CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
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THIS AGREEMENT made the _____ day of December, 1995, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its trust office located at 000 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000 ("Custodian"), and STATE BOND INVESTMENT FUNDS,
INC., a Maryland corporation, having its principal office and place of business
at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxx, Xxxxxxxxx 00000 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio and as its
agent to perform certain investment accounting and recordkeeping functions; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW, THEREFORE, for and 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. Fund hereby constitutes and appoints Custodian
as:
A. Custodian of the securities and monies at any time owned by the Fund;
and
B. Agent to perform certain accounting and recordkeeping functions relating
to portfolio transactions required of a duly registered investment
company under Rule 31a of the Investment Company Act of 1940 (the "1940
Act") and to calculate the net asset value of the Fund.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a corporation or trust (as specified above) duly
organized and existing and in good standing under the laws of its
state of organization, and that it is registered under the 1940 Act;
and
2. That it has the requisite power and authority under applicable law,
its articles of incorporation and its bylaws to enter into this
Agreement; that it has taken all requisite action necessary to
appoint Custodian as custodian and investment accounting and
recordkeeping agent for the Fund; and that this Agreement
constitutes a legal, valid and binding obligation of Fund,
enforceable in accordance with its terms.
B. Custodian hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into and perform this Agreement;
that this Agreement has been duly executed and delivered by
Custodian; and that this Agreement constitutes a legal, valid and
binding obligation of Custodian, enforceable in accordance with its
terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Except as permitted by the 1940 Act, Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or as
soon thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it or from
time to time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies not so
delivered.
B. Delivery of Accounts and Records
Fund shall turn over or cause to be turned over to Custodian all of the
Fund's relevant accounts and records previously maintained. Custodian
shall be entitled to rely
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conclusively on the completeness and correctness of the accounts and
records turned over to it, and Fund shall indemnify and hold Custodian
harmless of and from any and all expenses, damages and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or
other deficiency of such accounts and records or in the failure of Fund
to provide, or to provide in a timely manner, any accounts, records or
information needed by the Custodian to perform its functions hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time segregated in a separate account, and
if Fund is comprised of more than one portfolio of investment securities
(each a "Portfolio") Custodian shall keep the assets of each Portfolio
segregated in a separate account. Custodian will not deliver, assign,
pledge or hypothecate any such assets to any person except as permitted
by the provisions of this Agreement or any agreement executed by it
according to the terms of Section 3.S. of this Agreement. Upon delivery
of any such assets to a subcustodian pursuant to Section 3.S. of this
Agreement, Custodian will create and maintain records identifying those
assets which have been delivered to the subcustodian as belonging to the
Fund, by Portfolio if applicable. The Custodian is responsible for the
safekeeping of the securities and monies of Fund only until they have
been transmitted to and received by other persons as permitted under the
terms of this Agreement, except for securities and monies transmitted to
subcustodians appointed under Section 3.S. of this Agreement, for which
Custodian remains responsible to the extent provided in Section 3.S.
hereof. Custodian may participate directly or indirectly through a
subcustodian in the Depository Trust Company (DTC), Treasury/Federal
Reserve Book Entry System (Fed System), Participant Trust Company (PTC)
or other depository approved by the Fund (as such entities are
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defined at 17 CFR Section 270.17f-4(b)) (each a "Depository" and
collectively, the "Depositories").
D. Registration of Securities
The Custodian shall at all times hold registered securities of the Fund
in the name of the Custodian, the Fund, or a nominee of either of them,
unless specifically directed by instructions to hold such registered
securities in so-called "street name," provided that, in any event, all
such securities and other assets shall be held in an account of the
Custodian containing only assets of the Fund, or only assets held by the
Custodian as a fiduciary or custodian for customers, and provided
further, that the records of the Custodian at all times shall indicate
the Fund or other customer for which such securities and other assets
are held in such account and the respective interests therein. If,
however, the Fund directs the Custodian to maintain securities in
"street name", notwithstanding anything contained herein to the
contrary, the Custodian shall be obligated only to utilize its best
efforts to timely collect income due the Fund on such securities and to
notify the Fund of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
All securities, and the ownership thereof by Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable on the
records of the Custodian. The Fund agrees to hold Custodian and its
nominee harmless for any liability as a shareholder of record of
securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A.,
Custodian will exchange, or cause to be exchanged, portfolio securities
held by it for the account of Fund for other securities or cash issued
or paid in connection with any reorganization, recapitalization, merger,
consolidation, split-up of share, change of par value, conversion or
otherwise, and will deposit any such securities in
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accordance with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange securities
held by it in temporary form for securities in definitive form, to
effect an exchange of shares when the par value of the stock is changed,
and, upon receiving payment therefor, to surrender bonds or other
securities held by it at maturity or when advised of earlier call for
redemption, except that Custodian shall receive instructions prior to
surrendering any convertible security.
F. Purchases of Investments of the Fund -- Other Than Options and Futures
Fund will, on each business day on which a purchase of securities
(other than options and futures) shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares and the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes
and other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer through
whom the purchase was made; and
9. Whether the security is to be received in certificated form or
via a specified Depository.
In accordance with such instructions, Custodian will pay for out of
monies held for the account of Fund, but only insofar as such monies
are available for such purpose,
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and receive the portfolio securities so purchased by or for the account
of Fund, except that Custodian may in its sole discretion advance funds
to the Fund which may result in an overdraft because the monies held by
the Custodian on behalf of the Fund are insufficient to pay the total
amount payable upon such purchase. Except as otherwise instructed by
Fund, such payment shall be made by the Custodian only upon receipt of
securities: (a) by the Custodian; (b) by a clearing corporation of a
national exchange of which the Custodian is a member; or (c) by a
Depository. Notwithstanding the foregoing, (i) in the case of a
repurchase agreement, the Custodian may release funds to a Depository
prior to the receipt of advice from the Depository that the securities
underlying such repurchase agreement have been transferred by book-entry
into the account maintained with such Depository by the Custodian, on
behalf of its customers, provided that the Custodian's instructions to
the Depository require that the Depository make payment of such finds
only upon transfer by book-entry of the securities underlying the
repurchase agreement in such account; (ii) in the case of time deposits,
call account deposits, currency deposits and other deposits, foreign
exchange transactions, futures contracts or options, the Custodian may
make payment therefor before receipt of an advice or confirmation
evidencing said deposit or entry into such transaction; and (iii) in the
case of the purchase of securities, the settlement of which occurs
outside of the United States of America, the Custodian may make, or
cause a subcustodian appointed pursuant to Section 3.S.2. of this
Agreement to make, payment therefor in accordance with generally
accepted local custom and market price.
G. Sales and Deliveries of Investments of the Fund -- Other than Options
and Futures Fund will, on each business day on which a sale of
investment securities (other than options and futures) of Fund has been
made, deliver to Custodian instructions specifying with respect to each
such sale:
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1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued
interest, if any;
4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or other
expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or person
to whom the sale was made.
In accordance with such instructions, Custodian will deliver or cause to
be delivered the securities thus designated as sold for the account of
Fund to the broker or other person specified in the instructions
relating to such sale. Except as otherwise instructed by Fund, such
delivery shall be made upon receipt of payment therefor: (a) in such
form as is satisfactory to the Custodian; (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, on behalf of its customers, with a Depository.
Notwithstanding the foregoing: (i) in the case of securities held in
physical form, such securities shall be delivered in accordance with
"street delivery custom" to a broker or its clearing agent; or (ii) in
the case of the sale of securities, the settlement of which occurs
outside of the United States of America, the Custodian may make, or
cause a subcustodian appointed pursuant to Section 3.S.2. of this
Agreement to make, payment therefor in accordance with generally
accepted local custom and market practice.
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H. Purchases or Sales of Options and Futures
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
1. If applicable, the name of the Portfolio making such purchase or
sale;
2. Security Options
a. The underlying security:
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the sale
or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
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g. Whether the transaction is an opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom the
sale or purchase was made, or other applicable settlement
instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of Custodian,
Fund shall deliver a substantially complete and executed
custodial safekeeping account and procedural agreement which
shall be incorporated by reference into this Custody Agreement);
and
f. The name and address of the futures commission merchant through
whom the sale or purchase was made, or other applicable
settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
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f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund, and subject to
such additional terms and conditions as Custodian may require:
1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledgee designated in
such instructions by way of pledge or hypothecation to secure any
loan incurred by Fund; provided, however, that the securities shall
be released only upon payment to Custodian of the monies borrowed,
except that in cases where additional collateral is required to
secure a borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will pay, but
only from funds available for such purpose, any such loan upon
redelivery to it of the securities pledged or hypothecated therefor
and upon surrender of the note or notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities held
in custody to the borrower designated in such instructions;
provided, however, that the securities will be released only upon
deposit with Custodian of full cash collateral as specified in such
instructions, and that Fund will retain the right to any dividends,
interest or distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will release the
cash collateral to the borrower.
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J. Routine Matters
Custodian will, in general, attend to all routine and mechanical matters
in connection with the sale, exchange, substitution, purchase, transfer,
or other dealings with securities or other property of Fund except as
may be otherwise provided in this Agreement or directed from time to
time by the Fund in writing.
K. Deposit Accounts
Custodian will open and maintain one or more special purpose deposit
accounts in the name of Custodian ("Accounts"), subject only to draft or
order by Custodian upon receipt of instructions. All monies received by
Custodian from or for the account of Fund shall be deposited in said
Accounts. Barring events not in the control of the Custodian such as
strikes, lockouts or labor disputes, riots, war or equipment or
transmission failure or damage, fire, flood, earthquake or other natural
disaster, action or inaction of governmental authority or other causes
beyond its control, at 9:00 a.m., Kansas City time, on the second
business day after deposit of any check into an Account, Custodian
agrees to make Fed Funds available to the Fund in the amount of the
check. Deposits made by Federal Reserve wire will be available to the
Fund immediately and ACH wires will be available to the Fund on the next
business day. Income earned on the portfolio securities will be credited
to the Fund based on the schedule attached as Exhibit A. The Custodian
will be entitled to reverse any credited amounts were credits have been
made and monies are not finally collected. If monies are collected after
such reversal, the Custodian will credit the Fund in that amount.
Custodian may open and maintain Accounts in its own banking department,
or in such other banks or trust companies as may be designated by it or
by Fund in writing, all such Accounts, however, to be in the name of
Custodian and subject only to its draft or order. Funds received and
held for the
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account of different Portfolios shall be maintained in separate Accounts
established for each Portfolio.
L. Income and Other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the account of Fund all
income and other payments which become due and payable on or after
the effective date of this Agreement with respect to the securities
deposited under this Agreement, and credit the account of Fund in
accordance with the schedule attached hereto as Exhibit A. If, for
any reason, the Fund is credited with income that is not
subsequently collected, Custodian may reverse that credited amount.
2. Execute ownership and other certificates and affidavits for all
federal, state and local tax purposes in connection with the
collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in connection
with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for
payment of:
1. all coupons and other income items requiring presentation;
and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and regarding
which the Custodian has actual knowledge, or should
reasonably be expected to have knowledge; and
b. the endorsement for collection, in the name of the Fund, of all
checks, drafts or other negotiable instruments.
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Custodian, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of
instructions and upon being indemnified to its satisfaction against the
costs and expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights and other similar
items and will deal with the same pursuant to instructions. Unless prior
instructions have been received to the contrary, Custodian will, without
further instructions, sell any rights held for the account of Fund on
the last trade date prior to the date of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the shares
of capital stock of Fund ("Fund Shares") by the Board of Directors of
Fund, Fund shall deliver to Custodian instructions with respect thereto.
On the date specified in such instructions for the payment of such
dividend or other distribution, Custodian will pay out of the monies
held for the account of Fund, insofar as the same shall be available for
such purposes, and credit to the account of the Dividend Disbursing
Agent for Fund, such amount as may be specified in such instructions.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or
its agent shall advise Custodian of the aggregate dollar amount to be
paid for such shares and shall confirm such advice in writing. Upon
receipt of such advice, Custodian shall charge such aggregate dollar
amount to the account of Fund and either deposit the same in the account
maintained for the purpose of paying for the repurchase or redemption of
Fund Shares or deliver the same in accordance with such advice.
Custodian shall not have any duty or responsibility to determine that
Fund Shares have been removed from the proper shareholder account or
accounts or that the
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proper number of Fund Shares have been cancelled and removed from the
shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will deposit or cause
to be deposited with Custodian the amount received for such shares.
Custodian shall not have any duty or responsibility to determine that
Fund Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such shares
have been added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed to
Fund all proxies properly signed, all notices of meetings, all proxy
statements and other notices, requests or announcements affecting or
relating to securities held by Custodian for Fund and will, upon receipt
of instructions, execute and deliver or cause its nominee to execute and
deliver or mail or have delivered or mailed such proxies or other
authorizations as may be required. Except as provided by this Agreement
or pursuant to instructions hereafter received by Custodian, neither it
nor its nominee will exercise any power inherent in any such securities,
including any power to vote the same, or execute any proxy, power of
attorney, or other similar instrument voting any of such securities, or
give any consent, approval or waiver with respect thereto, or take any
other similar action.
Q. Disbursements
Custodian will pay or cause to be paid, insofar as funds are available
for the purpose, bills, statements and other obligations of Fund
(including but not limited to obligations in connection with the
conversion, exchange or surrender of securities owned by Fund, interest
charges, dividend disbursements, taxes, management fees, custodian fees,
legal fees, auditors' fees, transfer agents' fees, brokerage
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commissions, compensation to personnel, and other operating expenses of
Fund0 pursuant to instructions of Fund setting forth the name of the
person to whom payment is to be made, the amount of the payment, and the
purpose of the payment.
R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund a detailed
statement of the amounts received or paid and of securities received or
delivered for the account of Fund during each business day. Custodian
will, from time to time, upon request by Fund, render a detailed
statement of the securities and monies held for Fund under this
Agreement, and Custodian will maintain such books and records as are
necessary to enable it to do so. Custodian will permit such persons as
are authorized by Fund, including Fund's independent public accountants,
reasonable access to such records or will provide reasonable
confirmation of the contents of such records, and if demanded, Custodian
will permit federal and state regulatory agencies to examine the
securities, books and records. Upon the written instructions of Fund or
as demanded by federal or state regulatory agencies, Custodian will
instruct any subcustodian to permit such persons as are authorized by
Fund, including Fund's independent public accountants, reasonable access
to such records or to provide reasonable confirmation of the contents of
such records, and to permit such agencies to examine the books, records
and securities held by such subcustodian which relate to the Fund.
S. Appointment of Subcustodian
1. Notwithstanding any other provisions of this Agreement, all or any
of the monies or securities of Fund may be held in Custodian's own
custody or in the custody of one or more other banks or trust
companies acting as sub custodians as may be selected by Custodian.
Any such subcustodian selected by the Custodian must have the
qualifications required for a custodian under
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the 1940 Act, as amended. Custodian shall be responsible to the Fund
for any loss, damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of any subcustodians
selected and appointed by Custodian (except subcustodians appointed
at the request of Fund and as provided in Subsection 2 below) to the
same extent Custodian would be responsible to the Fund under Section
5. of this Agreement if it committed the act or omission itself.
Upon request of the Fund, Custodian shall be willing to contract
with other subcustodians reasonably acceptable to the Custodian 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, or (ii) providing depository and
clearing agency services with respect to certain variable rate
demand note securities, or (iii) for other reasonable purposes
specified by Fund; provided, however, that the Custodian shall be
responsible to the Fund for any loss, damage or expense suffered or
incurred by the Fund resulting from the actions or omissions of any
such subcustodian only to the same extent such subcustodian is
responsible to the Custodian. The Fund shall be entitled to review
the Custodian's contracts with any such subcustodians appointed at
the request of Fund. Custodian shall be responsible to the Fund for
any loss, damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of any Depository only to
the same extent such Depository is responsible to Custodian.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the 0000
Xxx) and Fund's cash or cash equivalents, in amounts deemed by the
Fund to be reasonably necessary to effect Fund's foreign securities
transactions, may be held in the
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custody of one or more banks or trust companies acting as
subcustodians, and thereafter, pursuant to a written contract or
contracts as approved by Fund's Board of Directors, may be
transferred to accounts maintained by any such subcustodian with
eligible foreign custodians, as defined in Rule 17f-5(c)(2).
Custodian shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the actions
or omissions of any foreign subcustodian only to the same extent the
foreign subcustodian is liable to the domestic subcustodian with
which the Custodian contracts for foreign subcustody purposes.
T. Accounts and Records
Custodian will prepare and maintain, with the direction and as
interpreted by the Fund, Fund's accountants and/or other advisors, in
complete, accurate and current form all accounts and records (i)
required to be maintained by Fund with respect to portfolio transactions
under Rule 31a of the 1940 Act, (ii) required to be maintained as a
basis for calculation of the Fund's net asset value, and (iii) as
otherwise agreed upon between the parties. Custodian relies upon Fund to
furnish, in writing or its electronic digital equivalent, accurate and
timely information needed by Custodian to complete Fund's records and
perform daily calculation of the Fund's net asset value. Custodian shall
incur no liability and Fund shall indemnify and hold harmless Custodian
from and against any liability arising from any failure of Fund to
furnish such information in a timely and accurate manner, even if Fund
subsequently provides accurate but untimely information. It shall be the
responsibility of Fund to furnish Custodian with the declaration, record
and payment dates and amounts of any dividends or income and any other
special actions required concerning each of its securities when such
information is not readily available from generally accepted securities
industry services or publications.
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U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records maintained
by Custodian pursuant to this Agreement are the property of Fund, and
will be made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist Fund's
independent auditors, or upon approval of Fund, or upon demand, any
regulatory body, in any requested review of Fund's accounts and records
but shall be reimbursed by Fund for all expenses and employee time
invested in any such review outside of routine and normal periodic
reviews. Upon receipt from Fund of the necessary information or
instructions, Custodian will supply information from the books and
records it maintains for Fund that Fund needs for tax returns,
questionnaires, period reports to shareholder and such other reports and
information requests as Fund and Custodian shall agree upon from time to
time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they agree
upon, and Custodian may conclusively assume that no procedure approved
or directed by Fund or its accountants or other advisors conflicts with
or violates any requirements of its prospectus, articles of
incorporation, bylaws, any applicable law, rule or regulation, or any
order, decree or agreement by which Fund may be bound. Fund will be
responsible to notify Custodian of any changes in statutes, regulations,
rules, require ments or policies which might necessitate changes in
Custodian's responsibilities or procedures.
W. Calculation of Net Asset Value
Custodian will calculate Fund's net asset value, in accordance with
Fund's prospectus. Custodian will price the securities and foreign
currency holdings of Fund for which market quotations are available by
the use of outside services designated by Fund which are normally used
and contracted with for this purpose;
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all other securities and foreign currency holdings will be priced in
accordance with Fund's instructions. Custodian will have no
responsibility for the accuracy of the prices quoted by these outside
services or for the information supplied by Fund or for acting upon such
instructions.
X. Advances
In the event Custodian or any subcustodian shall, in its sole
discretion, advance cash or securities for any purpose (including but
not limited to securities settlements, purchase or sale of foreign
exchange or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio, the advance shall be payable by the Fund on
demand. Any such cash advance shall be subject to an overdraft charge at
the rate set forth in the then-current fee schedule from the date
advanced until the date repaid. As security for each such advance, Fund
hereby grants Custodian and such subcustodian a lien on and security
interests in all property at any time held for the account of the
applicable Portfolio, including without limitation all assets acquired
with the amount advanced. Should the Fund fail to promptly repay the
advance, the Custodian and each subcustodian shall be entitled to
utilize available cash and to dispose of such Portfolio's assets
pursuant to applicable law to the extent necessary to obtain
reimbursement of the amount advanced and any related overdraft charges.
Y. Exercise of Rights; Tender Offers
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, 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.
-19-
4. INSTRUCTIONS.
A. The term "instructions," as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund shall
deliver to Custodian, prior to delivery of any assets to Custodian and
thereafter from time to time as changes therein are necessary, written
instructions naming one or more designated representatives to give
instructions in the name and on behalf of the Fund, which instructions
may be received and accepted by Custodian as conclusive evidence of the
authority of any designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will be fully
protected in acting in reliance thereon) until receipt by Custodian of
notice to the contrary. Unless such written instructions delegating
authority to any person to give instructions specifically limit such
authority to specific matters or require that the approval of anyone
else will first have been obtained, Custodian will be under no
obligation to inquire into the right of such person, acting alone, to
give any instructions whatsoever which Custodian may receive from such
person. If Fund fails to provide Custodian any such instructions naming
designated representatives, any instructions received by Custodian from
a person reasonably believed to be an appropriate representative of Fund
shall constitute valid and proper instructions hereunder.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such oral
instruction. At Custodian's sole discretion, Custodian may record on
tape, or otherwise, any oral instruction whether given in person or via
telephone, each such recording identifying the parties, the date and the
time of the beginning and ending of such oral instruction.
C. If Custodian shall provide Fund direct access to any computerized
recordkeeping and reporting system used hereunder or if Custodian and
Fund shall agree to utilize any
-20-
electronic system of communication, Fund shall be fully responsible for
any and all consequences of the use or misuse of the terminal device,
passwords, access instructions and other means of access to such
system(s) which are utilized by, assigned to or otherwise made available
to the Fund. Fund agrees to implement and enforce appropriate security
policies and procedures to prevent unauthorized or improper access to or
use of such system(s). Custodian shall be fully protected in acting
hereunder upon any instructions, communications, data or other
information received by Custodian by such means as fully and to the same
effect as if delivered to Custodian by written instrument signed by the
requisite authorized representative(s) of Fund. Fund shall indemnify and
hold Custodian harmless from and against any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability which may
be suffered or incurred by Custodian as a result of the use or misuse,
whether authorized or unauthorized, of any such system(s) by Fund or by
any person who acquires access to such system(s) through the terminal
device, passwords, access instructions or other means of access to such
system(s) which are utilized by, assigned to or otherwise made available
to the Fund, except to the extent attributable to any negligence or
willful misconduct by Custodian.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify and
hold Custodian harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability which may
be asserted against Custodian, incurred by Custodian or for which
Custodian may be held to be liable, arising out of or attributable to:
-21-
1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian has
acted in good faith and with due diligence and reasonable care; and
2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay or
reimburse Custodian under this indemnification provision), the
Fund's negligence or willful misconduct, or the failure of any
representation or warranty of the Fund hereunder to be and remain
true and correct in all respects at all times.
B. Custodian may request and obtain at the expense of Fund the advice and
opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law, and it shall be without liability to Fund
for any action taken or omitted by it in good faith, in conformity with
such advice or opinion. If Custodian reasonably believes that it could
not prudently act according to the instructions of the Fund or the
Fund's accountants or counsel, it may in its discretion, with notice to
the Fund, not act according to such instructions.
C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or other authorized individuals, and other
persons believed by it in good faith to be expert in matters upon which
they are consulted, and Custodian shall not be liable for any actions
taken, in good faith, upon such advice and statements.
D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money by Custodian, or which might make it or
its nominee liable for payment of monies or in any other way, Custodian
shall be indemnified and held harmless by Fund against any liability on
account of such action; provided, however, that nothing herein shall
obligate Custodian to take any such action except in its sole
discretion.
-22-
E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed. Custodian shall be entitled to receive upon request
as conclusive proof of any fact or matter required to be ascertained
from Fund hereunder a certificate signed by an officer or designated
representative of Fund. Fund shall also provide Custodian instructions
with respect to any matter concerning this Agreement requested by
Custodian.
F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase of any securities or foreign
currency positions or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the decision to purchase
or amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for which
the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares, or
the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
G. Custodian shall not be liable for, or considered to be Custodian of, any
money represented by any check, draft, wire transfer, clearinghouse
funds, uncollected funds, or instrument for the payment of money to be
received by it on behalf of Fund until Custodian actually receives such
money; provided, however, that it shall advise
-23-
Fund promptly if it fails to receive any such money in the ordinary
course of business and shall cooperate with Fund toward the end that
such money shall be received.
H. Except as provided in Section 3.S., Custodian shall not be responsible
for loss occasioned by the acts, neglects, defaults or insolvency of any
broker, bank, trust company, or any other person with whom Custodian may
deal.
I. Custodian shall not be responsible or liable for the failure or delay in
performance of its obligations under this Agreement, or those of any
entity for which it is responsible hereunder, arising out of or caused,
directly or indirectly, by circumstances beyond the affected entity's
reasonable control, including, without limitation: any interruption,
loss or malfunction of any utility, transportation, computer (hardware
or software) or communication service; inability to obtain labor,
material, equipment or transportation, or a delay in mails; governmental
or exchange action, statute, ordinance, rulings, regulations or
direction; war, strike, riot, emergency, civil disturbance, terrorism,
vandalism, explosions, labor disputes, freezes, floods, fires, tornados,
acts of God or public enemy, revolutions, or insurrection.
J. EXCEPT FOR VIOLATIONS OF SECTION 9, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO ANYONE,
INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR CONSEQUENTIAL,
SPECIAL OR PUNITIVE DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY
PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THIS POSSIBILITY THEREOF.
6. COMPENSATION. In consideration for its services hereunder as Custodian and
investment accounting and recordkeeping agent, Fund will pay to Custodian
such compensation as shall be set forth in a separate fee schedule to be
agreed to by Fund and
-24-
Custodian from time to time. A copy of the initial fee schedule is attached
hereto and incorporated herein by reference. Custodian shall also be
entitled to receive, and Fund agrees to pay to Custodian, on demand,
reimbursement for Custodian's cash disbursements and reasonable out-of-
pocket costs and expenses, including attorney's fees, incurred by Custodian
in connection with the performance of services hereunder. Custodian will
also be entitled to charge against any monies held by it for the account of
Fund the amount of any loss,
7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of one (1) year. Thereafter, either party to this Agreement may
terminate the same by notice in writing, delivered or mailed, postage
prepaid, to the other party hereto and received not less than ninety (90)
days prior to the date upon which such termination will take effect. Upon
termination of this Agreement, Fund will pay Custodian its fees and
compensation due hereunder and its reimbursable disbursements, costs and
expenses paid or incurred to such date and Fund shall designate a successor
custodian by notice in writing to Custodian by the termination date. In the
event no written order designating a successor custodian has been delivered
to Custodian on or before the date when such termination becomes effective,
then Custodian may, at its option, deliver the securities, funds and
properties of Fund to a bank or trust company at the selection of Custodian,
and meeting the qualifications for custodian set forth in the 1940 Act and
having not less than Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published report, or
apply to a court of competent jurisdiction for the appointment of a
successor custodian or other proper relief, or take any other lawful action
under the circumstances; provided, however, that Fund shall reimburse
Custodian for its costs and expenses, including reasonable attorney's fees,
incurred in connection therewith. Custodian will, upon termination of this
Agreement and payment of all sums due to Custodian from Fund hereunder or
otherwise, deliver to the successor custodian so specified or appointed,
or as
-25-
specified by the court, at Custodian's office, all securities then held by
Custodian hereunder, duly endorsed and in form for transfer, and all funds
and other properties of Fund deposited with or held by Custodian hereunder,
and Custodian will co-operate in effecting changes in book-entries at all
Depositories. Upon delivery to a successor custodian or as specified by the
court, Custodian will have no further obligations or liabilities under this
Agreement. Thereafter such successor will be the successor custodian under
this Agreement and will be entitled to reasonable compensation for its
services. In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing
to failure of the Fund to appoint a successor custodian, the Custodian shall
be entitled to compensation as provided in the then-current fee schedule
hereunder for its services during such period as the Custodian retains
possession of such securities, funds and other properties, and the
provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxx, Xxxxxxxxx 00000, or at such
other address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund hereunder; and notices, requests,
instructions and other writings addressed to Custodian at its offices at 000
Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Custody
Department, or to such other address as it may have designated to Fund in
writing, will be deemed to have been properly given to Custodian hereunder.
9. CONFIDENTIALITY.
A. Fund shall preserve the confidentiality of the computerized investment
portfolio recordkeeping and accounting system used by Custodian (the
"Portfolio Accounting System") and the tapes, books, reference manuals,
instructions, records, programs, documentation and information of, and
other materials relevant to, the Portfolio Accounting System and the
business of Custodian ("Confidential Information").
-26-
Fund shall not voluntarily disclose any such Confidential Information to any
other person other than its own employees who reasonably have a need to know
such information pursuant to this Agreement. Fund shall return all such
Confidential Information to Custodian upon termination or expiration of this
Agreement.
B. Fund has been informed that the Portfolio Accounting System is licensed
for use by Custodian from DST Systems, Inc. ("Licensor"), and Fund
acknowledges that Custodian and Licensor have proprietary rights in and
to the Portfolio Accounting System and all other Custodian or Licensor
programs, code, techniques, know-how, databases, supporting
documentation, data formats, and procedures, including without
limitation any changes or modifications made at the request or expense
or both of Fund (collectively, the "Protected Information"). Fund
acknowledges that the Protected Information constitutes confidential
material and trade secrets of Custodian and Licensor. Fund shall
preserve the confidentiality of the Protected Information, and Fund
hereby acknowledges that any unauthorized use, misuse, disclosure or
taking of Protected Information, residing or existing internal or
external to a computer, computer system, or computer network, or the
knowing and unauthorized accessing or causing to be accessed of any
computer, computer system, or computer network, may be subject to civil
liabilities and criminal penalties under applicable law. Fund shall so
inform employees and agents who have access to the Protected Information
or to any computer equipment capable of accessing the same. Licensor is
intended to be and shall be a third party beneficiary of the Fund's
obligations and undertakings contained in this paragraph.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund
-27-
shall be deemed to relate solely to the particular Portfolio to which
such transaction relates. Under no circumstances shall the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any other
Portfolio. The use of this single document to memorialize the separate
agreement of each Portfolio is understood to be for clerical convenience
only and shall not constitute any basis for joining the Portfolios for
any reason.
B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund in
writing.
11. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of the
State of Missouri, without reference to the choice of laws principles
thereof.
B. All terms and provisions of this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended
hereunder, and the provisions of Section 9. hereof are intended to and
shall continue after and survive the expiration, termination or
cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by each
party hereto.
E. The failure of either party to insist upon the performance of any terms
or conditions of this Agreement or to enforce any rights resulting from
any breach of any of the terms or conditions of this Agreement,
including the payment of damages, shall not be construed as a continuing
or permanent waiver of any such terms, conditions, rights or privileges,
but the same shall continue and remain in full force and effect
-28-
and if no such forbearance or waiver had occurred. No waiver, release or
discharge of any party's rights hereunder shall be effective unless
contained in a written instrument signed by the party sought to be
charged.
F. The captions in the Agreement are included for convenience of reference
only, and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
H. If any provision of this Agreement shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement shall not be
affected thereby, and every provision of this Agreement shall remain in
full force and effect and shall remain enforceable to the fullest extent
permitted by applicable law.
I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.
J. Neither the execution nor performance of this Agreement shall be deemed
to create a partnership or joint venture by and between Custodian and
Fund.
K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder shall not
affect any rights or obligations of the other party hereunder.
-29-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-------------------------
Title:
--------------------
STATE BOND INVESTMENT FUNDS, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Xxxxx X. Xxxxxx
Title: Secretary
--------------------
-30-
EXHIBIT A
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
TRANSACTION DTC PHYSICAL FED
-------------------- ----------------------- ---------------------------- -----------------------
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
----------------------------------------------------------------------------------------------------
Calls Puts As Received C or F* As Received C or F*
----------------------------------------------------------------------------------------------------
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
----------------------------------------------------------------------------------------------------
Tender Reorgs. As Received C As Received C N/A
----------------------------------------------------------------------------------------------------
Dividends Paydate C Paydate C N/A
----------------------------------------------------------------------------------------------------
Floating Rate Int. Paydate C Paydate C N/A
----------------------------------------------------------------------------------------------------
Floating Rate Int. N/A As Rate Received C N/A
(No Rate)
----------------------------------------------------------------------------------------------------
Mtg. Backed P&I Paydate C Paydate + 1 C Paydate F
Bus.
Day
----------------------------------------------------------------------------------------------------
Fixed Rate Int. Paydate C Paydate C Paydate F
----------------------------------------------------------------------------------------------------
Euroclear N/A C Paydate c
----------------------------------------------------------------------------------------------------
Legend
------
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
