EXHIBIT (8)(a)
CUSTODY AGREEMENT
AGREEMENT dated as of June 3, 1996, between WILSHIRE TARGET
FUNDS, INC., a corporation organized under the laws of the
State of Maryland, having its principal office and place of
business at Providence, Rhode Island (the "Company"), and
THE NORTHERN TRUST COMPANY (the "Custodian"), an Illinois
Company with its principal place of business at 00 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
That for and in consideration of the mutual promises
hereinafter set forth, the Company and the Custodian agree
as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to
this Agreement, the following words and phrases, unless the
context otherwise requires, shall have the following
meanings:
(a) The "1940 Act" shall mean the Investment Company Act
of 1940, and the Rules and Regulations thereunder, all as
amended from time to time.
(b) "Administrator" shall mean the person which performs
the administration functions for the Company.
(c) "Authorized Person" shall be deemed to include the
Chairman of the Board of Directors, the President, and any
Vice President, the Secretary, the Treasurer or any other
person, whether or not any such person is an officer or
employee of the Company, duly authorized by the Board of
Directors to give Oral Instructions and Written Instructions
on behalf of the Company and listed in the certification
annexed hereto as Schedule A or such other certification as
may be received by the Custodian from time to time.
(d) "Board of Directors" shall mean the Board of Directors
of the Company.
(e) "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and federal
agency Securities, its successor or successors and its
nominee or nominees.
(f) "Certificate" shall mean any notice, instruction or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually
received by the Custodian and signed on behalf of the
Company by any two Authorized Persons.
(g) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Company dated July 30, 1992, as
amended.
(h) "Depository" shall mean The Depository Trust Company,
a clearing agency registered with the Securities and
Exchange Commission under Section 17(a) of the Securities
Exchange Act of 1934, as amended, its successor or
successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make
deposits. The term "Depository" shall further mean and
include any other person to be named in a Certificate
authorized to act as a depository under the 1940 Act, its
successor or successors and its nominee or nominees.
(i) "Money Market Security" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as
to interest and principal by the Government of the United
States or agencies or instrumentalities thereof, commercial
paper, bank certificates of deposit, bankers' acceptances
and short-term corporate obligations, where the purchase or
sale of such securities normally requires settlement in
federal funds on the same day as such purchase or sale, and
repurchase agreements with respect to any of the foregoing
types of securities.
(j) "Oral Instructions" shall mean an oral
communication actually received by the Custodian from a
person reasonably believed by the Custodian to be an
Authorized Person.
(k) "Portfolio" refers to each of the Large Company Growth
Portfolio, the Large Company Value Portfolio, the Small
Company Growth Portfolio, and the Small Company Value
Portfolio, or any such other separate and distinct
investment portfolio as may from time to time be created and
designated by the Company in accordance with the provisions
of the Articles of Incorporation which the Company and the
Custodian agree in writing shall be subject to this
Agreement pursuant to the provisions of Section 5(b).
(l) "Prospectus" shall mean the Company's current
prospectus and statement of additional information relating
to the registration of the Portfolio's Shares under the
Securities Act of 1933, as amended.
(m) "Shares" refers to the shares of beneficial interest
of the Portfolio.
(n) "Security" or "Securities" shall be deemed to include
bonds, debentures, notes, stocks, shares, evidences of
indebtedness, and other securities, commodity interests and
investments from time to time owned by the Portfolio.
(o) "Sub-Custodian" shall mean and include (i) any
branch of the Custodian, (ii) any branch of a "qualified
U.S. bank," as that term is defined in Rule 17f-5 under the
1940 Act, approved by the Board of Directors and having a
contract with the Custodian which contract has been approved
by the Board of Directors, (iii) any "eligible foreign
custodian," as that term is defined in Rule 17f-5 under the
1940 Act, approved by the Board of Directors and having a
contract with the Custodian which contract has been approved
by the Board of Directors, and (iv) any securities
depository or clearing agency, incorporated or organized
under the laws of a country other than the United States,
which operates the central system for handling of securities
or equivalent book-entries in that country or a
transnational system for the central handling of securities
or equivalent book-entries, which securities depository or
clearing agency has been approved by the Board of Directors;
provided, that the Custodian or a Sub-Custodian has entered
into an agreement with such securities depository or
clearing agency.
(p) "Transfer Agent" shall mean the person which performs
as the transfer agent, dividend disbursing agent and
shareholder servicing agent for the Company.
(q) "Written Instructions" shall mean a written
communication actually received by the Custodian from a
person reasonably believed by the Custodian to be an
Authorized Person by any system whereby the receiver of such
communication is able to verify through codes or otherwise
with a reasonable degree of certainty the authenticity of
the sender of such communication; however, "Written
Instructions" from the Administrator to the Custodian shall
mean electronic communications transmitted by fund
accountants and their managers acting in accordance with
procedures (including appropriate security procedures
incorporating such safeguards as access codes furnished to,
and user identification numbers established by, Authorized
Persons in the employ of the Administrator) as may be
established by the Custodian and the Administrator with the
written consent of the Company. Except as otherwise
provided in this Agreement, "Written Instructions" may
include instructions given on a standing basis.
2. Appointment of Custodian.
(a) The Company hereby constitutes and appoints the
Custodian as custodian of all the Securities and monies
owned by or in the possession of the Portfolio during the
period of this Agreement.
(b) The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as
hereinafter set forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians
to act as Depository or Depositories or as sub-custodian or
sub-custodians of Securities and moneys at any time owned by
any Portfolio, upon terms and conditions as are specified in
this Agreement. The Custodian shall oversee the maintenance
of any Securities or moneys of any Portfolio by any Sub-
Custodian.
(b) If, after the initial approval of Sub-Custodians
by the Board of Directors in connection with this Agreement,
the Custodian wishes to appoint other Sub-Custodians to hold
property of the Portfolios, it will so notify the Company
and provide it with information reasonably necessary to
determine any such new Sub-Custodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the
proposed agreement with such Sub-Custodian. The Company
shall with reasonable promptness following receipt of such
notice and information inform the Custodian in writing of
its approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each
Sub-Custodian acting hereunder shall contain the required
provisions set forth in Rule 17f-5(a)(1)(iii).
(d) If the Custodian intends to remove any Sub-
Custodian previously approved by the Board of Directors, it
shall so notify the Company and move the property of the
Portfolio(s) deposited with such Sub-Custodian to another
Sub-Custodian previously approved by the Board of Directors.
The Custodian shall promptly take such steps as may be
required to remove any Sub-Custodian that has ceased to meet
the requirements of Rule 17f-5 under the 1940 Act.
(e) The Custodian hereby warrants to the Company that in
its opinion, after due inquiry, the established procedures
to be followed by each Sub-Custodian (that is not being used
as a foreign securities depository or clearing agency) in
connection with the safekeeping of property of the Portfolio
pursuant to this Agreement afford protection for such
property not materially different from that afforded by the
Custodian's established safekeeping procedures with respect
to similar property held by it (and its securities
depositories) in Chicago, Illinois.
4. Use of Sub-Custodians.
With respect to property of a Portfolio which is maintained
by the Custodian in the custody of a Sub-Custodian pursuant
to Section 3:
(a) The Custodian will identify on its books as belonging
to the particular Portfolio any property held by such Sub-
Custodian.
(b) In the event that a Sub-Custodian permits any of the
Securities placed in its care to be held in an eligible
foreign securities depository, such Sub-Custodian will be
required by its agreement with the Custodian to identify on
its books such Securities as being held for the account of
the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject
only to the instructions of the Custodian or its agents; and
any Securities held in an eligible foreign securities
depository for the account of a Sub-Custodian will be
subject only to the instructions of such Sub-Custodian.
(d) The Custodian will only deposit property of a
Portfolio in an account with a Sub-Custodian which includes
exclusively the assets held by the Custodian for its
customers, and will cause such account to be designated by
such Sub-Custodian as a special custody account for the
exclusive benefit of customers of the Custodian, and will
identify by book-entry on its records with respect to each
Portfolios property that property of each Portfolio held in
such account.
5. Compensation.
(a) The Company will compensate the Custodian for its
services rendered under this Agreement in accordance with
the fees set forth in the Fee Schedule annexed hereto as
Schedule B and incorporated herein for the existing
Portfolios. Such Fee Schedule does not include out-of-
pocket disbursements of the Custodian for which the
Custodian shall be entitled to xxxx separately. Out-of-
pocket disbursements may include only the items specified in
Schedule B and which may be modified by the Custodian if the
Company consents in writing to the modification.
(b) The parties hereto may agree to the appointment of the
Custodian as Custodian for any Portfolio hereafter
established and designated, and upon the compensation of the
Custodian for acting pursuant to such appointment, and at
the time that the Custodian commences serving as such for
said Portfolio, such agreement shall be reflected in a Fee
Schedule for that Portfolio, dated and signed by an officer
of each party hereto, which shall be attached to Schedule B
of this Agreement.
(c) Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule B of this
Agreement a revised Fee Schedule, dated and signed by an
officer of each party hereto.
(d) The Custodian will xxxx the Company for its services
to each Portfolio hereunder as soon as practicable after the
end of each calendar quarter, and said xxxxxxxx will be
detailed in accordance with the Fee Schedule for the
Company. The Company will promptly pay to the Custodian the
amount of such billing. The Custodian shall have a claim of
payment against the property in each Portfolio for any
compensation or expense amount owing to the Custodian in
connection with such Portfolio from time to time under this
Agreement.
(e) The Custodian (not the Company) will be responsible
for the payment of the compensation of each Sub-Custodian.
6. Custody of Cash and Securities
(a) Receipt and Holding of Assets. The Company will
deliver or cause to be delivered to the Custodian and the
Sub-Custodians all Securities and monies owned by the
Portfolio at any time during the period of this Agreement
and shall specify the Portfolio to which the Securities and
monies are to be specifically allocated. The Custodian will
not be responsible for such Securities and monies until
actually received by it or by a Sub-Custodian. The Company
shall instruct the Custodian from time to time in its sole
discretion, by means of Written Instructions, as to the
manner in which and in what amounts Securities, and monies
of a Portfolio are to be deposited on behalf of such
Portfolio in the Book-Entry System or a Depository;
provided, however, that prior to the deposit of Securities
of a Portfolio in the Book-Entry System or a Depository,
including a deposit in connection with the settlement of a
purchase or sale, the Custodian shall have received a
Certificate specifically approving such deposits by the
Custodian or a Sub-Custodian in the Book-Entry System or a
Depository. Securities and monies of a Portfolio deposited
in the Book-Entry System or a Depository will be deposited
in accounts which include only assets held by the Custodian
for its customers.
(b) Accounts and Disbursements. The Custodian shall
establish and maintain a separate account for each Portfolio
and shall credit to the separate account all monies received
by it or a Sub-Custodian for the account of such Portfolio
and shall disburse, or cause a Sub-Custodian to disburse,
the same only:
1. In payment for Securities purchased for the Portfolio,
as provided in Section 7 hereof;
2. In payment of dividends or distributions with respect
to the Shares of such Portfolio, as provided in Section 9
hereof;
3. In payment of original issue or other taxes with
respect to the Shares of such Portfolio, as provided in
Section 10(c) hereof;
4. In payment for Shares which have been redeemed by such
Portfolio, as provided in Section 10 hereof;
5. In payment of fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to
the Company, as provided in Sections 5 and 14(h) hereof;
6. Pursuant to Written Instructions setting forth the
name of the Portfolio and the name and address of the person
to whom the payment is to be made, the amount to be paid and
the purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a
Portfolio under this Section 6 exceeds the funds available
in that Portfolio's account, the Custodian or relevant Sub-
Custodian, as the case may be, may, in its discretion,
advance the Company on behalf of that Portfolio an amount
equal to such excess and such advance shall be deemed an
overdraft from the Custodian or such Sub-Custodian to that
Portfolio payable on demand, bearing interest at the rate of
interest customarily charged by the Custodian or such Sub-
Custodian on similar overdrafts.
(d) Confirmation and Statements. Promptly after the close
of business on each business day, the Custodian shall
furnish the Company with confirmations and a summary of all
transfers to or from the account of each Portfolio during
said day. Such summary shall include without limitation, as
to property acquired for a Portfolio, the identity of the
entity having physical possession of such property. Where
securities purchased by a Portfolio are in a fungible bulk
of securities registered in the name of the Custodian (or
its nominee) or shown on the Custodian's account on the
books of a Depository, the Book-Entry System or a Sub-
Custodian, the Custodian shall by book entry or otherwise
identify the quantity of those securities belonging to such
Portfolio. At least monthly, the Custodian shall furnish
the Company with a detailed statement of the Securities and
monies held by it and all Sub-Custodians for each Portfolio.
(e) Registration of Securities and Physical Separation.
All Securities held for a Portfolio which are issued or
issuable only in bearer form, except such Securities as are
held in the Book-Entry System, shall be held by the
Custodian or a Sub-Custodian in that form; all other
Securities held for a Portfolio may be registered in the
name of that Portfolio, in the name of any duly appointed
registered nominee of the Custodian or a Sub-Custodian as
the Custodian or such Sub-Custodian may from time to time
determine, or in the name of the Book-Entry System or a
Depository or their successor or successors, or their
nominee or nominees. The Company reserves the right to
instruct the Custodian as to the method of registration and
safekeeping of the Securities. The Company agrees to
furnish to the Custodian appropriate instruments to enable
the Custodian or any Sub-Custodian to hold or deliver in
proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System
or a Depository, any Securities which the Custodian of a
Sub-Custodian may hold for the account of a Portfolio and
which may from time to time be registered in the name of a
Portfolio. The Custodian shall hold all such Securities
specifically allocated to a Portfolio which are not held in
the Book-Entry System or a Depository in a separate account
for such Portfolio in the name of such Portfolio physically
segregated at all times from those of any other person or
persons.
(f) Segregated Accounts. Upon receipt of a Written
Instruction, the Custodian will establish segregated
accounts on behalf of a Portfolio to hold liquid or other
assets as it shall be directed by a Written Instruction and
shall increase or decrease the assets in such Segregated
Accounts only as it shall be directed by subsequent Written
Instruction.
(g) Collection of Income and Other Matters Affecting
Securities. Unless otherwise instructed to the contrary by
a Written Instruction, the Custodian, by itself or through
the use of the Book-Entry System or a Depository with
respect to Securities therein deposited, shall, or shall
instruct the relevant Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities held
for a Portfolio in accordance with this Agreement;
2. Present for payment and collect the amount payable
upon all Securities which may mature or be called, redeemed
or retired, or otherwise become payable;
3. Surrender Securities in temporary form for derivative
Securities;
4. Execute any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter
in effect; and
5. Hold directly, or through the Book-Entry System or a
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian or relevant Sub-Custodian for each Portfolio.
If the Custodian or any Sub-Custodian causes the
account of a Portfolio to be credited on the payable date
for interest, dividends or redemptions, the particular
Portfolio involved will promptly return to the Custodian any
such amount or property so credited upon oral or written
notification that neither the custodian nor the relevant
Sub-Custodian can collect such amount or property in the
ordinary course of business. The Custodian or such Sub-
Custodian, as the case may be, shall have no duty or
obligation to institute legal proceedings, file a claim or
proof of claim in any insolvency proceeding or take any
other action with respect to the collection of such amount
or property beyond its ordinary collection procedures unless
it is specifically requested to do so by the Company and
indemnified to its satisfaction for any liability, cost or
expense arising therefrom.
(h) Delivery of Securities and Evidence of Authority.
Upon receipt of a Written Instruction and not otherwise,
except for subparagraphs 5, 6, 7, and 8 of this section 6(h)
which may be effected by Oral or Written Instructions, the
Custodian, directly or through the use of the Book-Entry
System or a Depository, shall, or shall instruct the
relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and
delivered to such persons as may be designated in such
Written Instructions, proxies, consents, authorizations, and
any other instruments whereby the authority of the Company
as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held
for a Portfolio in exchange for other Securities or cash
issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any
conversion privilege;
3. Deliver or cause to be delivered any Securities held
for a Portfolio to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for each such Portfolio certificates of
deposit, interim receipts or other instruments or documents
as may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges
of the assets specifically allocated to the separate account
of a Portfolio and take such other steps as shall be stated
in Written Instructions to be for the purpose of
effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Company;
5. Deliver Securities upon sale of such Securities for
the account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of
payment in connection with any repurchase agreement related
to such Securities entered into by a Portfolio;
7. Deliver Securities owned by a Portfolio to
the issuer thereof or its agent when such Securities are
called, redeemed, retired or otherwise become payable;
provided, however, that in any such case the cash or other
consideration is to be delivered to the Custodian or Sub-
Custodian, as the case may be;
8. Deliver Securities for delivery in connection with any
loans of securities made by a Portfolio but only against
receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Company which may be in the
form of cash or obligations issued by the United States
Government, its agencies or instrumentalities;
9. Deliver Securities for delivery as security in
connection with any borrowings by a Portfolio requiring a
pledge of Portfolio assets, but only against receipt of the
amounts borrowed;
10. Deliver Securities to the Transfer Agent or to the
holders of Shares in connection with distributions in kind,
as may be described from time to time in the Prospectus, in
satisfaction of requests by holders of Shares for repurchase
or redemption;
11. Deliver Securities owned by any Portfolio for any
purpose expressly permitted by and in accordance with
procedures described in the Prospectus; and
12. Deliver Securities owned by any Portfolio for any
other proper business purpose, but only upon receipt of, in
addition to Written Instructions, a certified copy of a
resolution of the Board of Directors signed by an Authorized
Person and certified by the Secretary of the Company,
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 business purpose, and naming the
person or persons to whom delivery of such Securities shall
be made.
(i) Endorsement and Collection of Checks, Etc. The
Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by the Custodian for the account of a Portfolio.
7. Purchase and Sale of Investments of a Portfolio.
(a) Promptly after each purchase of Securities for a
Portfolio, the Company shall deliver to the Custodian (i)
with respect to each purchase of Securities which are not
Money Market Securities, a Written Instruction and (ii) with
respect to each purchase of Money Market Securities, either
a Written Instruction or Oral Instruction, in either case
specifying with respect to each purchase: (1) the name of
the Portfolio to which such Securities are to be
specifically allocated; (2) the name of the issuer and the
title of the Securities; (3) the number of shares or the
principal amount purchased and accrued interest, if any; (4)
the date of purchase and settlement; (5) the purchase price
per unit; (6) the total amount payable upon such purchase;
and (7) the name of the person from whom or the broker
through whom the purchase was made, if any. The Custodian
or specified Sub-Custodian shall receive the Securities
purchased by or for a Portfolio and upon receipt thereof
shall pay to the broker or other person designated by the
Company out of the monies held for the account of such
Portfolio the total amount payable upon such purchase,
provided that the same conforms to the total amount payable
as set forth in such Written or Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio,
the Company shall deliver to the Custodian (i) with respect
to each sale of Securities which are not Money Market
Securities, a Written Instruction, and (ii) with respect to
each sale of Money Market Securities, either Written
Instructions or Oral Instructions, in either case specifying
with respect to such sale: (1) the name of the Portfolio to
which the Securities sold were specifically allocated; (2)
the name of the issuer and the title of the Securities; (3)
the number of shares or principal amount sold, and accrued
interest, if any; (4) the date of sale; (5) the sale price
per unit; (6) the total amount payable to the Portfolio upon
such sale; and (7) the name of the broker through whom or
the person to whom the sale was made. The Custodian or
relevant Sub-Custodian shall deliver or cause to be
delivered the Securities to the broker or other person
designated by the Company upon receipt of the total amount
payable to such Portfolio upon such sale, provided that the
same conforms to the total amount payable to such Portfolio
as set forth in such Written or Oral Instruction. Subject
to the foregoing, the Custodian or relevant Sub-Custodian
may accept payment in such form as shall be satisfactory to
it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in
Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the
Portfolios may be invested by the Custodian for short term
purposes pursuant to standing Written Instructions from the
Company.
8. Lending of Securities.
If any Portfolio is permitted by the terms of
the Articles of Incorporation and the Prospectus to lend
Securities, then the Board of Directors may approve a
separate written agreement between the Company and the
Custodian authorizing the Custodian to lend such Securities.
Such agreement may provide for the payment of additional
reasonable compensation to the Custodian.
9. Payment of Dividends or Distributions.
(a) The Company shall furnish to the Custodian the vote of
the Board of Directors certified by the Secretary or the
Assistant Secretary of the Company (i) authorizing the
declaration of distributions with respect to a Portfolio on
a specified periodic basis and authorizing the Custodian to
rely on Oral or Written Instructions specifying the date of
the declaration of such distribution, the date of payment
thereof, the record date as of which shareholders entitled
to payment shall be determined, the amount payable per Share
to the shareholders of record as of the record date and the
total amount payable to the Transfer Agent on the payment
date, or (ii) setting forth the date of declaration of any
distribution by a Portfolio, the date of payment thereof,
the record date as of which shareholders entitled to payment
shall be determined and the amount payable per share to the
shareholders of record as of the record date.
(b) Upon the payment date specified in such vote, Oral
Instructions, or Written Instructions, as the case may be,
the Custodian shall pay the total amount payable to the
Transfer Agent out of the monies specifically allocated to
and held for the account of the appropriate Portfolio.
10. Sale and Redemption of Shares of the Company.
(a) Whenever the Company shall sell any Shares of a
Portfolio, the Company shall deliver or cause to be
delivered to the Custodian a Written Instruction duly
specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian
for the sale of such Shares.
The Custodian understands and agrees that Written
Instructions may be furnished subsequent to the purchase of
Shares of a Portfolio and that the information contained
therein will be derived from the sales of Shares as reported
to the Company by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate
account of the Portfolio specified in (a)(1) above.
(c) Upon issuance of any Shares of a Portfolio in
accordance with the foregoing provisions of this Section 10,
the Custodian shall pay all original issue or other taxes
required to be paid in connection with such issuance upon
the receipt of a Written Instruction specifying the amount
to be paid.
(d) Except as provided hereafter, whenever any Shares of a
Portfolio are redeemed, the Company shall cause the Transfer
Agent to promptly furnish to the Custodian Written
Instructions specifying:
1. The name of the Portfolio whose Shares were redeemed;
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived from
the redemption of Shares as reported to the Company by the
Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting
forth the number of Shares of a Portfolio being redeemed
pursuant to valid instructions as described in the
Prospectus, the Custodian shall make payment to the Transfer
Agent out of the monies specifically allocated to and held
for the account of the Portfolio specified in (d)(1) above
of the total amount specified in a Written Instruction
issued pursuant to paragraph (d) of this Section 10.
11. Indebtedness.
(a) The Company will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which
the Company borrows money, using Securities as collateral, a
notice or undertaking in the form currently employed by any
such bank setting forth the amount which such bank will loan
to the Company against delivery of a stated amount of
collateral. The Company shall promptly deliver to the
Custodian Written Instructions stating with respect to each
such borrowing: (1) the name of the Portfolio for which the
borrowing is to be made; (2) the name of the bank; (3) the
amount and terms of the borrowing, which may be set forth by
incorporating by reference an attached promissory note, duly
endorsed by the Company, or other loan agreement; (4) the
time and date, if known, on which the loan is to be entered
into (the "borrowing date"); (5) the date on which the loan
becomes due and payable; (6) the total amount payable to the
Company for the separate account of the Portfolio on the
borrowing date; (7) the market value of Securities to be
delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the
principal amount of any particular Securities; (8) whether
the Custodian is to deliver such collateral through the
Book-Entry System or a Depository; and (9) a statement that
such loan is in conformance with the 1940 Act and the
Prospectus.
(b) Upon receipt of the Written Instruction referred to in
paragraph (a) above, the Custodian shall deliver on the
borrowing date the specified collateral and the executed
promissory note, if any, against delivery by the lending
bank of the total amount of the loan payable, provided that
the same conforms to the total amount payable as set forth
in the Written Instruction. The Custodian may, at the
option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by
the Company from time to time such Securities specifically
allocated to such Portfolio as may be specified in Written
Instruction to collateralize further any transaction
described in this Section 11. The Company shall cause all
Securities released from collateral status to be returned
directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be
tendered to it. In the event that the Company fails to
specify in Written Instruction all of the information
required by this Section 11, the Custodian shall not be
under any obligation to deliver any Securities. Collateral
returned to the Custodian shall be held hereunder as it was
prior to being used as collateral.
12. Corporate Action
Whenever the Custodian or any Sub-Custodian (other than a
foreign securities depository or clearing agency) receives
information concerning Securities held for a Portfolio which
requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription
rights, bond issues, stock repurchase plans and rights
offerings, or legal notices or other material intended to be
transmitted to Securities holders ("Corporate Actions"), the
Custodian will give the Company notice of such Corporate
Actions to the extent that the Custodian's central corporate
actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action is received which bears an expiration date,
the Custodian will endeavor to obtain Written or Oral
Instructions from the Company, but if such Instructions are
not received in time for the Custodian to take timely
action, or actual notice of such Corporate Action was
received too late to seek such Instructions, the Custodian
is authorized to sell, or cause a Sub-Custodian to sell,
such rights entitlement or fractional interest and to credit
the applicable account with the proceeds and to take any
other action it deems, in good faith, to be appropriate, in
which case, provided it has met the standard of care in
Section 14 hereof, it shall be held harmless by the
particular Portfolio involved for any such action.
The Custodian will deliver proxies to the Company or its
designated agent pursuant to special arrangements which may
have been agreed to in writing between the parties hereto.
Such proxies shall be executed in the appropriate nominee
name relating to Securities registered in the name of such
nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are
involved, proxies will be delivered in accordance with
Written or Oral Instructions from Authorized Persons.
13. Persons Having Access of the Portfolios.
(a) No Company or agent of the Company, and no officer,
director, employee or agent of the Company's investment
adviser, of any sub-investment adviser of the Company, or of
the Administrator, shall have physical access to the assets
of any Portfolio held by the Custodian or any Sub-Custodian
or be authorized or permitted to withdraw any investments of
a Portfolio, nor shall the Custodian or any Sub-Custodian
deliver any assets of a Portfolio to any such person. No
officer, director, employee or agent of the Custodian who
holds any similar position with the Company's investment
adviser, with any sub-investment adviser of the Company or
with the Administrator shall have access to the assets of
any Portfolio.
(b) Nothing in this Section 13 shall prohibit any officer,
employee or agent of the Company, or any officer, director,
employee or agent of the investment adviser, of any sub
investment adviser of the Company or of the Administrator,
from giving Oral Instructions or Written Instructions to the
Custodian or executing a Certificate so long as it does not
result in delivery of or access to assets of a Portfolio
prohibited by paragraph (a) of this Section 13.
(c) The Custodian represents that it maintains a system
that is reasonably designed to prevent unauthorized persons
from having access to the assets that it holds (by any
means) for its customers.
14. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated
to perform only such services as are set forth in this
Agreement or expressly contained in a Certificate, Written
Instructions or Oral Instructions given to the Custodian
which are not contrary to the provisions of this Agreement.
(b) Standard of Care.
1. The Custodian will use reasonable care with respect to
its obligations under this Agreement and the safekeeping of
property of the Portfolios. The Custodian shall be liable
to, and shall indemnify and hold harmless the Company from
and against any loss, cost, charge, assessment, claim,
liability and expense (including reasonable attorney fees
and disbursements) which shall occur as the result of the
failure of the Custodian or a Sub-Custodian (other than a
foreign securities depository or clearing agency) to
exercise reasonable care with respect to their respective
obligations under this Agreement and the safekeeping of such
property. The determination of whether the Custodian or
Sub-Custodian has exercised reasonable care in connection
with the safekeeping of Portfolio property shall be made in
light of the standards applicable to the Custodian with
respect to similar property held by it in Chicago, Illinois.
The determination of whether the Custodian or Sub-Custodian
has exercised reasonable care in connection with their other
obligations under this Agreement shall be made in light of
prevailing standards applicable to professional custodians
in the jurisdiction in which such custodial services are
performed. In the event of any loss to the Company by
reason of the failure of the Custodian or a Sub-Custodian
(other than a foreign securities depository or clearing
agency) to exercise reasonable care, the Custodian shall be
liable to the Company only to the extent of the Company's
direct damages and expenses, which damages, for purposes of
property only, shall be determined based on the market value
of the property which is the subject of the loss at the date
of discovery of such loss and without reference to any
special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, default or for the solvency of any foreign
securities depository or clearing agency approved by the
Board of Directors pursuant to Section (1)(n) or Section 3
hereof.
3. The Custodian will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(not referred to in paragraph (b)(2) above) which it or a
Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the
event such an appointment and use is made or done
negligently or in bad faith, the Custodian shall be liable
to the Company only for direct damages and expenses
(determined in the manner described in paragraph (b)(1)
above) resulting from such appointment and use and, in the
case of any loss due to an act, omission or default of such
agent or broker, only to the extent that such loss occurs as
a result of the failure of the agent or broker to exercise
reasonable care ("reasonable care" for this purpose to be
determined in light of the prevailing standards applicable
to agents or brokers, as appropriate, in the jurisdiction
where services are performed).
4. The Custodian shall be entitled to rely, and may act
upon the advice of counsel (who may be counsel for the
Company) on all matters and shall be without liability for
any action reasonably taken or omitted in good faith and
without negligence pursuant to such advice.
5. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received
by the Custodian and reasonably believed by the Custodian to
be genuine and to be signed by two officers of the Company.
The Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The
Company agrees to forward to the Custodian Written
Instructions from an Authorized Person confirming such Oral
Instructions in such manner so that such Written
Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, by the close of business on
the same day that such Oral Instructions are given to the
Custodian. The Company agrees that the fact that such
confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Company. The Company agrees that the Custodian shall incur
no liability to the Company in (i) acting upon Oral
Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person
or (ii) deciding not to act solely upon Oral Instructions,
provided that the Custodian shall be required to contact the
giver of such Oral Instructions and request written
confirmation immediately following any such decision not to
act.
6. The Custodian shall supply the Administrator with such
daily information regarding the cash and securities
positions and activity of each Portfolio as the Custodian
and the Administrator shall from time to time agree. It is
understood that such information will not be audited by
Custodian and Custodian represents that such information
will be the best information then available to the
Custodian. The Custodian shall have no responsibility
whatsoever for the pricing of Portfolio Securities or for
the failure of the Administrator to reconcile differences
between the information supplied by the Custodian and
information obtained by the Administrator from other
sources, including but not limited to pricing vendors and
the Company's investment adviser. Subject to the foregoing,
to the extent that any miscalculation by the Administrator
of a Portfolio's net asset value is attributable to the
willful misfeasance, bad faith or negligence of the
Custodian (including any Sub-Custodian other than a foreign
securities depository or clearing agency) in supplying or
omitting to supply the Administrator with information as
aforesaid, the Custodian shall be liable to the Company for
any resulting loss (subject to such de minims rule of change
in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of
the foregoing, the Custodian shall be under no duty or
obligation to inquire into, and shall not be liable for:
1. The validity of the issue of any Securities purchased
by any Portfolio, the legality of the purchase thereof, or
the propriety of the amount specified by the Company for
payment therefor;
2. The legality of the sale of any Securities by any
Portfolio or the propriety of the amount of consideration
for which the same are sold;
3. The legality of the issue or sale of any Shares, or
the sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Portfolio;
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the
exclusive benefit of the Company, but hereby warrants that
as of the date of this Agreement it is maintaining a bankers
Blanket Bond and hereby agrees to notify the Company in the
event that such bond is canceled or otherwise lapses.
(e) Consistent with and without limiting the language
contained in Section 14(b), it is specifically acknowledged
that the Custodian shall have no duty or responsibility to:
1. Question Written Instructions or Oral Instructions or
make any suggestions to the Company or an Authorized Person
regarding such Instructions;
2. Supervise or make recommendations with respect to
investments or the retention of Securities;
3. Subject to Section 14(b)(3) hereof, evaluate or report
to the Company or an Authorized Person regarding the
financial condition of any broker, agent or other party to
which Securities are delivered or payments are made pursuant
to this Agreement; or
4. Review or reconcile trade confirmations received from
brokers.
(f) Amounts Due for Transfer Agent. The Custodian shall
not be under any duty or obligation to take action to effect
collection of any amount due to any Portfolio from the
Transfer Agent nor to take any action to effect payment or
distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent in accordance with this
Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall
not be under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the
Company and specifically allocated to a Portfolio are such
as may properly be held by the Company under the provisions
of the Articles of Incorporation and the Prospectus.
(h) Indemnification. The Company agrees to indemnify and
hold the Custodian harmless from all loss, cost, taxes,
charges, assessments, claims, and liabilities (including,
without limitation, liabilities arising under the Securities
Act of 1933, the Securities Exchange Act of 1934 and the
1940 Act and state or foreign securities laws) and expenses
(including reasonable attorneys fees and disbursements)
arising directly or indirectly from any action taken or
omitted by the Custodian (i) at the request or on the
direction of or in reliance on the advice of the Company or
in reasonable reliance upon the Prospectus or (ii) upon a
Certificate or Oral or Written Instructions; provided, that
the aforegoing indemnity shall not apply to any loss, cost,
tax, charge, assessment, claim, liability or expense to the
extent the same is attributable to the Custodian's or any
Sub-Custodian's (other than a foreign securities depository
or clearing agency) negligence, willful misconduct, bad
faith or reckless disregard of duties and obligations under
this Agreement or any other agreement relating to the
custody of Company property.
(i) The Company on behalf of the particular Portfolio
involved agrees to hold the Custodian harmless from any
liability or loss resulting from the imposition or
assessment of any taxes or other governmental charges on a
Portfolio.
(j) Without limiting the foregoing, the Custodian shall
not be liable for any loss which results from:
1. the general risk of investing, or
2. subject to Section 14(b) hereof, investing or holding
property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the
orderly execution of securities transactions or affect the
value of property held pursuant to this Agreement.
(k) No party shall be liable to the other for any loss due
to forces beyond their control including but not limited to
strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or
radiation, or acts of God.
(1) Inspection of Books and Records. The books and
records of the Custodian shall be open to inspection and
audit at reasonable times by officers and auditors employed
by the Company and by the appropriate employees of the
Securities and Exchange Commission.
(m) Accounting Control Reports. The Custodian shall
provide the Company with any report obtained by the
Custodian on the system of internal accounting control of
the Book-Entry System, each Depository, and each Sub-
Custodian and with an annual report on its own systems of
internal accounting control.
15. Term and Termination.
(a) This Agreement shall become effective on the date
first set forth above (the "Effective Date") and shall
continue in effect thereafter as the parties may, mutually
agree.
(b) Either of the parties hereto may terminate this
Agreement with respect to any Portfolio by giving to the
other party a notice in writing specifying the date of such
termination, which, in case the Company is the terminating
party, shall be not less than 60 days after the date of
receipt of such notice or, in case the Custodian is the
terminating party, shall be not less than 90 days after the
date of receipt of such notice. In the event such notice is
given by the Company, it shall be accompanied by a certified
vote of the Board of Directors, electing to terminate this
Agreement with respect to any Portfolio and designating a
successor custodian or custodians, which shall be a person
qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the
Company shall, on or before the termination date, deliver to
the Custodian a certified vote of the Board of Directors,
designating a successor custodian or custodians. In the
absence of such designation by the Company, the Custodian
may designate a successor custodian, which shall be a person
qualified to so act under the 0000 Xxx. If the Company
fails to designate a successor custodian with respect to any
Portfolio, the Company shall upon the date specified in the
notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than
Securities held in the Book-Entry System which cannot be
delivered to the Company) and monies then owned by such
Portfolio, be deemed to be its own custodian and the
Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the
duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Company.
(c) Upon the date set forth in such notice under paragraph
(b) of this Section
15, this Agreement shall terminate to the extent specified
in such notice, and the Custodian shall upon receipt of a
notice of acceptance by the successor custodian on that date
deliver directly to the successor custodian all Securities
and monies then held by the Custodian and specifically
allocated to the Portfolio or Portfolios specified, after
deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled
with respect to such Portfolio or Portfolios.
16. Limitation of Liability.
The execution and delivery of this Agreement have been
authorized by the Board of Directors of the Company, and
signed by an authorized officer of the Company, acting as
such, and neither such authorization by such the Board of
Directors nor such execution and delivery by such officer
shall be deemed to have been made by any of them or any
shareholder of the Company individually or to impose any
liability on any of them or any shareholder of the Company
personally, but shall bind only the assets and property of
the Company or of the appropriate Portfolio(s) thereof as
provided in the Articles of Incorporation.
17. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed
by two of the present officers of the Company setting forth
the names and the signatures of the present Authorized
Persons. The Company agrees to furnish to the Custodian a
new certification in similar form in the event that any such
present Authorized Person ceases to be such an Authorized
Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this
Agreement upon Oral Instructions or signatures of the
present Authorized Persons as set forth in the last
delivered certification.
(b) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian
and mailed or delivered to it at its offices at its address
stated on the first page hereof or at such other place as
the Custodian may from time to time designate in writing.
(c) Any notice or other instrument in writing, authorized
or required by this Agreement to be given to the Company,
shall be sufficiently given if addressed to the Company and
mailed or delivered to it at its offices at its address
shown on the first page hereof or at such other place as the
Company may from time to time designate in writing, with a
copy to: Wilshire Target Funds, Inc. c/o Wilshire
Associates, Incorporated, 0000 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxx Xxxxxx, XX 00000-0000 Attention: Xxxxxx X. Xxxxxxx,
President.
(d) This Agreement may not be amended or modified in any
manner except by a written agreement executed by both
parties with the same formality as this Agreement, (i)
authorized and approved by a vote of the Board of Directors,
or (ii) authorized and approved by such other procedures as
may be permitted or required by the 1940 Act.
(e) This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Company without the written consent of the
Custodian, or by the Custodian without the written consent
of the Company authorized or approved by a vote of the Board
of Directors, and any attempted assignment without such
written consent shall be null and void.
(f) This Agreement shall be construed in accordance with
the laws of the State of Illinois.
(g) The captions of the Agreement are included for
convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect
their construction or effect.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives
duly authorized as of the day and year first above written.
WILSHIRE TARGET FUNDS, INC.
By: s/s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
THE NORTHERN TRUST COMPANY
By: /s/ Xxxxx XXxxxx
Name: Xxxxx XXxxxx
Title: Vice President
