Exhibit 23(g)(5)
CUSTODY AGREEMENT
Dated January 17, 2001
Between
UMB BANK, N.A.
and
THE OBERWEIS FUNDS
TABLE OF CONTENTS
SECTION PAGE
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1. APPOINTMENT OF CUSTODIAN................................................1
2. DEFINITIONS.............................................................1
(a) "Security"......................................................1
(b) "Assets"........................................................1
(c)(3) Instructions and Special Instructions...........................2
3. DELIVERY OF CORPORATE DOCUMENTS.........................................2
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN................3
(a) Safekeeping......................................................3
(b) Manner of Holding Securities.....................................3
(c) Free Delivery of Assets..........................................5
(d) Exchange of Securities...........................................5
(e) Purchases of Assets..............................................5
(f) Sales of Assets..................................................6
(g) Options..........................................................6
(h) Futures Contracts................................................7
(i) Segregated Accounts..............................................7
(j) Depositary Receipts..............................................8
(k) Corporate Actions, Put Bonds, Called Bonds, Etc..................8
(l) Interest Bearing Deposits........................................8
(m) Foreign Exchange Transactions....................................9
(n) Pledges or Loans of Securities..................................10
(o) Stock Dividends, Rights, Etc....................................10
(p) Routine Dealings................................................10
(q) Collections.....................................................10
(r) Bank Accounts...................................................11
(s) Dividends, Distributions and Redemptions........................11
(t) Proceeds from Shares Sold.......................................11
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985.......................................11
(v) Books and Records...............................................12
(w) Opinion of Fund's Independent Certified Public Accountants......12
(x) Reports by Independent Certified Public Accountants.............12
(y) Bills and Other Disbursements...................................12
(z) Affirmation of Transactions.....................................12
5. SUBCUSTODIANS..........................................................13
(a) Domestic Subcustodians..........................................13
(b) Foreign Subcustodians...........................................13
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(c) Interim Subcustodians...........................................14
(d) Special Subcustodians...........................................14
(e) Termination of a Subcustodian...................................14
(f) Certification Regarding Foreign Subcustodians...................14
6. STANDARD OF CARE.......................................................15
(a) General Standard of Care........................................15
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control, Sovereign Risk, Etc........................15
(c) Liability for Past Records......................................15
(d) Advice of Counsel...............................................15
(e) Advice of the Fund and Others...................................16
(f) Instructions Appearing to be Genuine............................16
(g) Exceptions from Liability.......................................16
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.......................17
(a) Domestic Subcustodians..........................................17
(b) Liability for Acts and Omissions of Foreign Subcustodians.......17
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities Depositories and Clearing
Agencies........................................................17
(d) Defaults or Insolvency's of Brokers, Banks, Etc.................17
(e) Reimbursement of Expenses.......................................17
8. INDEMNIFICATION........................................................17
(a) Indemnification by Fund.........................................17
(b) Indemnification by Custodian....................................18
9. ADVANCES...............................................................18
10. LIENS..................................................................18
11. COMPENSATION...........................................................19
12. POWERS OF ATTORNEY.....................................................19
13. TERMINATION AND ASSIGNMENT.............................................19
14. ADDITIONAL FUNDS.......................................................20
15. NOTICES................................................................20
16. MISCELLANEOUS..........................................................20
ii
CUSTODY AGREEMENT
This agreement made as of this 17th day of January, 2001, between UMB Bank,
n.a., a national banking association with its principal place of business
located at Kansas City, Missouri (hereinafter "Custodian"), and each of the
Funds listed on Appendix B hereof, together with such additional Funds which
shall be made parties to this Agreement by the execution of Appendix B hereto
(individually, a "Fund" and collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for the
custody of Assets (as hereinafter defined) owned by such Fund which Assets are
to be held in such accounts as such Fund may establish from time to time; and
WHEREAS, Custodian is willing to accept such appointment on the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties hereto, intending to be legally bound, mutually covenant and agree
as follows:
1. APPOINTMENT OF CUSTODIAN
------------------------
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a custodian
and agrees to perform the duties and responsibilities of Custodian as set forth
herein on the conditions set forth herein.
2. DEFINITIONS
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For purposes of this Agreement, the following terms shall have the meanings
so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable paper
commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by the
Custodian for the benefit of a Fund.
(c)(1) "Instructions," as used herein, shall mean: (i) a tested telex, a
written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of a
Fund by an Authorized Person; (ii) a telephonic or other oral communication from
a person the Custodian reasonably believes to be an Authorized Person; or
(iii) a communication effected directly between an electro-mechanical or
electronic device or system (including, without limitation, computers) on behalf
of a Fund. Instructions in the form of oral communications shall be confirmed by
the appropriate Fund by tested telex or in writing in the manner set forth in
clause (i) above, but the lack of such confirmation shall in no way affect any
action taken by the Custodian in reliance upon such oral Instructions prior to
the Custodian's receipt of such confirmation. Each Fund authorizes the Custodian
to record any and all telephonic or other oral Instructions communicated to the
Custodian.
(c)(2) "Special Instructions," as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such Fund
in writing, which countersignature or confirmation shall be included on the same
instrument containing the Instructions or on a separate instrument relating
thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall be
continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS
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Each of the parties to this Agreement represents that its execution does
not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required corporate
action to authorize the execution and delivery of this Agreement has been taken.
Each Fund has furnished the Custodian with copies, properly certified or
authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Trust of the Fund as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Trustees of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional information.
Each Fund shall promptly furnish the Custodian with copies of any updates,
amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Trustees and all
amendments or supplements thereto, properly certified
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or authenticated, designating certain officers or employees of each such Fund
who will have continuing authority to certify to the Custodian: (a) the names,
titles, signatures and scope of authority of all persons authorized to give
Instructions or any other notice, request, direction, instruction, certificate
or instrument on behalf of each Fund, and (b) the names, titles and signatures
of those persons authorized to countersign or confirm Special Instructions on
behalf of each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may be
accepted and relied upon by the Custodian as conclusive evidence of the facts
set forth therein and shall be considered to be in full force and effect until
delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include the
name(s) of a person previously authorized to give Instructions or to countersign
or confirm Special Instructions, such persons shall no longer be considered an
Authorized Person authorized to give Instructions or to countersign or confirm
Special Instructions. Unless the certificate specifically requires that the
approval of anyone else will first have been obtained, the Custodian will be
under no obligation to inquire into the right of the person giving such
Instructions or Special Instructions to do so. Notwithstanding any of the
foregoing, no Instructions or Special Instructions received by the Custodian
from a Fund will be deemed to authorize or permit any director, trustee,
officer, employee, or agent of such Fund to withdraw any of the Assets of such
Fund upon the mere receipt of such authorization, Special Instructions or
Instructions from such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN
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Except for Assets held by any Subcustodian appointed pursuant to Sections
5(b), (c), or (d) of this Agreement, the Custodian shall have and perform the
powers and duties hereinafter set forth in this Section 4. For purposes of this
Section 4 all references to powers and duties of the "Custodian" shall also
refer to any Domestic Subcustodian appointed pursuant to Section 5(a).
(a) Safekeeping. The Custodian will keep safely the Assets of each Fund
which are delivered to it from time to time. The Custodian shall not be
responsible for any property of a Fund held or received by such Fund and not
delivered to the Custodian.
(b) Manner of Holding Securities.
----------------------------
(1) The Custodian shall at all times hold Securities of each Fund
either: (i) by physical possession of the share certificates or other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in accordance
with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities which have
been delivered to it in physical form, by registering the same in the name of
the appropriate Fund or its nominee, or in the name of the Custodian or its
nominee, for whose actions such Fund and Custodian, respectively, shall be fully
responsible. Upon the receipt of Instructions, the Custodian shall hold such
Securities in street certificate form, so called, with or without any indication
of fiduciary capacity. However, unless it receives Instructions to the
contrary, the Custodian will register all such portfolio Securities in the name
of the Custodian's authorized nominee. All such
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Securities shall be held in an account of the Custodian containing only assets
of the appropriate Fund or only assets held by the Custodian as a fiduciary,
provided that the records of the Custodian shall indicate at all times the Fund
or other customer for which such Securities are held in such accounts and the
respective interests therein.
(3) The Custodian may deposit and/or maintain domestic Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry system
as provided in (i) Subpart O of Treasury Circular Xx. 000, 00 XXX 306.115, (ii)
Subpart B of Treasury Circular Public Debt Series Xx. 00-00, 00 XXX 350.2, or
(iii) the book-entry regulations of federal agencies substantially in the form
of 31 CFR 306.115. Upon the receipt of Special Instructions, the Custodian may
deposit and/or maintain domestic Securities owned by a Fund in any other
domestic clearing agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Securities Exchange Act of 1934 (or as may
otherwise be authorized by the SEC to serve in the capacity of depository or
clearing agent for the Securities or other assets of investment companies) which
acts as a Securities depository. Each of the foregoing shall be referred to in
this Agreement as a "Securities System," and all such Securities Systems shall
be listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and regulations,
if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities directly or through
one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the Securities
in a Securities System, provided that such Securities are represented in an
account ("Account") of the Custodian in the Securities System that includes
only assets held by the Custodian as a fiduciary, custodian or otherwise
for customers.
(iii) The books and records of the Custodian shall at all times
identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased for the
account of a Fund only upon (a) receipt of advice from the Securities
System that such Securities have been transferred to the Account of the
Custodian in accordance with the rules of the Securities System, and (b)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of such Fund. The Custodian shall
transfer Securities sold for the account of a Fund only upon (a) receipt of
advice from the Securities System that payment for such Securities has been
transferred to the Account of the Custodian in accordance with the rules of
the Securities System, and (b) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of such
Fund. Copies of all advices from the Securities System relating to
transfers of Securities for the account of a Fund shall be maintained for
such Fund by the Custodian. The Custodian shall deliver to a Fund on the
next succeeding business day daily transaction reports that shall
4
include each day's transactions in the Securities System for the account of
such Fund. Such transaction reports shall be delivered to such Fund or any
agent designated by such Fund pursuant to Instructions, by computer or in
such other manner as such Fund and Custodian may reasonably agree.
(v) The Custodian shall, if requested by a Fund pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or
any Subcustodian with respect to a Securities System's accounting system,
internal accounting control and procedures for safeguarding Securities
deposited in the Securities System.
(vi) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly
as practicable and shall take all actions reasonably practicable to
safeguard the Securities of such Fund maintained with such Securities
System.
(c) Free Delivery of Assets. Notwithstanding any other provision of this
Agreement and except as provided in paragraph 3 hereof, the Custodian, upon
receipt of Special Instructions, will undertake to make free delivery of Assets,
provided such Assets are on hand and available, in connection with a Fund's
transactions and to transfer such Assets to such broker, dealer, Subcustodian,
bank, agent, Securities System or otherwise as specified in such Special
Instructions.
(d) Exchange of Securities. Upon receipt of Instructions, the Custodian
will exchange portfolio Securities held by it for a Fund for other Securities or
cash paid in connection with any reorganization, recapitalization, merger,
consolidation, or conversion of convertible Securities, and will deposit any
such Securities in accordance with the terms of any reorganization or protective
plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par value
of the stock is changed, to sell any fractional shares, and, upon receiving
payment therefor, to surrender bonds or other Securities held by it at maturity
or call.
(e) Purchases of Assets.
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(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has
received Special Instructions to the contrary, such payment will be made only
upon receipt of Securities by the Custodian, a clearing corporation of a
national Securities exchange of which the Custodian is a member, or a Securities
System in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, upon receipt of Instructions: (i) in connection
with a repurchase agreement, the Custodian may release funds to a Securities
System prior to the receipt of advice from the Securities System that the
Securities underlying such repurchase agreement have been transferred
5
by book-entry into the Account maintained with such Securities System by the
Custodian, provided that the Custodian's instructions to the Securities System
require that the Securities System may make payment of such funds to the other
party to the repurchase agreement only upon transfer by book-entry of the
Securities underlying the repurchase agreement into such Account; (ii) in the
case of Interest Bearing Deposits, currency deposits, and other deposits,
foreign exchange transactions, futures contracts or options, pursuant to
Sections 4(g), 4(h), 4(l), and 4(m) hereof, the Custodian may make payment
therefor before receipt of an advice of transaction; and (iii) in the case of
Securities as to which payment for the Security and receipt of the instrument
evidencing the Security are under generally accepted trade practice or the terms
of the instrument representing the Security expected to take place in different
locations or through separate parties, such as commercial paper which is indexed
to foreign currency exchange rates, derivatives and similar Securities, the
Custodian may make payment for such Securities prior to delivery thereof in
accordance with such generally accepted trade practice or the terms of the
instrument representing such Security.
(2) Other Assets Purchased. Upon receipt of Instructions and except
as otherwise provided herein, the Custodian shall pay for and receive other
Assets for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
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(1) Securities Sold. In accordance with Instructions, the Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of which
the Custodian is a member; or (c) credit to the Account of the Custodian with a
Securities System, in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, Securities held in physical form may be delivered
and paid for in accordance with "street delivery custom" to a broker or its
clearing agent, against delivery to the Custodian of a receipt for such
Securities, provided that the Custodian shall have taken reasonable steps to
ensure prompt collection of the payment for, or return of, such Securities by
the broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to perform
of such broker or its clearing agent or for any related loss arising from
delivery or custody of such Securities prior to receiving payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
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(1) Upon receipt of Instructions relating to the purchase of an option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
the option by a Fund; (b) if the transaction involves the
6
sale of a covered call option, deposit and maintain in a segregated account the
Securities (either physically or by book-entry in a Securities System) subject
to the covered call option written on behalf of such Fund; and (c) pay, release
and/or transfer such Securities, cash or other Assets in accordance with any
notices or other communications evidencing the expiration, termination or
exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the securities or options exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.
(2) Upon receipt of Instructions relating to the sale of a naked
option (including stock index and commodity options), the Custodian, the
appropriate Fund and the broker-dealer shall enter into an agreement to comply
with the rules of the OCC or of any registered national securities exchange or
similar organizations(s). Pursuant to that agreement and such Fund's
Instructions, the Custodian shall: (a) receive and retain confirmations or
other documents, if any, evidencing the writing of the option; (b) deposit and
maintain in a segregated account, Securities (either physically or by book-entry
in a Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The appropriate Fund and the broker-dealer shall be
responsible for determining the quality and quantity of assets held in any
segregated account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract.
(h) Futures Contracts. Upon receipt of Instructions, the Custodian shall
enter into a futures margin procedural agreement among the appropriate Fund, the
Custodian and the designated futures commission merchant (a "Procedural
Agreement"). Under the Procedural Agreement the Custodian shall: (a) receive
and retain confirmations, if any, evidencing the purchase or sale of a futures
contract or an option on a futures contract by such Fund; (b) deposit and
maintain in a segregated account cash, Securities and/or other Assets designated
as initial, maintenance or variation "margin" deposits intended to secure such
Fund's performance of its obligations under any futures contracts purchased or
sold, or any options on futures contracts written by such Fund, in accordance
with the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any similar
organization(s), regarding such margin deposits; and (c) release Assets from
and/or transfer Assets into such margin accounts only in accordance with any
such Procedural Agreements. The appropriate Fund and such futures commission
merchant shall be responsible for determining the type and amount of Assets held
in the segregated account or paid to the broker-dealer in compliance with
applicable margin maintenance requirements and the performance of any futures
contract or option on a futures contract in accordance with its terms.
(i) Segregated Accounts. Upon receipt of Instructions, the Custodian shall
establish and maintain on its books a segregated account or accounts for and on
behalf of a Fund, into which account or accounts may be transferred Assets of
such Fund, including Securities maintained by the
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Custodian in a Securities System pursuant to Paragraph (b)(3) of this Section 4,
said account or accounts to be maintained (i) for the purposes set forth in
Sections 4(g), 4(h) and 4(n) and (ii) for the purpose of compliance by such Fund
with the procedures required by the SEC Investment Company Act Release Number
10666 or any subsequent release or releases relating to the maintenance of
segregated accounts by registered investment companies, or (iii) for such other
purposes as may be set forth, from time to time, in Special Instructions. The
Custodian shall not be responsible for the determination of the type or amount
of Assets to be held in any segregated account referred to in this paragraph, or
for compliance by the Fund with required procedures noted in (ii) above.
(j) Depositary Receipts. Upon receipt of Instructions, the Custodian shall
surrender or cause to be surrendered Securities to the depositary used for such
Securities by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter referred to, collectively, as "ADRs"), against
a written receipt therefor adequately describing such Securities and written
evidence satisfactory to the organization surrendering the same that the
depositary has acknowledged receipt of instructions to issue ADRs with respect
to such Securities in the name of the Custodian or a nominee of the Custodian,
for delivery in accordance with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory to
the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. Upon receipt of
Instructions, the Custodian shall: (a) deliver warrants, puts, calls, rights or
similar Securities to the issuer or trustee thereof (or to the agent of such
issuer or trustee) for the purpose of exercise or sale, provided that the new
Securities, cash or other Assets, if any, acquired as a result of such actions
are to be delivered to the Custodian; and (b) deposit Securities upon
invitations for tenders thereof, provided that the consideration for such
Securities is to be paid or delivered to the Custodian, or the tendered
Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall notify the appropriate Fund of such action in writing by
facsimile transmission or in such other manner as such Fund and Custodian may
agree in writing.
The Fund agrees that if it gives an Instruction for the performance of an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund shall
hold the Bank harmless from any adverse consequences in connection with acting
upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits. Upon receipt of Instructions directing the
Custodian to purchase interest bearing fixed term and call deposits (hereinafter
referred to, collectively, as "Interest Bearing Deposits") for the account of a
Fund, the Custodian shall purchase such Interest
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Bearing Deposits in the name of such Fund with such banks or trust companies,
including the Custodian, any Subcustodian or any subsidiary or affiliate of the
Custodian (hereinafter referred to as "Banking Institutions"), and in such
amounts as such Fund may direct pursuant to Instructions. Such Interest Bearing
Deposits may be denominated in U.S. dollars or other currencies, as such Fund
may determine and direct pursuant to Instructions. The responsibilities of the
Custodian to a Fund for Interest Bearing Deposits issued by the Custodian shall
be that of a U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those issued by the Custodian, (a) the Custodian shall be
responsible for the collection of income and the transmission of cash to and
from such accounts; and (b) the Custodian shall have no duty with respect to the
selection of the Banking Institution or for the failure of such Banking
Institution to pay upon demand.
(m) Foreign Exchange Transactions.
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(1) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to
provide exchange rate and U.S. Dollar information, in writing, to the Funds.
Such information shall be supplied by the Custodian at least by the business day
prior to the value date of the foreign exchange transaction, provided that the
Custodian receives the request for such information at least two business days
prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution as
it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have no
responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein, upon
receipt of Instructions the Custodian may, in connection with a foreign exchange
contract, make free outgoing payments of cash in the form of U.S. Dollars or
foreign currency prior to receipt of confirmation of such foreign exchange
contract or confirmation that the countervalue currency completing such contract
has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign
exchange transactions as principal. However, if the Custodian has made
available to a Fund its services as a principal in foreign exchange transactions
and subject to any separate agreement between the parties relating to such
transactions, the Custodian shall enter into foreign exchange contracts or
options to
9
purchase and sell foreign currencies for spot and future delivery on behalf of
and for the account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
------------------------------
(1) Upon receipt of Instructions from a Fund, the Custodian will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions,
the Custodian will pay, but only from funds available for such purpose, any such
loan upon re-delivery to it of the Securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan. In lieu of
delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account for
the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral, the
Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the borrower
thereof only upon receipt of the collateral for such borrowing. The Custodian
shall have no responsibility or liability for any loss arising from the delivery
of Securities prior to the receipt of collateral. Upon receipt of Instructions
and the loaned Securities, the Custodian will release the collateral to the
borrower.
(o) Stock Dividends, Rights, Etc. The Custodian shall receive and collect
all stock dividends, rights, and other items of like nature and, upon receipt of
Instructions, take action with respect to the same as directed in such
Instructions.
(p) Routine Dealings. The Custodian will, in general, attend to all
routine and mechanical matters in accordance with industry standards in
connection with the sale, exchange, substitution, purchase, transfer, or other
dealings with Securities or other property of each Fund except as may be
otherwise provided in this Agreement or directed from time to time by
Instructions from any particular Fund. The Custodian may also make payments to
itself or others from the Assets for disbursements and out-of-pocket expenses
incidental to handling Securities or other similar items relating to its duties
under this Agreement with prior approval of the appropriate Fund.
(q) Collections. The Custodian shall (a) collect amounts due and payable,
including the completion and filing of any proof of claims forms, to each Fund
with respect to portfolio Securities and other Assets; (b) promptly credit to
the account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
10
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other payments
with respect to portfolio Securities and other Assets, or in connection with the
transfer of such Securities or other Assets; provided, however, that with
respect to portfolio Securities registered in so-called street name, or physical
Securities with variable interest rates, the Custodian shall use its best
efforts to collect amounts due and payable to any such Fund. The Custodian
shall notify a Fund in writing by facsimile transmission or in such other manner
as such Fund and Custodian may agree in writing if any amount payable with
respect to portfolio Securities or other Assets is not received by the Custodian
when due. The Custodian shall not be responsible for the collection of amounts
due and payable with respect to portfolio Securities or other Assets that are in
default.
(r) Bank Accounts. Upon Instructions, the Custodian shall open and operate
a bank account or accounts on the books of the Custodian; provided that such
bank account(s) shall be in the name of the Custodian or a nominee thereof, for
the account of one or more Funds, and shall be subject only to draft or order of
the Custodian. The responsibilities of the Custodian to any one or more such
Funds for deposits accepted on the Custodian's books shall be that of a U.S.
bank for a similar deposit.
(s) Dividends, Distributions and Redemptions. To enable each Fund to pay
dividends or other distributions to shareholders of each such Fund and to make
payment to shareholders who have requested repurchase or redemption of their
shares of each such Fund (collectively, the "Shares"), the Custodian shall
release cash or Securities insofar as available. In the case of cash, the
Custodian shall, upon the receipt of Instructions, transfer such funds by check
or wire transfer to any account at any bank or trust company designated by each
such Fund in such Instructions. In the case of Securities, the Custodian shall,
upon the receipt of Special Instructions, make such transfer to any entity or
account designated by each such Fund in such Special Instructions.
(t) Proceeds from Shares Sold. The Custodian shall receive funds
representing cash payments received for shares issued or sold from time to time
by each Fund, and shall credit such funds to the account of the appropriate
Fund. The Custodian shall notify the appropriate Fund of Custodian's receipt of
cash in payment for shares issued by such Fund by facsimile transmission or in
such other manner as such Fund and the Custodian shall agree. Upon receipt of
Instructions, the Custodian shall: (a) deliver all federal funds received by
the Custodian in payment for shares as may be set forth in such Instructions and
at a time agreed upon between the Custodian and such Fund; and (b) make federal
funds available to a Fund as of specified times agreed upon from time to time by
such Fund and the Custodian, in the amount of checks received in payment for
shares which are deposited to the accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication Act
of 1985. The Custodian shall deliver or cause to be delivered to the
appropriate Fund all forms of proxies, all notices of meetings, and any other
notices or announcements affecting or relating to Securities owned by such Fund
that are received by the Custodian, any Subcustodian, or any nominee of either
of them, and, upon receipt of Instructions, the Custodian shall execute and
deliver, or cause such
11
Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Instructions,
neither the Custodian nor any Subcustodian or nominee shall vote upon any such
Securities, or execute any proxy to vote thereon, or give any consent or take
any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer which
requests such information pursuant to the Shareholder Communications Act of 1985
for the specific purpose of direct communications between such issuer and any
such Fund unless a particular Fund directs the Custodian otherwise in writing.
(v) Books and Records. The Custodian shall maintain such records relating
to its activities under this Agreement as are required to be maintained by Rule
31a-1 under the Investment Company Act of 1940 ("xxx 0000 Xxx") and to preserve
them for the periods prescribed in Rule 31a-2 under the 1940 Act. These records
shall be open for inspection by duly authorized officers, employees or agents
(including independent public accountants) of the appropriate Fund during normal
business hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants. The
Custodian shall take all reasonable action as each Fund may request to obtain
from year to year favorable opinions from each such Fund's independent certified
public accountants with respect to the Custodian's activities hereunder and in
connection with the preparation of each such Fund's periodic reports to the SEC
and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants. At the request of
a Fund, the Custodian shall deliver to such Fund a written report prepared by
the Custodian's independent certified public accountants with respect to the
services provided by the Custodian under this Agreement, including, without
limitation, the Custodian's accounting system, internal accounting control and
procedures for safeguarding cash, Securities and other Assets, including cash,
Securities and other Assets deposited and/or maintained in a Securities System
or with a Subcustodian. Such report shall be of sufficient scope and in
sufficient detail as may reasonably be required by such Fund and as may
reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements. Upon receipt of Instructions, the
Custodian shall pay, or cause to be paid, all bills, statements, or other
obligations of a Fund.
(z) Affirmation of Transactions. The Custodian shall be responsible for
the affirmation of all Funds' securities transactions.
12
5. SUBCUSTODIANS
-------------
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians, Foreign
Subcustodians, Special Subcustodians, or Interim Subcustodians (as each are
hereinafter defined) to act on behalf of any one or more Funds. A Domestic
Subcustodian, in accordance with the provisions of this Agreement, may also
appoint a Foreign Subcustodian, Special Subcustodian, or Interim Subcustodian to
act on behalf of any one or more Funds. For purposes of this Agreement, all
Domestic Subcustodians, Foreign Subcustodians, Special Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians."
(a) Domestic Subcustodians. The Custodian may, at any time and from time
to time, appoint any bank as defined in Section 2(a)(5) of the 1940 Act or any
trust company or other entity, any of which meet the requirements of a custodian
under Section 17(f) of the 1940 Act and the rules and regulations thereunder, to
act for the Custodian on behalf of any one or more Funds as a subcustodian for
purposes of holding Assets of such Fund(s) and performing other functions of the
Custodian within the United States (a "Domestic Subcustodian"). Each Fund shall
approve in writing the appointment of the proposed Domestic Subcustodian; and
the Custodian's appointment of any such Domestic Subcustodian shall not be
effective without such prior written approval of the Fund(s). Each such duly
approved Domestic Subcustodian shall be listed on Appendix A attached hereto, as
it may be amended, from time to time.
(b) Foreign Subcustodians. The Custodian may at any time appoint, or cause
a Domestic Subcustodian to appoint, any bank, trust company or other entity
meeting the requirements of an "eligible foreign custodian" under Section 17(f)
of the 1940 Act and the rules and regulations thereunder to act for the
Custodian on behalf of any one or more Funds as a subcustodian or sub-
subcustodian (if appointed by a Domestic Subcustodian) for purposes of holding
Assets of the Fund(s) and performing other functions of the Custodian in
countries other than the United States of America (hereinafter referred to as a
"Foreign Subcustodian" in the context of either a subcustodian or a sub-
subcustodian); provided that the Custodian shall have obtained written
confirmation from each Fund of the approval of the Board of Trustees, or other
governing body of each such Fund (which approval may be withheld in the sole
discretion of such Board of Trustees or other governing body or entity) with
respect to (i) the identity of any proposed Foreign Subcustodian (including
branch designation), (ii) the country or countries in which, and the securities
depositories or clearing agencies (hereinafter "Securities Depositories and
Clearing Agencies"), if any, through which, the Custodian or any proposed
Foreign Subcustodian is authorized to hold Securities and other Assets of each
such Fund, and (iii) the form and terms of the subcustodian agreement to be
entered into with such proposed Foreign Subcustodian. Each such duly approved
Foreign Subcustodian and the countries where and the Securities Depositories and
Clearing Agencies through which they may hold Securities and other Assets of the
Fund(s) shall be listed on Appendix A attached hereto, as it may be amended,
from time to time. Each Fund shall be responsible for informing the Custodian
sufficiently in advance of a proposed investment which is to be held in a
country in which no Foreign Subcustodian is authorized to act, in order that
there shall be sufficient time for the Custodian, or any Domestic Subcustodian,
to effect the appropriate arrangements with a proposed Foreign Subcustodian,
including obtaining approval as provided in
13
this Section 5(b). In connection with the appointment of any Foreign
Subcustodian, the Custodian shall, or shall cause the Domestic Subcustodian to,
enter into a subcustodian agreement with the Foreign Subcustodian in form and
substance approved by each such Fund. The Custodian shall not consent to the
amendment of, and shall cause any Domestic Subcustodian not to consent to the
amendment of, any agreement entered into with a Foreign Subcustodian, which
materially affects any Fund's rights under such agreement, except upon prior
written approval of such Fund pursuant to Special Instructions.
(c) Interim Subcustodians. Notwithstanding the foregoing, in the event
that a Fund shall invest in an Asset to be held in a country in which no Foreign
Subcustodian is authorized to act, the Custodian shall notify such Fund in
writing by facsimile transmission or in such other manner as such Fund and the
Custodian shall agree in writing of the unavailability of an approved Foreign
Subcustodian in such country; and upon the receipt of Special Instructions from
such Fund, the Custodian shall, or shall cause its Domestic Subcustodian to,
appoint or approve an entity (referred to herein as an "Interim Subcustodian")
designated in such Special Instructions to hold such Security or other Asset.
(d) Special Subcustodians. Upon receipt of Special Instructions, the
Custodian shall, on behalf of a Fund, appoint one or more banks, trust companies
or other entities designated in such Special Instructions to act for the
Custodian on behalf of such Fund as a subcustodian for purposes of: (i)
effecting third-party repurchase transactions with banks, brokers, dealers or
other entities through the use of a common custodian or subcustodian; (ii)
providing depository and clearing agency services with respect to certain
variable rate demand note Securities, (iii) providing depository and clearing
agency services with respect to dollar denominated Securities, and (iv)
effecting any other transactions designated by such Fund in such Special
Instructions. Each such designated subcustodian (hereinafter referred to as a
"Special Subcustodian") shall be listed on Appendix A attached hereto, as it may
be amended from time to time. In connection with the appointment of any Special
Subcustodian, the Custodian shall enter into a subcustodian agreement with the
Special Subcustodian in form and substance approved by the appropriate Fund in
Special Instructions. The Custodian shall not amend any subcustodian agreement
entered into with a Special Subcustodian, or waive any rights under such
agreement, except upon prior approval pursuant to Special Instructions.
(e) Termination of a Subcustodian. The Custodian may, at any time in its
discretion upon notification to the appropriate Fund(s), terminate any
Subcustodian of such Fund(s) in accordance with the termination provisions under
the applicable subcustodian agreement, and upon the receipt of Special
Instructions, the Custodian will terminate any Subcustodian in accordance with
the termination provisions under the applicable subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians. Upon request of a Fund,
the Custodian shall deliver to such Fund a certificate stating: (i) the
identity of each Foreign Subcustodian then acting on behalf of the Custodian;
(ii) the countries in which and the Securities Depositories and Clearing
Agencies through which each such Foreign Subcustodian is then holding cash,
Securities and other Assets of such Fund; and (iii) such other information as
may be requested
14
by such Fund, and as the Custodian shall be reasonably able to obtain, to
evidence compliance with rules and regulations under the 1940 Act.
6. STANDARD OF CARE
----------------
(a) General Standard of Care. The Custodian shall be liable to a Fund for
all losses, damages and reasonable costs and expenses suffered or incurred by
such Fund resulting from the negligence or willful misfeasance of the Custodian
or from the failure of the Custodian to perform its obligations pursuant to this
Agreement; provided, however, in no event shall the Custodian be liable for
special, indirect or consequential damages arising under or in connection with
this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc. In no event shall the Custodian or any Domestic
Subcustodian incur liability hereunder (i) if the Custodian or any Subcustodian
or Securities System, or any subcustodian, Securities System, Securities
Depository or Clearing Agency utilized by the Custodian or any such
Subcustodian, or any nominee of the Custodian or any Subcustodian (individually,
a "Person") is prevented, forbidden or delayed from performing, or omits to
perform, any act or thing which this Agreement provides shall be performed or
omitted to be performed, by reason of: (a) any provision of any present or
future law or regulation or order of the United States of America, or any state
thereof, or of any foreign country, or political subdivision thereof or of any
court of competent jurisdiction (and neither the Custodian nor any other Person
shall be obligated to take any action contrary thereto); or (b) any event beyond
the control of the Custodian or other Person such as armed conflict, riots,
strikes, lockouts, labor disputes, equipment or transmission failures, natural
disasters, or failure of the mails, transportation, communications or power
supply; or (ii) for any loss, damage, cost or expense resulting from "Sovereign
Risk." A "Sovereign Risk" shall mean nationalization, expropriation, currency
devaluation, revaluation or fluctuation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting a Fund's Assets; or acts of armed conflict,
terrorism, insurrection or revolution; or any other act or event beyond the
Custodian's or such other Person's control.
(c) Liability for Past Records. Neither the Custodian nor any Domestic
Subcustodian shall have any liability in respect of any loss, damage or expense
suffered by a Fund, insofar as such loss, damage or expense arises from the
performance of the Custodian or any Domestic Subcustodian in reliance upon
records that were maintained for such Fund by entities other than the Custodian
or any Domestic Subcustodian prior to the Custodian's employment hereunder.
(d) Advice of Counsel. The Custodian and all Domestic Subcustodians shall
be entitled to receive and act upon advice from counsel of its own choosing
before acting upon any instructions received from the Fund. If counsel advises
the Custodian or Domestic Subcustodians that it would be unlawful to follow the
Fund's instructions, the Custodian or Subcustodian shall immediately provide
notice of this opinion to the Fund. If the Fund obtains a contradictory opinion
from counsel
15
of its choice, the parties agree to mediate the dispute in good faith through
the services of an independent third party mediator.
The provision of this paragraph shall apply to advice obtained from an
attorney or any other persons reasonably believed by the Custodian or any
Domestic Subcustodians in good faith to be expert in matters upon which they are
consulted. Custodian shall not be held liable when its acts or omissions
resulted from its good faith reliance on the advice of legal counsel only when
such advice was received from counsel employed or retained by Fund.
(e) Advice of the Fund and Others. The Custodian and any Domestic
Subcustodian may rely upon the advice of any Fund and upon statements of such
Fund's accountants and other persons believed by it in good faith to be expert
in matters upon which they are consulted, and neither the Custodian nor any
Domestic Subcustodian shall be liable for any actions taken or omitted, in good
faith, pursuant to such advice or statements.
(f) Instructions Appearing to be Genuine. The Custodian and all Domestic
Subcustodians shall be fully protected and indemnified in acting as a custodian
hereunder upon any Resolutions of the Board of Trustees, Instructions, Special
Instructions, advice, notice, request, consent, certificate, instrument or paper
appearing to it to be genuine and to have been properly executed and shall,
unless otherwise specifically provided herein, be entitled to receive as
conclusive proof of any fact or matter required to be ascertained from any Fund
hereunder a certificate signed by any officer of such Fund authorized to
countersign or confirm Special Instructions.
(g) Exceptions from Liability. Without limiting the generality of any
other provisions hereof, neither the Custodian nor any Domestic Subcustodian
shall be under any duty or obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by or for
any Fund, the legality of the purchase thereof or evidence of ownership required
to be received by any such Fund, or the propriety of the decision to purchase or
amount paid therefor;
(ii) the legality of the sale of any Securities by or for any Fund, or
the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities, borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust, By-Laws or
votes or proceedings of the shareholders, trustees, or trustees of any such
Fund, or any such Fund's currently effective Registration Statement on file with
the SEC.
16
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS
------------------------------------------------
(a) Domestic Subcustodians. The Custodian shall be liable for the acts or
omissions of any Domestic Subcustodian to the same extent as if such actions or
omissions were performed by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians. The
Custodian shall be liable to a Fund for any loss or damage to such Fund caused
by or resulting from the acts or omissions of any Foreign Subcustodian to the
extent that, under the terms set forth in the subcustodian agreement between the
Custodian or a Domestic Subcustodian and such Foreign Subcustodian, the Foreign
Subcustodian has failed to perform in accordance with the standard of conduct
imposed under such subcustodian agreement and the Custodian or Domestic
Subcustodian recovers from the Foreign Subcustodian under the applicable
subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies. The Custodian shall not be
liable to any Fund for any loss, damage or expense suffered or incurred by such
Fund resulting from or occasioned by the actions or omissions of a Securities
System, Interim Subcustodian, Special Subcustodian, or Securities Depository and
Clearing Agency unless such loss, damage or expense is caused by, or results
from, the negligence or willful misfeasance of the Custodian.
(d) Defaults or Insolvency's of Brokers, Banks, Etc. The Custodian shall
not be liable for any loss, damage or expense suffered or incurred by any Fund
resulting from or occasioned by the actions, omissions, neglects, defaults or
insolvency of any broker, bank, trust company or any other person with whom the
Custodian may deal (other than any of such entities acting as a Subcustodian,
Securities System or Securities Depository and Clearing Agency, for whose
actions the liability of the Custodian is set out elsewhere in this Agreement)
unless such loss, damage or expense is caused by, or results from, the
negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses. Each Fund agrees to reimburse the Custodian
for all reasonable out-of-pocket expenses incurred by the Custodian in
connection with this Agreement, but excluding salaries and usual overhead
expenses.
8. INDEMNIFICATION
---------------
(a) Indemnification by Fund. Subject to the limitations set forth in this
Agreement, each Fund agrees to indemnify and hold harmless the Custodian and its
nominees from all losses, damages and expenses (including attorneys' fees)
suffered or incurred by the Custodian or its nominee caused by or arising from
actions taken by the Custodian, its employees or agents in the performance of
its duties and obligations under this Agreement, including, but not limited to,
any indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
17
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such 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.
(b) Indemnification by Custodian. Subject to the limitations set forth in
this Agreement and in addition to the obligations provided in Sections 6 and 7,
the Custodian agrees to indemnify and hold harmless each Fund from all losses,
damages and expenses suffered or incurred by each such Fund caused by the
negligence or willful misfeasance of the Custodian.
9. ADVANCES
--------
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each of
which for purposes of this Section 9 shall be referred to as "Custodian"), makes
any payment or transfer of funds on behalf of any Fund as to which there would
be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and shall
accrue interest from the date of the Advance to the date of payment by such Fund
to the Custodian at a rate agreed upon in writing from time to time by the
Custodian and such Fund. It is understood that any transaction in respect of
which the Custodian shall have made an Advance, including but not limited to a
foreign exchange contract or transaction in respect of which the Custodian is
not acting as a principal, is for the account of and at the risk of the Fund on
behalf of which the Advance was made, and not, by reason of such Advance, deemed
to be a transaction undertaken by the Custodian for its own account and risk.
The Custodian and each of the Funds which are parties to this Agreement
acknowledge that the purpose of Advances is to finance temporarily the purchase
or sale of Securities for prompt delivery in accordance with the settlement
terms of such transactions or to meet emergency expenses not reasonably
foreseeable by a Fund. The Custodian shall promptly notify the appropriate Fund
of any Advance. Such notification shall be sent by facsimile transmission or in
such other manner as such Fund and the Custodian may agree.
10. LIENS
-----
The Bank shall have a lien on the Property in the Custody Account to secure
payment of fees and expenses for the services rendered under this Agreement. If
the Bank advances cash or securities to the Fund for any purpose or in the event
that the Bank or its nominee shall incur or be assessed
18
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of its duties hereunder, except such as may arise from its
or its nominee's negligent action, negligent failure to act or willful
misconduct, any Property at any time held for the Custody Account shall be
security therefor and the Fund hereby grants a security interest therein to the
Bank. The Fund shall promptly reimburse the Bank for any such advance of cash or
securities or any such taxes, charges, expenses, assessments, claims or
liabilities upon request for payment, but should the Fund fail to so reimburse
the Bank, the Bank shall be entitled to dispose of such Property to the extent
necessary to obtain reimbursement. The Bank shall be entitled to debit any
account of the Fund with the Bank including, without limitation, the Custody
Account, in connection with any such advance and any interest on such advance as
the Bank deems reasonable.
11. COMPENSATION
------------
Each Fund will pay to the Custodian such compensation as set forth on
Appendix C. Such compensation, together with all amounts for which the
Custodian is to be reimbursed in accordance with Section 7(e), shall be billed
to each such Fund and paid in cash to the Custodian. The fees set forth on
Appendix C shall be fixed through April 30, 2004.
12. POWERS OF ATTORNEY
------------------
Upon request, each Fund shall deliver to the Custodian such proxies, powers
of attorney or other instruments as may be reasonable and necessary or desirable
in connection with the performance by the Custodian or any Subcustodian of their
respective obligations under this Agreement or any applicable subcustodian
agreement.
13. TERMINATION AND ASSIGNMENT
--------------------------
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which such
termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective date
of termination. The provisions of Sections 7 and 8 of this Agreement shall
survive the termination of this Agreement.
This Agreement may not be assigned by the Custodian or any Fund without the
respective consent of the other, duly authorized by a resolution by its Board of
Trustees.
19
14. ADDITIONAL FUNDS
----------------
An additional Fund or Funds may become a party to this Agreement after the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix B or an amended Appendix B, signed by each of the additional Funds
(if any) and each of the remaining Funds as well as the Custodian, deleting or
adding such Fund or Funds, as the case may be. The termination of this
Agreement as to less than all of the Funds shall not affect the obligations of
the Custodian and the remaining Funds hereunder as set forth on the signature
page hereto and in Appendix B as revised from time to time.
15. NOTICES
-------
As to each Fund, notices, requests, instructions and other writings
delivered to: The Oberweis Funds, 000 Xxx Xxxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxx,
XX 00000, Attn: Xxxxxxx X. Xxxxx, Executive Vice President, postage prepaid,
or to such other address as any particular Fund may have designated to the
Custodian in writing, shall be deemed to have been properly delivered or given
to a Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration department of the Custodian at its office at 000 Xxxxx
Xxxx., 00xx Xxxxx, Xxxx: Xxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, or mailed
postage prepaid, to the Custodian's Securities Administration department, Post
Office Box 226, Attn: Xxxxxx Xxxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, or to such
other addresses as the Custodian may have designated to each Fund in writing,
shall be deemed to have been properly delivered or given to the Custodian
hereunder; provided, however, that procedures for the delivery of Instructions
and Special Instructions shall be governed by Section 2(c) hereof.
16. MISCELLANEOUS
-------------
(a) This Agreement is executed and delivered in the State of Missouri and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived, in
any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
20
(d) The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of execution hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
Term Section
---- -------
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Liens 10
OCC 4(g)(1)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(d)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid by any court of competent
jurisdiction, the remaining portion or portions shall be considered severable
and shall not be affected, and the rights and obligations of the parties shall
be construed and enforced as if this Agreement did not contain the particular
part, term or provision held to be illegal or invalid.
21
(i) This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof, and accordingly
supersedes, as of the effective date of this Agreement, any custodian agreement
heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody Agreement
to be executed by their respective duly authorized officers.
THE OBERWEIS FUNDS
Attest: /s/ Xxxxxx X. XxXxxx By: /s/ Xxxxxxx X. Xxxxx
-------------------------- ------------------------------
Xxxxxx X. XxXxxx
Secretary Name: Xxxxxxx X. Xxxxx
----------------------------
Title: Executive Vice President
---------------------------
Date: 01/17/2001
----------------------------
UMB BANK, N.A.
Attest: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------- -------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------
Title: Senior Vice President
---------------------------
Date: 01/17/2001
----------------------------
22
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
Xxxxx Brothers Xxxxxxxx & Co. (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Participant Trust Company
Depository Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
--------- --------------------- -----------------
Euroclear
THE OBERWEIS FUNDS UMB BANK, N.A.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxx
----------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxx
--------------------------- ---------------------------
Title: Executive Vice President Title: Senior Vice President
-------------------------- --------------------------
Date: 01/17/2001 Date: 01/17/2001
--------------------------- ---------------------------
X-0
XXXXXXXX X
CUSTODY AGREEMENT
The following open-end management investment companies ("Funds") are hereby
made parties to the Custody Agreement dated January 17, 2001 with UMB Bank, n.a.
("Custodian") and The Oberweis Funds, and agree to be bound by all the terms and
conditions contained in said Agreement:
The Oberweis Funds
.Oberweis Emerging Growth Portfolio
.Oberweis Micro-Cap Portfolio
.Oberweis Mid-Cap Portfolio
THE OBERWEIS FUNDS
Attest: /s/ Xxxxxx X. XxXxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------ --------------------------------
Xxxxxx X. XxXxxx
Secretary Name: Xxxxxxx X. Xxxxx
-----------------------------
Title: Executive Vice President
----------------------------
Date: 01/17/2001
-----------------------------
UMB BANK, N.A.
Attest: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
------------------------ --------------------------------
Name: Xxxxx X. Xxxxxxx
-----------------------------
Title: Senior Vice President
----------------------------
Date: 01/17/2001
-----------------------------
B-1
APPENDIX C
UMB Bank, n.a.
Schedule of Fees for Domestic Custody Services
Prepared for the Oberweis Funds
Net Asset Value Fees
--------------------------------------------------------------------------------
To be computed as of month-end on the average net asset value of each
portfolio at the annual rate of:
1.0 basis point on the first $100,000,000 in assets; plus
.75 basis point on the next $100,000,000 in assets; plus
.50 basis point on the assets in excess of $200,000,000;
*Subject to a $250 per month minimum per portfolio
Portfolio Transaction Fees
--------------------------------------------------------------------------------
*DTC - Equities $ 4.00
*DTC - Fixed Income 7.00
*PTC 12.00
*Fed Book Entry 8.00
*Physical 25.00
Principal Paydown 5.00
Option (Initial Only)/Future 25.00
Corporate Action/Call/Reorg 25.00
*Third-Party VRDN (Bank Book Entry) 15.00
*UMB Repurchase Agreement 5.00
*Tri-Party Repurchase Agreement 15.00
Wires In/Out & Checks Issued (Non-Settlement Related) 8.00
*Fund of Fund Security Transaction
~In-house Sweep (Scout &/or MMF) no charge
~Preferred List** 10.00
~All other 25.00
Fund of Fund Dividend Transaction
~Sweep Income no charge
~Preferred List** 5.00
~All other 10.00
*A transaction includes buys, sells, maturities, assignments or free
security movements.
**UMB Fund of Fund Preferred List
C-1
Out-of-Pocket Expenses
-------------------------------------------------------------------
Includes, but is not limited to, security transfer fees,
certificate fees, shipping/courier fees or charges, FDIC
insurance premiums, specialized programming charges, legal
review/processing of restricted and private placement
securities and system access/connect charges.
This fee schedule pertains to custody of U.S. Domestic
assets only. UMB Bank will provide its fees schedule for
Euroclear and global custody upon request.
Fees for services not contemplated by this schedule will be
negotiated on a case-by-case basis.
C-2
