Exhibit 8
CUSTODY AGREEMENT
Agreement made as of the 1st day of January, 1996, between Penn
Capital Funds, Inc. (the "Corporation"), a corporation organized under
the laws of the State of Pennsylvania and having its office at 0000
Xxxxxxxxx Xx, Xxxxxxxxxx acting for and on behalf of Asset Allocation
(the "Fund"), which is operated and maintained by the Corporation for
the benefit of the holders of shares of each Fund, and Star Bank, N.A.
(the "Custodian"), a national banking association having its principal
office and place of business at Star Bank Center, 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx 00000, which Agreement provides for the furnishing of
custodian services to the Fund.
WITNESSETH:
that for and in consideration of the mutual promises hereinafter set
forth the Corporation, on behalf of the Fund, and the Custodian 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
Chairman, President, Secretary, Treasurer, Controller, and the Senior
Vice President, or any other person, whether or not any such person is
an officer or employee of the Corporation, duly authorized by the
Board of Directors of the Corporation to give Oral Instructions and
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, subject in each
case to any limitations on the authority of such person as set forth
in Appendix A or any such Certificate.
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, provided the
Custodian has received a certified copy of a resolution of Board of
Directors of the Corporation specifically approving deposits in the
Book-Entry System.
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 signed on behalf of the Fund by an
officer of the Corporation and is actually received by the Custodian.
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.
The term "Depository" shall further mean and include any other person
or clearing agency authorized to act as a depository under the
Investment Company Act of 1940, its successor or successors and its
nominee or nominees, provided that the Custodian has received a
certified copy of a resolution of the Board of Directors of the
Corporation specifically approving such other person or clearing
agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and
transfer agent active, from time to time, in such capacity pursuant to
a written agreement with the Fund, changes in which the Corporation
shall immediately report to the Custodian in writing.
6. "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to principal
and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including
certificates of deposit, bankers' acceptances, repurchase and reserve
repurchase agreements with respect to the same) and bank time deposits
of domestic banks that are members of Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase
and sale of such securities normally require settlement in federal
funds or their equivalent on the same day as such purchase or sale.
7. "Officers" shall be deemed to include the Chairman, the
President, the Secretary, the Treasurer, the Controller, the Senior
Vice President of the Corporation listed in the Certificate annexed
hereto as Appendix A or such other Certificate as may be received by
the Custodian from time to time.
8. "Oral Instructions" shall mean oral instructions actually
received by the Custodian from an Authorized Person (or from a person
which the Custodian reasonably believes in good faith to be an
Authorized Person) and confirmed by Written Instructions from
Authorized Persons in such manner so that such Written Instructions
are received by the Custodian on the next business day.
9. "Prospectus" shall mean the Fund's currently effective
prospectus and statement of additional information, as filed with and
declared effective by the Securities and Exchange Commission.
10. "Security or Securities" shall mean Money Market Securities,
common or preferred stocks, options, bonds, debentures, corporate debt
securities, notes, 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.
11. "Written Instructions" shall mean communication actually
received by the Custodian from one Authorized Person or from one
person which the Custodian reasonably believes in good faith to be an
Authorized Person in writing or by telex or any other such system
whereby the receiver of such communication is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of
the senders of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Corporation, acting for and on behalf of the Fund,
hereby constitutes and appoints the Custodian as custodian of all the
Securities and monies at any time owned by the Fund during the period
of this Agreement (the "Fund Assets").
2. The Custodian hereby accepts appointment as such Custodian
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE CORPORATION
The Corporation hereby agrees to furnish to the Custodian the
following documents:
1. A copy of its Articles of Incorporation certified by its
Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Directors
appointing the Custodian certified by its Secretary.
4. A copy of the most recent Prospectus of the Fund.
5. A Certificate of the President and Secretary setting forth
the names and signatures of the present officers of the Corporation.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
1. The Corporation will deliver or cause to be delivered to the
Custodian all Fund Assets, including cash received for the issuance of
its shares, at any time during the period of this Agreement. The
Custodian will not be responsible for such Fund Assets until actually
received by it. Upon such receipt, the Custodian shall hold in
safekeeping and physically segregate at all times from the property of
any other persons, firms or corporations, all Fund Assets received by
it from or for the account of the Fund. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where such
credits have been previously made and monies are not finally collected
within 90 days of the making of such credits. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where such
credits have been previously made and monies are not finally collected
within 90 days of the making of such credits. The Custodian is hereby
authorized by the Corporation, acting on behalf of the Fund, to
actually deposit any Fund Assets in the Book-Entry System or in a
Depository, provided, however, that the Custodian shall always be
accountable to the Corporation for the Fund Assets so deposited. Fund
Assets deposited in the Book-Entry System or the 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 or accounts
in the name of the Fund all monies received by it for the account of
the Fund, and shall disburse the same only:
(a) In payment for Securities purchased for the account of
the Fund, as provided in Article V;
(b) In payment of dividends or distributions, as provided
in Article VI hereof;
(c) In payment of original issue or other taxes, as
provided in Article VII hereof;
(d) In payment for shares of the Fund redeemed by it, as
provided in Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and
setting forth the name and address of the person to whom the payment
is to be made, the amount of such payment and the purpose for which
payment is to be made (the Custodian not being required to question
such direction) or (ii) if reserve requirements are established for
the Fund by law or by valid regulation, directing the Custodian to
deposit a specified amount of collected funds in the form of U.S.
dollars at a specified Federal Reserve Bank and stating the purpose of
such deposit; or
(f) In reimbursement of the expenses and liabilities of the
Custodian, as provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day the fund is
open and valuing its portfolio. The Custodian shall furnish the
Corporation with a detailed statement of monies held for the Fund
under this Agreement and with confirmations and a summary of all
transfers to or from the account of the Fund during said day. Where
Securities are transferred to the account of the Fund without physical
delivery, the Custodian shall also 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
Corporation with a detailed statement of the Securities 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 Corporation 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 by the
Depository or a Sub-Custodian in a separate account or accounts in the
name of the Fund segregated at all times from those of any other fund
maintained and operated by the Corporation and from those of any other
person or persons.
5. Unless otherwise instructed to the contrary by a
Certificate, the Custodian shall with respect to all Securities held
for the Fund in accordance with this Agreement:
(a) Collect all income due or payable to the Fund with
respect to the Fund Assets;
(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, including any foreign taxing authority, now or
hereafter in effect; and
(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 account of 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 certificates 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 Certificate to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund.
7. The Custodian shall promptly deliver to the Corporation all
notices, proxy material and executed but unvoted proxies pertaining to
shareholder meetings of Securities held by the Fund. The Custodian
shall not vote or authorize the voting of any Securities or give any
consent, waiver, or approval with respect thereto unless so directed
by a Certificate or Written Instruction.
8. The Custodian shall promptly deliver to the Corporation all
material received by the Custodian and pertaining to Securities held
by the Fund with respect to tender or exchange offers, calls for
redemption or purchase, expiration of rights, name changes, stock
splits and stock dividends, or any other activity involving ownership
rights in such Securities.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the
Corporation shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate or Written Instructions, (ii) with respect to each
purchase of Money Market Securities, Written Instructions, a
Certificate or Oral Instructions, specifying with respect to each such
purchase: (a) the name of the issuer and the title of the Securities,
(b) 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 monies 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, Written Instruction or Oral
Instructions.
2. Promptly after each sale of Securities by the Corporation
for the account of the Fund, the Corporation shall deliver to the
Custodian (i) with respect to each sale of Securities which are not
Money Market Securities, a Certificate or Written Instructions, and
(ii) with respect to each sale of Money Market Securities, Written
Instructions, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the name of the issuer and the title of
the Security, (b) the 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
Corporation agrees that it will institute no short sales of any
securities, convertible or other. 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, Written Instructions or Oral
Instructions. Subject to the foregoing, the Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
3. Promptly after the time as of which the Corporation, on
behalf of the Fund, either:
(a) writes an option on Securities or writes a covered
put option in respect of a Security, or
(b) notifies the Custodian that its obligations in
respect of any put or call option, as described in the
Fund's Prospectus, require that the Fund deposit Securities
or additional Securities with the Custodian, specifying the
type and value of Securities required to be so deposited, or
(c) notifies the Custodian that its obligations in
respect of any other Security, as descried in the Fund's
Prospectus, require that the Fund deposit Securities or
additional Securities with the Custodian, specifying the
type and value of Securities required to be so deposited,
the Custodian will cause to be segregated or identified as
deposited, pursuant to the Fund's obligations as set forth
in the Prospectus, Securities of such kinds and having such
aggregate values as are required to meet the Fund's
obligations in respect thereof.
The Corporation will provide to the Custodian, as of the end
of each trading day, the market value of the Fund's option liability
and the market value of its portfolio of common stocks.
4. On contractual settlement date, the amount of the Fund will
be charged for all purchases settling on that day, regardless of
whether or not delivery is made. On contractual settlement date, sale
proceeds will likewise be credited to the account of the Fund
irrespective of delivery.
In the case of "sale fails," the Custodian may request the
assistant of the Fund in making delivery of the failed Security.
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Corporation shall furnish to the Custodian a copy of the
resolution of the Board of Directors, certified by the Secretary,
either (i) setting forth the date of the declaration of any dividend
or distribution in respect of shares of the Fund, the date of payment
thereof, the record date as of which Fund shareholders entitled to
payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date and the total amount to be paid
by the Dividend and Transfer Agent of the Fund on the payment date, or
(ii) authorizing the declaration of dividends and distributions in
respect of shares of the Fund on a daily basis and authorizing the
Custodian to rely on Written Instructions or a Certificate setting
forth the date of the declaration of any such dividend or
distribution, the date of payment thereof, the record date as of which
Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date and
the total amount to be paid by the Dividend and Transfer Agent on the
payment date.
2. Upon the payment date specified in such resolution, Written
Instructions or Certificate, as the case may be, the Custodian shall
arrange for such payments to be made by the Dividend and Transfer
Agent out of monies held for the account of the Fund.
ARTICLE VI
SALE AND REDEMPTION OF SHARES OF THE FUND
1. The Custodian shall receive and credit to the account of the
Fund such payments for shares of the Fund issued or sold from time to
time as are received from the distributor for the Fund's shares, from
the Dividend and Transfer Agent of the Fund, or from the Corporation.
2. Upon receipt of Written Instructions, the Custodian shall
arrange for payment of redemption proceeds to be made by the Dividend
and Transfer Agent out of the monies held for the account of the Fund
in the total amount specified in the Written Instructions.
3. Notwithstanding the above provisions regarding the
redemption of any shares of the Fund, whenever shares 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
subsequently instructed by Written Instructions shall, upon receipt of
any Written Instructions 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 VIII
INDEBTEDNESS
In connection with any borrowings, the Corporation, on behalf of
the Fund, will cause to be delivered to the Custodian by a bank or
broker (including the Custodian, if the borrowing is from the
Custodian), requiring Securities as collateral for such borrowings, a
notice or undertaking in the form currently employed by any such bank
or broker setting forth the amount which such bank or broker will loan
to the Fund against delivery of a stated amount of collateral. The
Corporation shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the
bank or broker, (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 Corporation, acting on behalf of the Fund,
or other loan agreement, (c) the date and time, 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 collateralizing the 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 that such loan is in conformance with the Investment Company
Act of 1940 and the Fund's then current 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 or broker 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 or broker, keep such collateral in its possession, but
such collateral shall be subject to all rights therein given the
lending bank or broker, by virtue of any promissory note or loan
agreement. The Custodian shall deliver in the manner directed by the
Corporation from time to time such Securities as additional collateral
as may be specified in a Certificate to collateralize further any
transaction described in this paragraph. The Corporation 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 Corporation fails to specify in a Certificate or Written
Instructions the name of the issuer, the title and number of shares or
the principal amount of any particular Securities to be delivered as
collateral by the Custodian, the Custodian shall not be under any
obligation to deliver any Securities. The Custodian may require such
reasonable conditions with respect to such collateral and its dealings
with third-party lenders as it may deem appropriate.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as otherwise provided herein, the Custodian
shall not 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 Corporation, on behalf of the Fund and only from Fund
Assets (or insurance purchased by the Corporation with respect to its
liabilities on behalf of the Fund hereunder), shall defend, indemnify
and hold harmless the Custodian and its directors, officers, employees
and agents with respect to any loss, claim, liability or cost
(including reasonable attorneys' fees) arising or alleged to arise
from or relating to the Corporation's duties with respect to the Fund
hereunder or any other action or inaction of the Corporation or its
Directors, officers, employees or agents as to the Fund, except such
as may arise from the negligent action, omission or willful misconduct
of the Custodian, its directors, officers, employees or agents. The
Custodian shall defend, indemnify and hold harmless the Corporation
and its Directors, officers, employees or agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees)
arising or alleged to arise from or relating to the Custodian's duties
with respect to the Fund hereunder or any other action or inaction of
the Custodian or its directors, officers, employees, agents, nominees
or Sub-Custodians as to the Fund, except such as may arise from the
negligent action, omission or willful misconduct of the Corporation,
its Directors, officers, employees or agents. The Custodian may, with
respect to questions of law apply for and obtain the advice and
opinion of counsel to the Corporation at the expense of the Fund, or
of its own counsel at its own expense, and shall be fully protected
with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Corporation,
and shall be similarly protected with respect to anything done or
omitted by it in good faith in conformity with advice or opinion of
its counsel, unless counsel to the Fund shall, within a reasonable
time after being notified of legal advice received by the Custodian,
having a differing interpretation of such question of law. The
Custodian shall be liable to the Corporation for any proximate loss or
damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or
misconduct on the part of the Custodian or any of its employees,
agents, nominees or Sub-Custodians but not for any special,
incidental, consequential, or punitive damages; provided, however,
that nothing contained herein shall preclude recovery by the
Corporation, on behalf of the Fund, of principal and of interest to
the date of recovery on, Securities incorrectly omitted from the
Fund's account or penalties imposed on the Corporation, in connection
with the Fund, for any failures to deliver Securities.
In any case in which one party hereto may be asked to indemnify
the other or hold the other harmless the party from whom
indemnification is sought (the "Indemnifying Party") shall be advised
of all pertinent facts concerning the situation in question, and the
party claiming a right to indemnification (the "Indemnified Party")
will use reasonable care to identify and notify the Indemnifying Party
promptly concerning any situation which presents or appears to present
a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified
Party against any claim which may be the subject of the
indemnification, and in the event the Indemnifying Party so elects,
such defense shall be conducted by counsel chosen by the Indemnifying
Party and satisfactory to the Indemnified Party and the Indemnifying
Party will so notify the Indemnified Party and thereupon such
Indemnifying Party shall take over the complete defense of the claim
and the Indemnifying Party shall sustain no further legal or other
expenses in such situation for which indemnification has been sought
under this paragraph, except the expenses of any additional counsel
retained by the Indemnified Party. In no case shall any party
claiming the right to indemnification confess any claim or make any
compromise in any case in which the other party has been asked to
indemnify such party (unless such confession or compromise is made
with such other party's prior written consent).
The obligations of the parties hereto under this paragraph shall
survive the termination of this Agreement.
2. Without limiting the generality of the foregoing, the
Custodian, acting in the capacity of Custodian hereunder, 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 account of 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 account of the Fund, or the propriety of the amount
for which the same are sold;
(c) The legality of the issuer or sale of any shares
of the Fund, or the sufficiency of the amount to be received
therefor;
(d) The legality of the redemption of any shares 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 Corporation in respect of shares of the
Fund;
(f) The legality of any borrowing by the Corporation,
on behalf of the Fund, using Securities as collateral;
(g) The sufficiency of any deposit made pursuant to a
Certificate described in clause (ii) of paragraph 2(e) of
Article IV hereof.
3. The Custodian shall not be liable for any money or collected
funds in U.S. dollars deposited in a Federal Reserve Bank in
accordance with a Certificate described in clause (ii) of paragraph
2(e) of Article IV hereof, nor 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
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 Dividend and Transfer Agent of the Fund nor to take any action to
effect payment or distribution by the Dividend and Transfer Agent of
the Fund of any amount paid by the Custodian to the dividend and
Transfer Agent of the Fund in accordance with this Agreement.
5. Income due or payable to the Fund with respect to Fund
Assets will be credited to the account of the Fund as follows:
(a) dividends will be credited on the first business
day following payable date irrespective of collection.
(b) Interest on fixed rate municipal bonds and debt
securities issued or guaranteed as to principal and/or
interest by the government of the United States or agencies
or instrumentalities thereof (excluding securities issued by
the Government National Mortgage Association) will be
credited on payable date irrespective of collection.
(c) Interest on fixed rate corporate debt securities
will be credited on the first business day following payable
date irrespective of collection.
(d) Interest on variable and floating rate debt
securities and debt securities issued by the Government
National Mortgage Association will be credited upon the
Custodian's receipt of funds.
(e) Proceeds from options will be credited upon the
Custodian's receipt of funds.
6. Notwithstanding paragraph 5 of this Article IX, 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 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 or, at the Custodian's option, prepayment.
7. The Custodian may appoint one or more financial or 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 monies at any time
owned by the Fund, upon terms and conditions approved in a
Certificate. Current Depository(s) and Sub-Custodian(s) are noted in
Appendix B. The Custodian shall not be relieved of any obligations or
liability under this Agreement in connection with the appointment or
activities of such Depositories or Sub-Custodians.
8. 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 the Articles of Incorporation and the
Corporation's By-Laws.
9. The Custodian shall treat all records and other information
relating to the Corporation, the Fund and the Fund Assets as
confidential and shall not disclose any such records or information to
any other person unless (a) the Corporation shall have consented
thereto in writing or (b) such disclosure is compelled by law.
10. The Custodian shall be entitled to receive and the
Corporation agrees to pay to the Custodian, for the Fund's account
from Fund Assets only, such compensation as shall be determined
pursuant to Appendix C attached hereto, or as shall be determined
pursuant to amendments to such Appendix approved by the Custodian and
the Corporation, on behalf of the Fund. The Custodian shall 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 as determined by agreement of the
Custodian and the Corporation or by the final order of any court or
arbitrator having jurisdiction and as to which all rights of appeal
shall have expired. The expenses which the Custodian may charge
against the account of the Fund include, but are not limited to, the
expenses of Sub-Custodians incurred in settling transactions involving
the purchase and sale of Securities of the Fund.
11. The Custodian shall be entitled to rely upon any
Certificate. The Custodian shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by the
Custodian pursuant to Article IV or V hereof. The Corporation agrees
to forward to the Custodian Written Instructions from Authorized
Persons confirming Oral Instructions in such manner so that such
Written Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, on the first business day following the
day on which such Oral Instructions are given to the Custodian. The
Corporation agrees that the fact that such confirming instructions are
not received by the Custodian shall in no way affect the validity of
the transactions or enforceability of the transactions hereby
authorized by the Corporation. The Corporation agrees that the
Custodian shall incur no liability to the Fund in acting upon Oral
Instructions given to the Custodian hereunder concerning such
transactions.
12. The Custodian will (a) set up and maintain proper books of
account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31 a-1 and 31 a-2
thereunder, and (b) preserve for the periods prescribed by applicable
Federal statute or regulation all records required to be so preserved.
The books and records of the Custodian shall be open to inspection and
audit at reasonable times and with prior notice by Officers and
auditors employed by the Corporation.
13. The Custodian and its Sub-Custodians shall promptly send to
the Corporation, for the account of the Fund, any report received on
the systems of internal accounting control of the Book-Entry System or
the Depository and with such reports on their own systems of internal
accounting control as the Corporation may reasonably request from time
to time.
14. The Custodian performs only the services of a custodian and
shall have no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the Fund.
The Custodian is not a selling agent for shares of the Fund and
performance of its duties as a custodial agent shall not be deemed to
be a recommendation to the Custodian's depositors or others of shares
of the Fund as an investment.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement
for any reason 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. If such
notice is given by the Corporation, on behalf of the Fund, it shall be
accompanied by a copy of a resolution of the Board of Directors,
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 corporation 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 Corporation 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, designating a successor
custodian or custodians to act on behalf of the Fund. In the absence
of such designation by the Corporation, 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 provided that it has received a notice of acceptance
by the successor custodian, shall deliver, on the date, directly to
the successor custodian all Securities and monies then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement,
the Corporation shall pay to the Custodian on behalf of the Fund such
compensation as may be due as of the date of such termination. The
Corporation agrees on behalf of the Fund that the Custodian shall be
reimbursed for its reasonable costs in connection with the termination
of this Agreement.
2. If a successor custodian is not designated by the
Corporation, on behalf of the Fund, or by the Custodian in accordance
with the preceding paragraph, or the designated successor cannot or
will not serve, the Corporation shall upon the delivery by the
Custodian to the Corporation of all Securities (other than Securities
held in the Book-Entry System which cannot be delivered to the
Corporation) and monies then owned by the Fund, other than monies
deposited with the Federal Reserve Bank pursuant to a Certificate
described in clause (ii) of paragraph 2(e) of Article IV, be deemed to
be the custodian for the Fund, and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the
Book Entry System which cannot be delivered to the Corporation to hold
such Securities hereunder in accordance with this Agreement.
ARTICLE X
MISCELLANEOUS
1. Appendix A sets forth the names and the signatures of all
Authorized Persons. The Corporation agrees to furnish to the
Custodian, on behalf of the Fund, a new Appendix A in form similar to
the attached Appendix A, if any present Authorized Person ceases to be
an Authorized Person or if any other or additional Authorized Persons
are elected or appointed. Until such new Appendix A 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
Appendix A.
2. No recourse under any obligation of this Agreement or for
any claim based thereon shall be had against any organizer,
shareholder, Officer, Director, past, present or future as such, of
the Corporation or of any predecessor or successor, either directly or
through the Corporation or any such predecessor or successor, whether
by virtue of any constitution, statute or rule of law or equity, or be
the enforcement of any assessment or penalty or otherwise; it being
expressly agreed and understood that this Agreement and the
obligations thereunder are enforceable solely against Fund Assets, and
that no such personal liability whatever shall attach to, or is or
shall be incurred by, the organizers, shareholders, Officers,
Directors of the Corporation or of any predecessor or successor, or
any of them as such, because of the obligations contained in this
Agreement or implied therefrom and that any and all such liability is
hereby expressly waived and released by the Custodian as a condition
of, and as a consideration for, the execution of this Agreement.
3. The obligations set forth in this Agreement as having been
made by the Corporation have been made by the Board of Directors,
acting as such Directors for and on behalf of the Fund, pursuant to
the authority vested in them under the laws of the State of
________________, the Articles of Incorporation and the By-Laws of the
Corporation. This Agreement has been executed by Officers of the
Corporation as officers, and not individually, and the obligations
contained herein are not binding upon any of the Directors, Officers,
agents or holders of shares, personally, but bind only the Corporation
and them only to the extent of Fund Assets.
4. Such provisions of the Prospectus of the Fund and any other
documents (including advertising material) specifically mentioning the
Custodian (other than merely by name and address) shall be reviewed
with the Custodian by the Corporation.
5. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the custodian and mailed or
delivered to it at its offices at Star Bank Center, 000 Xxxxxx Xxxxxx,
X. X. 0000, Xxxxxxxxxx, Xxxx 00000, attention Mutual Fund Custody
Department, or at such other place as the Custodian may from time to
time designate in writing.
6. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Corporation shall be
sufficiently given when delivered to the Corporation or on the second
business day following the time such notice is deposited in the U.S.
mail postage prepaid and addressed to the Corporation at its office at
_______________, or at such other place as the Corporation may from
time to time designate in writing.
7. This Agreement with the exception of Appendices A & B 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 authorized and approved by a resolution of the Board of Directors.
8. 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
Corporation or by the Custodian, and no attempted assignment by the
Corporation or the Custodian shall be effective without the written
consent of the other party hereto.
9. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
10. 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 Officers, thereunto duly authorized
as of the day and year first above written.
ATTEST: Penn Capital Funds, Inc.
______________________________
______________________________ By: /s/ Xxxxx X. Xxxxxx, Xx.
ATTEST: STAR BANK, N.A.
______________________________ By:___________________________
APPENDIX A
Board of Directors
Authorized Person Specimen Signatures
Chairman: _________________ ____________________
President: _________________ ____________________
Secretary: _________________ ____________________
Treasurer: _________________ ____________________
Controller: _________________ ____________________
Adviser Employees: _________________ ____________________
_________________ ____________________
_________________ ____________________
APPENDIX B
The following Depository(s) and Sub-Custodian(s) are employed
currently by Star Bank, N.A. for securities processing and control . .
.
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
APPENDIX C
Star Bank, N.A.
Proporsed Custody Fee Schedule
for Penn Capital Funds
Star Bank, N.A., as Custodian, will receive monthly compensation for
services according to the terms of the following Schedule:
1. Portfolio Transaction Fees:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserev $9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA prin/Int Paydown, GNMA Sales $8.00
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free
delivery (excludes initial conversion), maturity, tender or exchange.
2. Market Value Fee:
Based upon an annual rate of: Xxxxxxx
.0000 (0 Xxxxx Xxxxxx) on Firest $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
3. Monthly Minimum Fee-Per Fund $400.00
4. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be
shipping fees and transfer fees.
5. XXX Documents
Per Shareholder/year to hold each XXX Document $8.00
*Star Bank agrees for a period of one year from the date of the
custody conversion to Star Bank to reduce the custody fee from $400.00
per fund per month to $300.00 for the first fund and $200.00 for the
second fund. On the one year anniversary, the minimum annual fees
will revert to the standard published fee schedule in effect at that
time.
Appendix C
Star Bank
Proposed Cash Management Fee Schedule For
Penn Capital Funds
Services Unit Cost($) Monthly Cost ($)
D.D.A. Account Maintenance .37 12.00
Deposits .105
Deposited Items .159
Balance Reporting - P.C. Access 50.00
ACH Transaction .095
ACH Monthly Maintenance 40.00
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 5.50
International Items Returned 10.00
NSF Returned Checks 20.00
Stop Payments 20.00
Data Transmission per account 110.00
Data Capture* .10
Drafts cleared .179
Lockbox Maintenance** 55.00
Lockbox items Processed
- with copy of check .32
- without copy of check .26
Wires Incoming
- Domestic
- Repetitive 10.00
- Non-Repetitive 10.00
- International
- Repetitive 35.00
- Non-Repetitive 40.00
PC-Initiated Wires:
- Domestic
- Repetitive 9.00
- Non-Repetitive 9.00
- International
- Repetitive 25.00
- Non-Repetitive 25.00
__________________
*** Uncollected Charge Star Bank Prime Rate as of first of month
plus 4%
* Price can vary depending upon what information needs to be
captured
** With the use of lockbox, the collected balance in the demand
deposit account will be significantly increased and therefore
earnings to offset cash management service fees will be maximized
*** Fees for uncollected balances are figured on the monthly average
of all combined accounts.
**** Other available cash management services are priced separately.
