Exhibit (g)(2)
CUSTODIAN CONTRACT
This Contract between Xxxxxxx Mutual Funds, Inc. (the "Fund"), a
Maryland corporation organized under Articles of Incorporation dated March 17,
1988, as the same may be amended from time to time (the "Charter"), and State
Street Bank and Trust Company (the "Custodian"),
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
I. Employment of Custodian and Property to be Held by It; Application of
Contract
The Fund hereby employs the Custodian as the Custodian of its assets,
including securities intended to be held within the United States ("domestic
securities") and securities intended to be held outside the United States
("foreign securities"), pursuant to the provisions of the Charter and the
By-Laws of the Fund. The Fund agrees to deliver to the Custodian all securities
and cash owned by it, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Fund from time to time, and the cash consideration received by it for such new
or treasury shares of capital stock, with $.01 par value, ("Shares") of all
series whenever created (each a "Portfolio") 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.
The Custodian may from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Directors of the Fund, and provided that the Custodian shall have
no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodians
for the Fund's securities and other assets the foreign banking institutions and
foreign securities depositories designated in Schedule "A" hereto, but only in
accordance with the provisions of Section Q or Article II hereof.
The Fund may from time to time employ a special custodian in connection
with certain repurchase agreements entered into by the Fund, with the terms of
such employment to be governed by a special custodian agreement between the Fund
the special custodian. However, the Fund agrees not to employ any such special
custodian until the Fund and the Custodian have entered into a master repurchase
agreement or other agreement which sets forth the terms governing the
relationship, including the method of transfer of securities and cash, between
the Custodian and such special custodian.
State Street acknowledges that additional Portfolios may be established
and that Portfolios may be terminated, from time to time by action of the Board
of Directors of the Fund. If the context requires and unless otherwise
specifically provided herein, the term "Fund" as used in this Contract shall
mean in addition each subsequently created separate Portfolio.
II. Duties of the Custodian with Respect to Property of the Fund Held by
the Custodian
"Holding Securities. The Custodian shall hold and physically segregate
in a separate account for each series ("Portfolio") of the Fund all non-cash
property allocated to each portfolio, including all securities owned by the Fund
and allocated to each Portfolio except that (a) securities which are maintained
pursuant to Section II.L. in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of
Treasury, collectively referred to herein as "Securities System", shall be
identified as belonging to a specified Portfolio and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section II.L.1., shall be identified as
belonging to a specified Portfolio."
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 or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") 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 L hereof;
4) In the case of a sale effected through the Direct Paper System
in accordance with the provisions of Section L.1 hereof;
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5) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
6) 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;
7) 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 K of Article II hereof or into
the name or nominee name of any sub-custodian appointed
pursuant to Article I hereof; 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;
8) 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
negligence or willful misconduct;
9) 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;
10) In the case of warrants, rights or similar securities, for 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;
11) For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
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by the United States government, its agencies or
instrumentalities; except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian may deliver
securities prior to the credit of such collateral, provided
that the Custodian shall promptly notify the Fund if such
collateral is not credited;
12) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt of amounts borrowed;
13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of the National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
14) 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 transactions by the Fund;
15) Upon receipt of instructions from the transfer agent for the
Fund (the "Transfer Agent"), for delivery to the Transfer
Agent or to holders of shares in connection with distributions
in kind, as may be described from time to time in the Fund's
currently effective prospectus, in satisfaction of requests by
holders of Shares for repurchase or redemption; and
16) For any other proper corporate purposes, but only upon receipt
of, in addition to proper instructions, a certified copy of a
resolution of the Directors or of the Executive Committee
signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purposes to be proper
corporate purposes, and naming the person or persons to whom
delivery of such securities shall be made.
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C. Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or nominee name
of any agent appointed pursuant to Section K of Article II hereof or in
the name or nominee name of any sub-custodian or special custodian
appointed pursuant to Article I hereof. All securities accepted by the
Custodian on behalf of the Fund under the terms of this Contract shall
be in "street" or other good delivery form.
D. Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940, as amended. Funds held by the
Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940, as amended, 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 Directors of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
E. Payments for Shares. The Custodian shall receive from the distributor
of the Fund's Shares or from the Transfer Agent and deposit into the
Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will
provide timely notification to the Fund and the Transfer Agent of any
receipt by it of payments for Shares of the Fund.
F. Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the
receipt of proper instructions, which may be continuing instructions
when deemed appropriate by the parties,
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1) invest in such instruments as may be set forth in
such instructions on the same day as received all
federal funds received after a time agreed upon
between the Custodian and the Fund; and
2) 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
received in payment for Shares of the Fund which are
deposited into the Fund's account.
G) Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to United States registered
securities held hereunder to which the Fund shall be entitled either by
law or pursuant to custom in the securities business, and shall collect
on a timely basis all income and other payments with respect to United
States bearer securities if, on the date of payment by the Issuer, such
securities are held by the Custodian or agent thereof and shall credit
such income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder.
Income due the Fund on United State securities loaned
pursuant to the provisions of Section B (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith except as set forth in the
preceding paragraph, 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.
H. Payment of Fund Monies. Upon receipt of proper instructions,
which may be continuing instructions when deemed appropriate
by the parties, the Custodian shall pay out monies of the Fund
in the following cases only:
1) Upon the purchase of securities, options, 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 such
options, futures contracts or options on futures
contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United
States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as
a custodian and has been designated by the Custodian
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as its agent for this purpose) registered in the name
of the Fund or in the name of a nominee of the
Custodian referred to in Section II.C hereof or in
proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in
accordance with the conditions set forth in Section
II.L. hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the
conditions set forth in Section II.L.1; or (d) in the
case of repurchase agreements entered into between
the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form
or through an entry crediting the Custodian's account
in which it holds securities as a fiduciary,
custodian or otherwise for customers at the Federal
Reserve Bank with such securities or (ii) in the case
of purchase by the Fund of securities owned by State
Street Bank and Trust Company ("State Street") for
its own account, against (A) delivery of the receipt
evidencing purchase by the Fund, (B) earmarking
certificates for such securities to show ownership by
the Fund or transfer of such securities from State
Street's proprietary account at the Federal Reserve
Bank to its account described in (i) above, unless
the securities are already held in the latter
account, (C) the entry on the records of State Street
showing that such securities are held by the Fund,
and (D) delivery of written evidence of the agreement
of State Street to repurchase such securities from
the Fund; provided that, upon receipt of Proper
Instructions, the Custodian shall transfer to another
bank or trust company qualified to act as a custodian
under the Investment Company Act of 1940, as amended,
securities held in a Securities System and purchased
from State Street subject to State Street's agreement
to repurchase such securities;
2) In connection with conversion, exchange or surrender
of securities owned by the Fund as set forth in
Section B of Article II hereof;
3) For the redemption or repurchase of Shares issued by
the Fund as set forth in Section J of Article II
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
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agent and legal fees, and operating expenses of the
Fund whether or not such expenses are to be in whole
or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to
the governing documents of the Fund;
6) For the payment of the amount of dividends received
in respect of securities sold short;
7) For any other proper purposes, but only upon receipt
of, in addition to proper instructions, a certified
copy of a resolution of the Board of Directors or of
the Executive Committee 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.
I. Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of domestic securities
for the account of the Fund is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same extent as
if the securities had been received by the Custodian, except that in
the case of repurchase agreements entered into by the Fund with a bank
which is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safe-keeping receipt, provided that
such securities have in fact been so transferred by book-entry.
J. Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available for the purpose but subject to the
limitations of the Charter and any applicable votes of the Board of
Directors 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 who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian is authorized upon receipt of instructions from the Transfer
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Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders.
K. Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company, which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article II as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of any of its responsibilities or liabilities
hereunder.
L. Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities Systems" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep 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 have 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
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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. 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 on the next business day.
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 or
annual certificate, as the case may be, required by
Article IX hereof.
6) Anything to the contrary in this Contract
not-withstanding, 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 any 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.
L.1 "Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by the Fund for which the custodian
acts as issuing and paying agent for the direct issue of commercial paper by and
for issuers through the Custodian's book-entry system, referred to herein as the
"Direct Paper System", subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of
Proper Instructions;
2) The Custodian may keep securities of the Fund in the
Direct Paper System only if such securities are
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represented in an account ("Account") of the
Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to
securities of the Fund which are maintained in the
Direct Paper System shall identify by Portfolio by
book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for
the account of the Fund upon the making of an entry
on the records of the Custodian to reflect such
payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of
an entry on the records of the
Custodian to reflect such transfer and receipt of
payment for the account of the Fund;
5) 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, of Direct
Paper on the next business day following such
transfer and shall furnish to the Fund copies of
daily transaction sheets reflecting each day's
transactions in the Direct Paper System for the
account of the Fund; and
6) The Custodian shall provide the Fund with any report
on its system of internal accounting control
regarding the Direct Paper System as the Fund may
reasonably request from time to time."
M. Segregated Account. The Custodian shall upon receipt of proper
instructions, which may be standing 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 L hereof, (i) in accordance with the
provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the
NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
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Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by the
Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered 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 Directors or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
N. Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all U.S. 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.
O. 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
material and all notices to such securities.
P. Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of 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 or from any foreign
sub-custodians employed pursuant to Section Q hereof. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian (or received by
any foreign sub-custodian and transmitted to 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 desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the
Custodian at least three business days (five days in the case of
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foreign securities) prior to the date on which the Custodian is to take
such action.
Q. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
1) Appointment of Foreign Sub-Custodian. The Custodian is
authorized and instructed to employ as sub-custodians for the
Fund's securities and other assets maintained outside of the
United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto
("foreign sub-custodians"). Upon receipt of Proper
Instructions, together with a certified resolution of the
Fund's Board of Directors, the Custodian and the Fund may
agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodians. Upon receipt
of Proper Instructions from the Fund the Custodian shall cease
the employment of anyone or more of such sub-custodians for
maintaining custody of the Fund's assets.
2) Assets to be Held. The Custodian shall limit the securities
and other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities," as defined in
paragraph (c)(1) of Rule 17f-5 under the Investment Company
Act of 1940, and (b) cash and cash equivalents in such amounts
as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities
transactions.
3) Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund, assets
of the Fund shall be maintained in foreign securities
depositories only through arrangements implemented by the
foreign banking institutions serving as sub-custodians
pursuant to the terms hereof.
4) Segregation of Securities. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities of the
Fund held by each foreign sub-custodian. Each agreement
pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a
custody account for the Custodian on behalf of the Fund and
physically segregate in that account, securities and other
assets of the Fund, and, in the event that such institution
deposits the Fund's securities in a foreign securities
depository, that it shall identify on its books as belonging
to the Custodian, as agent for the Fund, the securities so
deposited (all collectively referred to as the "Account").
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5) Agreements with Foreign Banking Institutions. Each agreement
with a foreign banking institution shall be substantially in
the form set forth in Exhibit 1 hereto and shall provide that:
(a) the Fund's assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor
of the foreign banking institution or its creditors, except a
claim of payment for their safe custody or administration; (b)
beneficial ownership for the Fund's assets will be freely
transferable without the payment of money or value other than
for custody or administration; (c) adequate records will be
maintained identifying the assets as belonging to the Fund;
(d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent
permitted under applicable law the independent public
accountants for the Fund, will be given access to the books
and records of the foreign banking institution relating to its
actions under its agreement with the Custodian; and (e) assets
of the Fund held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
6) Access of Independent Accountants of the Fund. Upon request by
the Fund, the Custodian will use its best efforts to arrange
for the independent accountants of the Fund to be afforded
access to the books and records of any foreign banking
institution employed as a foreign sub-custodian insofar as
such books and records relate to the performance of such
foreign banking institution under its agreement with the
Custodian.
7) Reports by Custodian. The Custodian will supply to the Fund
from time to time, as mutually agreed upon, statements in
respect of the securities and other assets of the Fund held by
foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's
securities and other assets and advices or notifications of
any transfers of securities to or from each custodial account
maintained by a foreign banking institution for the Custodian
on behalf of the Fund indicating, as to securities acquired
for the Fund, the identity of the entity having physical
possession of such securities.
8) Transactions in Foreign Custody Account.
(a) Upon receipt of Proper Instructions, which may be
continuing instructions, when deemed appropriate by
the parties, the Custodian shall make or cause its
foreign sub-custodian to transfer, exchange or
deliver foreign securities owned by the Fund, but
except to the extent explicitly provided herein, only
14
in any of the cases specified in Section B hereof.
(b) Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by
the parties the Custodian shall pay out or cause its
foreign sub-custodians to pay out monies of the fund,
but except to the extent explicitly provided herein,
only in any of the cases specified in Section H
hereof.
(c) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities
received for the account of the Fund and delivery of
securities maintained for the account of the Fund may
be effected in accordance with the customary or
established securities trading or securities
processing practices and procedures in the
jurisdiction or market in which the transaction
occurred, including, without limitation, delivering
securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving
later payment for such securities from such purchaser
or dealer.
(d) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such
entity's nominee to the same extent as set forth in
Section C hereof and the fund agrees to hold any such
nominee harmless from any liability as a holder of
record of such securities.
9) Liability of Foreign Sub-Custodians. Each agreement pursuant
to which the Custodian employs a foreign banking institution
as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Custodian and Fund from
and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with such institution's
performance of such obligations. At the election of the Fund,
it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund
has not been made whole for any such loss, damage, cost
expense, liability or claim.
10) Liability of Custodian. The Custodian shall be liable for the
acts or omissions of a foreign banking institution to the same
extent as set forth with respect to sub-custodians generally
15
in Article I hereof and, regardless of whether assets are
maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph (12) hereof, the Custodian shall not
be liable for any loss, damage, cost, expense, liability or
claim resulting from, or caused by, the direction of or
authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including,
but not limited to, losses resulting from nationalization,
expropriation, currency restrictions, or acts of war or
terrorism.
11) Monitoring Responsibilities. The Custodian shall furnish
annually to the Fund, during the month of June, information
concerning the foreign sub-custodians employed by the
Custodian. Such information shall be similar in kind and scope
to that furnished to the Fund in connection with the initial
approval of this Contract. In addition, the custodian will
promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial condition
of a foreign sub-custodian or is notified by a foreign banking
institution employed as a foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders'
equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting
principles).
12) Branches of U.S. Banks. Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the
custody of the Fund assets is maintained in a foreign branch
of a banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of 1940 and
which meets the qualification set forth in Section 26 (a) of
said Act. The appointment of any such branch as a
sub-custodian shall be governed by Article I of this Contract.
R. Proper Instructions. "Proper instructions" as used throughout this
Article II means a writing signed or initialled by one or more person
or persons as the Directors shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered
proper instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate
16
of the Secretary or an Assistant Secretary as to the authorization by
the Directors of the Fund accompanied by a detailed description of
procedures approved by the Board of Directors, "proper instructions"
may include communications effected directly between electro-mechanical
or electronic devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
S. Actions Permitted without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses
of handling securities or other similar items
relating to its duties under this contract, provided
that all such payments shall be accounted for to the
Fund;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Fund,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details
in connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Fund except as
otherwise directed by the Board of Directors of the
Fund.
T. Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument, or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of Directors
of the fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of
any action by the Board of Directors pursuant to the Charter 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.
III. Duties of Custodian with Respect to 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 Directors of the Fund to keep the books
17
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 asset value per
share. The Custodian shall also upon request calculate the net income of the
fund 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 income of the Fund shall be made at the time or times described from time to
time in the Fund's currently effective prospectus.
IV. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All such
records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when 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.
V. Opinion of Fund's Independent Accountant
the Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other
periodic reports to the Securities and Exchange Commission and with respect to
any other requirements of such Commission.
VI. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the custodian under this Contract; such reports, which
shall be of sufficient scope and in sufficient detail, as may reasonably be
18
required by the Fund, to provide reasonable assurance that any material
inadequacies would be disclosed, shall state in detail material inadequacies
disclosed by such examination, and, if there are no such inadequacies, shall so
state.
VII. 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.
VIII. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice. Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article II, Section
P hereof to the same extent as set forth in Article I hereof with respect to
sub-custodians located in the United States and, regardless of whether assets
are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by Article II,
Section P, paragraph 12 hereof, the Custodian shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from, or caused by, the
direction of or authorization by the Fund to maintain custody of any securities
or cash of the Fund in a foreign country including, but not limited to, losses
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
19
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
IX. 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 to 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 thirty (30) days after the date of such delivery or mailing; provided,
however, that the Custodian shall not act under Section II.L. hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Fund has approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Directors has reviewed
the use by the Fund of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not act under Section II.L.1 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors has approved the initial use of the Direct Paper System and the
receipt of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Directors has reviewed the use by the Fund of the Direct Paper
System; 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 Declaration of Trust, and further provided, that the
Fund may at any time by action of its Board of Directors (i) substitute another
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (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, the Federal Deposit Insurance Corporation or the Commissioner of
Banks for the Commonwealth of Massachusetts or upon the happening of a like
20
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 costs, expenses and disbursements.
X. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors
of the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, as
amended, doing business in Boston, Massachusetts, of its own selection, having
an aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, 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.
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 vote referred to or of the
Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
21
XI. Special Provisions Concerning Repurchase Agreements
Notwithstanding anything to the contrary in this Agreement, upon
receipt of proper instructions, which may be standing instructions, in
connection with repurchase agreements, the Custodian shall transmit, prior to
receipt on behalf of the Fund of any securities or other property, funds from
the Fund's custodian account to a special custodian approved by the Board of
Directors of the Fund, which funds shall be used to pay for securities to be
purchased by the Fund subject to the Fund's obligation to sell and the seller's
obligation to repurchase such securities. In such a case, the securities shall
be held in the custody of the special custodian.
XII. 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 Charter or the By-Laws of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
XIII.Directors
All references to actions of or by Directors herein shall require
action by such Directors acting as a board or formally constituted group and not
individually.
XIV. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts.
22
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 23rd day of August, 1991.
SEAL XXXXXXX MUTUAL FUNDS, INC.
By /s/Xxxxx X. Xxx
--------------------------
Xxxxx X. Xxx, Vice President
SEAL STATE STREET BANK AND TRUST COMPANY
By /s/X. X. Xxxxxxx
-------------------
Its Vice President
--------------------------
23
Xxxxxxx Mutual Funds, Inc.
Exhibit B
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Xxxxxxx Mutual
Funds, Inc. for use as sub-custodians for the Fund's securities and other
assets.
BANK COUNTRY
---- -------
ANZ Banking Group Ltd. Australia
Canada Trust Company Canada
Xxxxx Xxxxxx Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
DEPOSITORY COUNTRY
---------- -------
EUROCLEAR Transnational
CEDEL S.A. Transnational
Approved:
/s/Xxxxx X. Xxx
------------
Fund's Authorized Officer
Dated: June 26, 1991
-------------
