EXHIBIT (j)
CUSTODIAN CONTRACT
Between
THE HYPERION TOTAL RETURN FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
CUSTODIAN CONTRACT
This Contract between The Hyperion Total Return Fund, Inc., a corporation
organized and existing under the laws of the State of Maryland, having its
principal place of business at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the
"Custodian", WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. 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, $.01 par value, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 4), the
Custodian shall 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 agrees that it shall not appoint a domestic
subcustodian which under the terms of its contract has a standard of care less
than that contained herein. 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 Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the United
States, including all domestic securities owned by the Fund, other than
securities which are maintained pursuant to Section 2.10 in a clearing agency
which acts as a securities depository or in a book-entry system authorized by
the U.S. Department of the Treasury, collectively referred to herein as
"Securities System" 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 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
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 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 2.10 hereof;
4) To the depository agent in connection with tender or other similar offers
for portfolio securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any such
case, the cash or other consideration is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of the Fund
or into the name of any nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed pursuant to Section 2.9 or into
the name or nominee name of any sub-custodian appointed pursuant to Article
1; or for exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be delivered to
the Custodian;
(7) Upon the sale of such securities for the account of the Fund, to the broker
or its clearing agent, against a receipt, for examination in accordance
with "street delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any loss arising
from the delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own negligence or
willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are
to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or
the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any . such case, the new securities and cash,
if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Fund,
but only against receipt of adequate collateral as agreed upon from time to
time by the Custodian and the 1 Fund, which may be in the form of cash or
obligations issued 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
will not be held liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral except as may arise
from the Custodian's own negligence or willful misconduct;
11) 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;
12) For delivery in accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (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;
13) For delivery in accordance with the provisions of any agreement among the
Fund, the Custodian, and a Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account deposits in
connection with transactions by the Fund;
14) For any other proper corporate purpose, 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 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 purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. 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 is
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 2.9 or in the
name or nominee name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Fund under the terms of
this Contract shall be in "street name" or other good delivery form.
2.4 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. 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 and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Directors 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.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper Instructions,
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.
2.6 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
its agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the Fund on United
States securities loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund with such
information or data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the Fund is properly
entitled.
2.7 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 domestic 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 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 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a Securities System, in accordance with the conditions set
forth in Section 2.10 hereof; (c) in the case of a purchase involving the
Direct Paper System, in accordance with the conditions set forth in Section
2.10A; (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 at
the Federal Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the Custodian to
repurchase such securities from the Fund or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions from the Fund as
defined in Article 4;
2) In connection with conversion, exchange or surrender of securities owned by
the Fund as set forth in Section 2.2 hereof;
3) For the payment of any expense or liability incurred by the Fund, including
but not limited to the following payments for the account of the Fund:
interest, taxes, management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
4) For the payment of any dividends declared pursuant to the governing
documents of the Fund
5) For payment of the amount of dividends received in respect of securities
sold short;
6) 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.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, 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.
2.9 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 2 as the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Securities in Securities Systems. The Custodian may deposit
and/or maintain domestic 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 System"
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 domestic 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 domestic 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 domestic 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 domestic
securities sold for the account of the Fund upon (i) receipt of advice from
the Securities System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of domestic
securities for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form of a written
advice or notice sad shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions is the Securities System for the
account of the Fund.
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 domestic securities deposited is
the Securities System;
5) The Custodian shall have received the initial or annual certificate, as the
case may be, required by Article 12 hereof;
6) Anything to the contrary in this Contract notwithstanding, the Custodian
shall be liable to the Fund for any loss or damage to the Fund resulting
from use of the Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the Securities
System; at the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage.
2.10. X.Xxxx Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian 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 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 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 off daily transaction sheets reflecting each
day's transaction in the Securities System for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from time to
time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account-or accounts for and on behalf of the
Fund, into which account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under the Exchange
Act and a member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act),.relating to compliance with the rules of..
The Options Clearing Corporation and of any registered national securities
exchange-(or the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund, (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 Board of 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.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
domestic securities of the Fund held by it and in connection with transfers of
such securities.
2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Fund or a nominee of the Fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to such
securities.
2.14 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 domestic 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
domestic securities being held for the Fund. With respect to tender or exchange
offers; the Custodian shall transmit promptly to the Fund all written
information received by the Custodian from issuers of the domestic 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 prior to the date on which
the Custodian is to take such action.
2.15 Reports to Fund 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 domestic securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund, to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, a-d, if there are no such inadequacies, the reports shall so state.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside of
the United States
3.1 Appointment of Foreign Sub-Custodians. The-Fund hereby authorizes and
instructs the Custodian-to employ as sub-custodians for the Fund's securities
and other assets maintained outside the United States the foreign banking
institutions and foreign securities depositories designated on Schedule A hereto
("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 4 of this Contract, 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-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the-Fund's
assets.
3.2 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.
3.3 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. Where possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.
3.4 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.
3.5 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 or agent, except a claim-of payment
for their safe custody or administration; (b) beneficial ownership of 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.
3.6 Access of Independent Accountants of the Fund. Upon request of 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.
3.7 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
a-m-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.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided in
paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7 of this
Contract shall apply, mutatis mutandis to the foreign securities of the Fund
held outside the United States by foreign sub-custodians. (b) Notwithstanding
nay provision of this Contract to the contrary, settlement and payment for
securities received for the account of the Fund sad delivery of securities
maintained for the account of the Fund may be effected in accordance with the
customary established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
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. (c) 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 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of such
securities.
3.9 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 each Fund from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the 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.
3.10 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 in this Contract 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
3.13 hereof, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where the
sub-custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except such loss
as may result from (a) political risk (including, but not limited to, exchange
control restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses (excluding
a bankruptcy or insolvency of State Street London Ltd. not caused by political
risk) due to Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose including the purchase or sale of foreign
exchange or of contracts for foreign exchange, 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.
3.12 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 any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not the subject
of an exemptive order from the Securities and Exchange Commission is notified by
such 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).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of the Fund assets are
maintained in a foreign branch of a banking institution which is a "bank" as
defined by Section 2(a)(S) of the Investment Company Act of 1940 meeting 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 paragraph 1 of this
Contract. (b) Cash held for the Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the Custodian,
State Street London Ltd. or both.
4. Proper Instructions
Proper Instructions as used herein means a writing signed or initialed
by one or more person or persons as the Board of 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 of the Secretary or an assistant Secretary as to
the authorization by the Board of 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. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in accordance with Section
2.11.
5. 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 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.
6. 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 Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate weekly the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent weekly of the total amounts of .such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net--income among
its various components. The calculations of the net asset value per share and
the weekly income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
8. 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, 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.
9. 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-2, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
10. 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.
11. 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,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. 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 and the cost of which shall be borne by the Custodian unless mutually
agreed otherwise) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a
foreign banking institution appointed pursuant to the provisions of Article 3 to
the same extent as set forth in Article 1 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 paragraph 3.11 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 or 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
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.
12. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in full
force and effect until terminated as hereinafter provided, may be amended at any
time by mutual agreement of the parties hereto and may be terminated by either
party toy 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 2.10 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 2.10.A 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 Articles of Incorporation, 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 or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction. Upon termination of the Contract, the
Fund shall pay to the Custodian such compensation as may be due as of the date
of such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
13. 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 and shall transfer
to an account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor
custodian or certified copy of a vote of the Board 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, 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 and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board 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.
14. 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
is 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 Articles of Incorporation 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.
15. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
16. Prior Contracts
This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund and the Custodian relating to the custody
of the Fund's assets.
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 2nd day of August, 1989.
ATTEST THE HYPERION TOTAL RETURN FUND, INC.
/s/ Xxxxx X. Xxxxx By /s/ Xxxxxxx X. Xxxxxxxx
----------------------------- --------------------------------------
Xxxxx X. Xxxxx Xxxxxxx X. Xxxxxxxx
ATTEST STATE STREET BANK AND TRUST COMPANY
_____________________________ By _______________________________________
Assistant Secretary Vice President
Schedule A
Schedule A
The following foreign banking institutions and foreign securities
depositories have bees approved by the Board of Directors of The Hyperion Total
Return and Income Fund, Inc. for use as sub-custodians for the Fund's securities
and other assets:
(Insert banks and securities depositories)
State Street London, Ltd.
Certified:
------------------------
Fund's Authorized Officer
Date: ____8/2/89_______
------
III. Options
Option charge for each option written or
closing contract, per issue, per broker $25.00
Option expiration charge, per issue, $15.00
per broker.
Option exercised charge, per issue $15.00
per broker.
IV. Lending of Securities
Deliver loaned securities versus cash $20.00
collateral
Deliver loaned securities versus securities $30.00
collateral.
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt $15.00
loaned securities.
Deliver securities collateral versus $25.00
receipt of loaned securities.
Loan administration - xxxx-to-market per $3.00
day, per loan
V. Interest Rate Futures (Marking)
---------------------
Transactions -- no security movement $10.00
VI. Holdings Charge
For each issue maintained -- monthly charge $5.00
VII. Principal Reduction Payments
Per paydown $8.00
VIII. Special Services
Fees for activities of a non-recurring nature such as
fund consolidations or reorganizations, extraordinary
security shipments and the preparation of special
reports will be subject to negotiation. Fees for
automated pricing, yield calculation and other special
items will be negotiated separately.
IX. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket
expenses will be made as of the end of each month.
Out-of-pocket expenses include, but are not limited to
the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out)
Postage and Insurance Courier Service Duplicating
Legal Fees Supplies Related to Fund Records Rush
Transfer -- $8.00 Each Transfer Fees Sub-custodian
Charges Price Waterhouse Audit Letter Federal Reserve
Fee for Return Check items over $2,500 - $4.25 GNMA
Transfer - $15 each
X. Payment
The above fees will be charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
HYPERION TOTAL RETURN FUND, INC. STATE STREET BANK & TRUST COMPANY
By: /s/Xxxxxxx X. Xxxxxxxx By:___________________________
------------------------ Xxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Title:____ President__________________ Title: ___Vice President__________
----------- --------------
Date: ___August 2, 1989 _______________ Date: ____ 7/27/89 ____________
---------------- -------------
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
HYPERION TOTAL RETURN FUND, INC.
I. Administration
Custody Service: Maintain custody of fund assets. Settle portfolio purchases and
sales. Report buy and sell fails. Determine and collect portfolio income. Make
cash disbursements and report cash transactions. Monitor corporate actions.
Portfolio and Fund Accounting: Maintain investment ledgers, provide selected
portfolio transactions, position and income reports. Maintain general ledger and
capital stock accounts. Prepare daily trial balance. Calculate net asset value.
Provide selected general ledger reports. Securities yield or market value
quotations will be provided by State Street's Automated Pricing System or by the
Fund.
The fee shown below is an annual charge, billed and payable monthly, based on
average monthly net assets.
ANNUAL FEES
Fund Net Assets Annual Custody Fees
-------------------
First $50 Million 1/15 of 1%
Next $50 Million 1/30 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges $3,000
II. Portfolio Trades - For Each Line Item Processed
-----------------------------------------------
State Street Bank Repos $ 7.00
DTC of Fed Book Entry $16.00
New York Physical Settlements $25.00
All Other Trades $16.00
Option charge for each option written or closing
contract, per issue, per broker $25.00
Option expiration charge, per issue, per broker $15.00
Option exercised charge, per issue, per broker $15.00
IV. Lending of Securities
---------------------
Deliver loaned securities versus cash collateral $20.00
Deliver loaned securities versus securities collateral $30.00
Receive/deliver additional cash collateral $ 6.00
Substitutions of securities collateral $30.00
Deliver cash collateral versus receipt of loaned securities $15.00
Deliver securities collateral versus receipt of loaned securities $25:00
Loan administration - xxxx-to-market per day, per loan $ 3.00
V. Interest Rate Futures (Marking)
-------------------------------
Transactions - no security movement $10.00
VI. NA Vigator Automated Pricing
----------------------------
Monthly Base Charge $175.00
Monthly Quote Charge:
Municipal Bonds via Xxxxx/S & P/Xxxxxx Data $16.00
Fixed Income Securities via IDSI $13.00
Government or Corporate Bonds via Xxxxx/S & P or Xxxxxx $11.00
Fixed Income Securities via Xxxxxxx Xxxxx $11.00
Foreign Bonds via Extel $10.00
Options, Futures, and Private Placements $ 6.00
Listed and OTC Equities (Domestic & Foreign) $ 6.00
For billing purposes, the monthly quote charge will be based on the average
number of positions in the portfolio at month end. VII. Holdings Charge For each
issue maintained- monthly charge
_________________________________________________ $ 5.00 VIII. Principal
Reduction Payments Per Paydown
_______________________________________________________________________________
$ 8.00 IX. Special Services Fees for activities of a non-recurring nature such
as fund consolidations or reorganizations, extraordinary security shipments and
the preparation of special reports will be subject to negotiation. Fees for
automated pricing, yield calculation and other special items will be negotiated
separately.
X. Out-of-Pocket Expenses
A billing for the recovery of applicable out-of-pocket expenses will be made as
of the end of each month. Out-of-pocket expenses include, but are not limited to
the following:
Telephone
Wire Charges ($5.25 per wire in and $5.00 out) Postage and Insurance
Courier Service Duplicating Legal Fees Supplies Related to Fund Records
Rush Transfer -- $8.00 each Transfer Fees Sub-custodian Charges Price
Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over $2,500 -- $4.25 GNMA
Transfer - $15 each
XI. Payment
The-above fees will be charged against the fund's custodian checking account
five (5) days after the invoice is mailed to the fund's offices.
HYPERION TOTAL RETURN FUND INC, STATE STREET BANK AND TRUST CO.
Title: /s/ Xxxxxx Xxxxxxxx By: _____________________________
-------------------------
Xxxxxx Xxxxxxxx
By: __________Treasurer_____________ Title: _____Vice President___________
--------- --------------
Date: _________9/27/96 _____________ Date: ________9-6-96______________
-------- ------
