EXHIBIT 8
CUSTODIAN AGREEMENT
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Agreement made as of the 1st day of October, 1998, between Xxxx Small &
Mid-Cap Growth Fund, Inc., a corporation organized and existing under the laws
of the State of Maryland, and registered under the Investment Company Act of
1940 as an investment company, having its principal office and place of business
at 0000 Xxxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 (hereinafter called
the "Fund"), and Founders Bank of Arizona, authorized to do a banking business,
whose mailing address is 0000 X. Xxxxxxxxxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx
00000 (hereinafter called the "Custodian").
WITNESSETH
WHEREAS, the Fund desires to engage the Custodian to hold assets of the
Fund; and
WHEREAS, the Custodian is willing to hold and administer assets of the Fund
in accordance with this Agreement;
NOW, THEREFORE, the Fund and the Custodian in consideration of the mutual
promises hereinafter set forth do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Persons" shall be deemed to include the Treasurer, the
Controller or any other person, whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Board of Directors of the Fund to
give Oral Instructions or Written Instructions on behalf of the Fund and listed
in the Certificate annexed hereto as Appendix A or such other Certificate as may
be received by the Custodian from time to time.
2. "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.
3. "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 Fund by any two Officers of the Fund.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Board of Directors
specifically approving deposits in DTC. The term "Depository" shall further
mean and include any other person authorized to act as a depository under the
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Investment Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a resolution of the
Fund's Board of Directors specifically approving deposits therein by the
Custodian.
5. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and interest by the
government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale.
6. "Officers" shall be deemed to include the Chairman, President, any Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Board of Directors of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
7. "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from an Authorized Person or from a person reasonably believed by
the Custodian to be an Authorized Person.
8. "Security" shall be deemed to include, without limitation, Money Market
Securities, bonds, debentures, corporate debt securities, notes, common stock,
securities convertible into common stock, preferred stock, mortgages or other
obligations, and any certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interest therein, or any property
or assets.
9. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the recipient of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
Securities and moneys owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
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ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Fund will deliver or cause to be delivered to the Custodian all
Securities and all moneys owned by it, including cash received for the issuance
of its shares, at any time during the period of this Agreement except for such
moneys as may be deposited by the Fund from time to time in a checking account
maintained by the Fund in accordance with the rules and regulations of the
Securities and Exchange Commission under the Investment Company Act of 1940.
The Custodian will not be responsible for such Securities and such moneys until
actually received by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf, where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein and
to utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of the Fund in a Depository the Fund shall deliver to the Custodian a
certified resolution of the Board of Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral, provided however, that the
Custodian shall not deposit any Securities of the Fund with a Depository, or
leave on deposit any Securities so deposited, unless the Custodian's rights
against the Depository include the right to recover from the Depository, for the
benefit of the Fund, any loss sustained in connection with the Securities of the
Fund deposited by the Custodian with the Depository, as a result of negligence
or willful misconduct on the part of the Depository or any agent or custodian of
it. Securities and moneys of the Fund deposited in either the Book-Entry System
or a Depository will be represented in accounts which include only assets held
by the Custodian for customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of the
Fund all moneys received by it for the account of the Fund, and shall disburse
the same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions as provided in Article V
hereof;
(c) In payment of original issue or other taxes, as provided in
Article VI hereof;
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(d) In payment for capital stock of the Fund redeemed by it, as
provided in Article VI hereof;
(e) Pursuant to Certificates setting forth the name and address of the
person to whom the payment is to be made, and the purpose for which payment is
to be made, or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article IX hereof.
3. On each business day the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from the account of the Fund
during the preceding business day. Where Securities are transferred to the
account of the Fund, the Custodian shall also by book entry or otherwise
identify as belonging to the Fund a quantity of Securities 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 the Book-Entry System or the Depository.
At least monthly and from time to time, the Custodian shall furnish the Fund
with a detailed statement of the Securities and moneys held for the Fund under
this Agreement.
4. All Securities held for the Fund, 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 in that form; all other Securities held for the Fund
may be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository any
Securities which it may hold for the account of the Fund and which may from time
to time be registered in the name of the Fund. The Custodian shall hold all
such Securities which are not held in the Book-Entry System or in the Depository
in a separate account in the name of the Fund physically segregated at all times
from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with respect to
all Securities held for the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called redeemed, or retired, or otherwise
become payable;
(c) Surrender Securities in temporary form for definitive Securities;
(d) Execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
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(e) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund 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;
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificate of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities which
are not Money Market Securities, a Certificate, and (ii) with respect to each
purchase of Money Market Securities, a Certificate, Oral Instructions, or
Written Instructions, specifying with respect to each such purchase: (a) the
name of the issuer and the title of the Securities, (b) the number of shares or
the principal amount purchased and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person from whom or the
broker through whom the purchase was made. The Custodian shall upon receipt of
Securities purchased by or for the Fund pay out of the moneys held for the
account of the Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions, or
Written Instructions.
2. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, a Certificate, Oral Instructions, or Written
Instructions, specifying with respect to each such sale: (a) the name of
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the issuer and the title of the Security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale, and (f)
the name of the broker through whom or the person to whom the sale was made. The
Custodian shall deliver the Securities upon receipt of the total amount payable
to the Fund upon such sale, provided that the same conforms to the total amount
payable as set forth in such Certificate, Oral Instructions, or Written
Instructions. Subject to the foregoing, the Custodian may accept payment, and
may deliver Securities and arrange for payment, in accordance with the customs
prevailing in the principal United States financial centers among dealers in
Securities.
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. In connection with any dividend or distribution declared with respect
to shares of capital stock of the Fund, the Fund shall furnish to the Custodian
a copy of the resolution of the Board of Directors, certified by the Secretary
or any Assistant Secretary, either (i) setting forth the date of the declaration
of such dividend or 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 that date and the total
amount payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distribution on a daily basis and
authorizing the Custodian to rely on a Certificate, Oral Instructions or Written
Instructions setting forth the date of the declaration of such dividend or
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 that date and the total amount payable
to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Certificate, Oral
Instructions, or Written Instructions, as the case may be, the Custodian shall
pay out of the moneys held for the account of the Fund the total amount payable
to the Dividend Agent of the Fund.
ARTICLE VI
SALE AND REDEMPTION OF SHARES OF CAPITAL STOCK OF THE FUND
1. Whenever the Fund shall sell any shares of its capital stock, it shall
deliver to the Custodian a Certificate specifying:
(a) The number of shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale
of such shares.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the account of the Fund.
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3. Upon issuance of any shares of the capital stock of the Fund in
accordance with the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in connection with such issuance
upon the receipt of a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund shall redeem any
shares of its capital stock, it shall furnish to the Custodian a Certificate
specifying:
(a) The number of shares of capital stock redeemed; and
(b) The amount to be paid for the shares of capital stock redeemed.
5. Upon receipt from the Transfer Agent of an advice setting forth the
number of shares of capital stock received by the Transfer Agent for redemption
and that such shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent out of the moneys held for the account
of the Fund of the total amount specified in the Certificate issued pursuant to
the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
shares of the capital stock of the Fund, whenever shares of the capital stock of
the Fund are redeemed pursuant to any check redemption privilege which may from
time to time be offered by the Fund, the Custodian, unless otherwise instructed
by a Certificate, shall, upon receipt of an advice from the Fund or its agent
setting forth that the redemption is in good form for redemption in accordance
with the check redemption procedure, honor the check presented as part of such
check redemption privilege out of the money held in the account of the Fund for
such purposes.
ARTICLE VII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf
of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is for any other reason indebted
to the Custodian, (except a borrowing for investment or for temporary or
emergency purpose using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article VII),
such overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund payable on demand and shall bear interest from the date
incurred at the rate per annum (based on a 360-day year for the actual number of
days involved) equal to 1/2% over the prime commercial lending rate of Founders
Bank of Arizona in effect from time to time, such rate to be adjusted on the
effective date of any change in such prime commercial lending rate but in no
event to be less than 6% per annum. Any such overdraft or indebtedness shall be
reduced by an amount equal to the total of all amounts due the Fund which have
not been collected by the Custodian on behalf of the Fund when due because of
the failure of the Custodian to timely make demand or presentment for payment.
In addition, the Fund hereby agrees that the Custodian shall
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have a continuing lien and security interest in and to any property at any time
held by it for the benefit of the Fund or in which the Fund may have an interest
which is then in the Custodian's possession or control or in possession or
control of any third party acting in the Custodian's behalf. The Fund authorizes
the Custodian, in its sole discretion, at any time to charge any such overdraft
or indebtedness together with interest due thereon against any balance of
account standing to the Fund's credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking on the form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank, (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or other
loan agreement, (c) the time and date, if known, on which the loan is to be
entered into, (d) the date on which the loan becomes due and payable, (e) the
total amount payable to the Fund on the borrowing date, (f) 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, and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate 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
Certificate. 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 such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund 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 Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount or any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE VIII
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of Incorporation
and as disclosed in its most recent and currently effective prospectus to lend
its portfolio Securities, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan: (a) the name of the
issuer and the title of the Securities, (b) the number of shares or the
principal amount loaned, (c) the date of loan and delivery, (d) the total amount
to be delivered to the Custodian
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against the loan of the Securities, including the amount of cash collateral and
the premium, if any, separately identified, and (e) the name of the broker,
dealer, or financial institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer or financial
institution to which the loan was made upon receipt of the total amount
designated as to be delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than through the Book-
Entry System or Depository only in the form of a certified or bank cashier's
check payable to the order of the Fund or the Custodian drawn on New York
Clearing House funds and may deliver Securities in accordance with the customs
prevailing among dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of securities:
(a) the name of the issuer and the title of the Securities to be returned, (b)
the number of shares or the principal amount to be returned, (c) the date of
termination, (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate), and (e) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Custodian may,
with respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted by it in good faith
in conformity with such advice or opinion. The Custodian shall promptly notify
the Fund whenever it intends to apply for and obtain advice or an opinion of
counsel at the expense of the Fund. The Custodian shall be liable to the Fund
for any loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or willful
misconduct on the part of the Custodian or any of its employees or agents. In
the event that the Custodian should determine that there has been any loss or
damage involving Securities of the Fund deposited with any Depository, the
Custodian will enforce, for the benefit of the Fund, the Custodian's rights
against the Depository in connection with any of the Securities of the Fund
deposited by the Custodian with the Depository. The Custodian shall credit to
the Fund's account hereunder the amount, if any, recovered by the Custodian from
or for the account of, any Depository as reimbursement for the loss of, or
damage to, any Securities deposited by the Custodian hereunder with said
Depository.
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2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or for
the Fund, the legality of the purchase thereof, or the propriety of the amount
paid therefor;
(b) The legality of the sale of any Securities by or for the Fund, or
the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of the capital
stock of the Fund, or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of capital stock of
the Fund, or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by the
Fund;
(f) The legality of any borrowing by the Fund using Securities as
collateral; or
(g) The legality of any loan of portfolio Securities pursuant to
Article VIII of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer, or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such cash
collateral held by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
fund are lent pursuant to Article VIII of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the Book-
Entry System or the Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such amount is
payable are in default, or if
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payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction of reimbursement of its costs and expenses in
connection with any such action.
6. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including, but
not limited to, banking institutions located in foreign countries, of Securities
and moneys at any time owned by the Fund, upon terms and conditions approved in
a Certificate.
7. 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 account of
the Fund are such as properly may be held by the Fund under the provisions of
its Articles of Incorporation.
8. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses incurred by the Custodian in the
performance of its duties pursuant to such agreement against any money held by
it for the account of the Fund. The Custodian shall also be entitled to charge
against any money held by it for the account of the Fund the amount of any loss,
damage, liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement. The expenses
which the Custodian may charge against the account of the Fund include, but are
not limited to, the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City transactions involving
the purchase and sale of Securities of the Fund.
9. 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 a Certificate. The Custodian shall be entitled to rely upon
any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Articles IV or V hereof. The Fund agrees to forward to
the Custodian a Certificate or facsimile thereof confirming such Oral
Instructions or Written Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by hand delivery,
telecopier or other similar device, or otherwise, by the close of business of
the same day that such Oral Instructions or Written Instructions are given to
the Custodian. The Fund agrees that the fact that such confirming Certificate
or facsimile thereof is not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions or Written Instructions
given to the Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
10. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
11
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
11. The Custodian shall promptly provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
12. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article VI as part of any check redemption privilege program of
the Fund, except for any such liability, claim, loss and demand arising out of
the Custodian's own negligence or willful misconduct.
13. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution of the board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of its Board of Directors, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, 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 moneys then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the Custodian
in accordance with the preceding paragraph, the Fund 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 Fund) and moneys then owned by the Fund
be deemed to be its own custodian and the Custodian shall
12
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 Fund to hold such Securities hereunder
in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of certain present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event that any
such present Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until
such new Certificate 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
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. 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 to it at its offices at 0000 X. Xxxxxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000, or at such other place as the Custodian
may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at 0000 Xxxxx 00xx
Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000 or at such other place as the Fund may
from time to time designate in writing.
5. 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 and approved by a resolution of the Board of Directors of the Fund.
6. 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 Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of Arizona.
13
8. 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 corporate Officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
Xxxx Small & Mid-Cap Growth Fund, Inc.
By /s/ L. Xxx Xxxx
-----------------------------------
Chairman
Attest:
/s/ Xxxxxx X. Xxxxxxx
---------------------------
Secretary
Founders Bank of Arizona
By /s/ Xxxxxxx X. Xxx
-----------------------------------
Attest:
/s/ Xxxxxx Xxxxxx
---------------------------
14
APPENDIX A
We, L. Xxx Xxxx, Chairman, and Xxxxxx X. Xxxxxxx, Secretary, of Xxxx Small
& Mid-Cap Growth Fund, Inc., a Maryland corporation (the "Fund"), do hereby
certify that the following individuals have been duly authorized by the Board of
Directors of the Fund, in conformity with the Fund's Articles of Incorporation
and Bylaws, to give Oral Instructions and Written Instructions on behalf of the
Fund, and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Signatures
---------------------------- ---------------------------------
L. Xxx Xxxx /s/ L. Xxx Xxxx
---------------------------------
Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxxx X. Xxxx /s/ Xxxxxxxx X. Xxxx
---------------------------------
Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
---------------------------------
/s/ L. Xxx Xxxx
---------------------------------
L. Xxx Xxxx, Chairman
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx, Secretary
15
APPENDIX B
We, L. Xxx Xxxx, chairman, and Xxxxxx X. Xxxxxxx, secretary, of Xxxx Small
& Mid-Cap Growth Fund, Inc., a Maryland corporation ("xxx Xxxx") do hereby
certify that the following individuals serve in the positions with the Fund set
forth below their respective names and have been duly elected by the Board of
Directors of the Fund to such positions and qualified therefor in conformity
with the Fund's Articles of Incorporation and Bylaws, and the signatures set
forth opposite their respective names are their true and correct signatures:
Name Signatures
---------------------------- ----------------------------------
L. Xxx Xxxx /s/ L. Xxx Xxxx
Chairman ----------------------------------
Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
President ----------------------------------
Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
Vice President and Secretary ----------------------------------
Xxxxxxxx X. Xxxx /s/ Xxxxxxxx X. Xxxx
Vice President and Treasurer ----------------------------------
Xxxxx X. Xxxxxxxx /s/ Xxxxx X. Xxxxxxxx
Vice President ----------------------------------
Xxxxx X. Xxxx /s/ Xxxxx X. Xxxx
Vice President & Assistant Treasurer ----------------------------------
/s/ L. Xxx Xxxx
----------------------------------
L. Xxx Xxxx, Chairman
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx, Secretary
16
FEE SCHEDULE
Effective on the date of this Agreement, compensation payable by the Fund
to Founders Bank of Arizona (the "Custodian") pursuant to Article IX-8 of the
Custody Agreement between the Fund and the Custodian dated as of October 1, 1998
shall be as follows:
ANNUAL BASE FEE $1,750.00
PLUS:
Annual charge for each issue held $ 25.00
Charge for each transaction $ 50.00
Charge for each outgoing wire transfer
directed by a Fund authorized person,
and for each incoming wire transfer
received for the account of the Fund $ 4.00
Transactions are defined as a purchase, a sale, a call or a maturity.
It is understood that additional fees, as agreed to between Custodian and
Fund, may become payable by Fund should Fund engage in certain activities,
including but not limited to, the lending of portfolio securities of the Fund,
which result in the incurring of additional expenses by the Custodian.
Approved:
Xxxx Small & Mid-Cap Growth Fund, Inc.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Vice President
Founders Bank of Arizona
By: /s/ Xxxxxxx X. Xxx
----------------------------------
Vice President
