or additional provisions made
as provided in the preceding sentence shall be deemed to be an amendment of this
Contract.
12. California Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of California.
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13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Fund at 0000 X. Xx Xxxxxxx
Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, or to the Custodian at 0000 X. Xx
Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxxxx 00000, or to such other address
as the Fund or the Custodian may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more counterparts,
each which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability as
set forth in paragraph 9 of the Certificate of Incorporation and agrees that the
obligations and liabilities assumed by the Fund pursuant to this Contract,
including, without limitation, any obligation or liability to indemnify the
Custodian pursuant to Section 8 hereof, shall be limited in any case to the Fund
and its assets and that the Custodian shall not seek satisfaction of any such
obligation from the shareholders of the Fund, from its shareholders, or from the
Directors, Officers, employees or agents of the Fund, or any of them.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 28th day of April, 2000.
IMPERIAL SPECIAL INVESTMENTS, INC.
/s/ Xxxxxx Xxxxx
-----------------------------------------------
President
IMPERIAL BANK
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------------
Secretary
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Custodian Contract
Schedule A
For its services under the Custodian Contract, the Custodian will receive
an annual fee as follows:
For Custody Services
0.02% of the average daily net assets of the Fund. There is no additional fee
for custody services related to limited liability company interests.
All fees are to be accrued daily and paid monthly.
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