(9/95)
Custody & Fund Accounting
CUSTODIAN AGREEMENT
BETWEEN
ATLAS FUNDS
AND
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
Page
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1. Bank Appointed Custodian............................ 1
2. Definitions......................................... 1
2.1 Authorized Person.............................. 1
2.2 Security....................................... 1
2.3 Portfolio Security............................. 2
2.4 Officers' Certificate.......................... 2
2.5 Book-Entry System.............................. 2
2.6 Depository..................................... 2
2.7 Proper Instructions............................ 2
3. Separate Accounts................................... 3
4. Certification as to Authorized Persons.............. 3
5. Custody of Cash..................................... 3
5.1 Purchase of Securities......................... 4
5.2 Redemptions.................................... 4
5.3 Distributions and Expenses of Fund............. 4
5.4 Payment in Respect of Securities............... 4
5.5 Repayment of Loans............................. 4
5.6 Repayment of Cash.............................. 4
5.7 Foreign Exchange Transactions.................. 4
5.8 Other Authorized Payments...................... 5
5.9 Termination.................................... 5
6. Securities.......................................... 5
6.1 Segregation and Registration................... 5
6.2 Voting and Proxies............................. 6
6.3 Book-Entry System.............................. 6
6.4 Use of a Depository............................ 7
6.5 Use of Book-Entry System for Commercial Paper.. 8
6.6 Use of Immobilization Programs................. 9
6.7 Eurodollar CDs................................. 9
6.8 Options and Futures Transactions............... 10
(a) Puts and Calls Traded on Securities
Exchanges, NASDAQ or Over-the-Counter..... 10
(b) Puts, Calls, and Futures Traded on
Commodities Exchanges..................... 10
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6.9 Segregated Account............................. 11
6.10 Interest Bearing Call or Time Deposits......... 12
6.11 Transfer of Securities......................... 13
7. Redemptions........................................ 14
8. Merger, Dissolution, etc. of Fund.................. 15
9. Actions of Bank Without Prior Authorization......... 15
10. Collections and Defaults............................ 16
11. Maintenance of Records and Accounting Services...... 16
12. Fund Evaluation..................................... 17
13. Concerning the Bank................................. 17
13.1 Performance of Duties and Standard of Care..... 17
13.2 Agents and Subcustodians with Respect to
Property of the Fund Held in the United States. 18
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States.............. 19
13.4 Insurance...................................... 23
13.5 Fees and Expenses of Bank..................... 23
13.6 Advances by Bank.............................. 23
14. Termination......................................... 23
15. Confidentiality..................................... 24
16. Notices.............................................. 25
17. Amendments.......................................... 25
18. Parties............................................. 25
19. Governing Law....................................... 25
20. Counterparts........................................ 25
CUSTODIAN AGREEMENT
AGREEMENT made as of this ____ day of _________, 1995, between ATLAS
FUNDS, a Maryland corporation (the "Company") and INVESTORS BANK & TRUST
COMPANY (the "Bank").
The Company, an open-end management investment company, desires to place
and maintain all of the portfolio securities and cash of its separate series
(each series referred to herein as a "Fund" or collectively as the "Funds")
in the custody of the Bank. The Bank has at least the minimum qualifications
required by Section 17(f)(1) of the Investment Company Act of 1940 (the "1940
Act") to act as custodian of the portfolio securities and cash of the
Company, and has indicated its willingness to so act, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Company hereby appoints the Bank
as custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
2.1 AUTHORIZED PERSON. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Company by appropriate resolution of its Board of Directors
("the Board"), and set forth in a certificate as required by Section 4 hereof.
2.2 SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit,
or group or index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to a foreign currency, or, in
general, any interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to, or
option contract to purchase or sell any of the foregoing, and futures,
forward contracts and options thereon.
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2.3 PORTFOLIO SECURITY. Portfolio Security will mean any Security
owned by a Fund of the Company.
2.4 OFFICERS' CERTIFICATE. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Company.
2.5 BOOK-ENTRY SYSTEM. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank,
its successor or successors and its nominee or nominees.
2.6 DEPOSITORY. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934
("Exchange Act"), its successor or successors and its nominee or nominees.
The term "Depository" shall further mean and include any other person
authorized to act as a depository under the 1940 Act, its successor or
successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Board.
2.7 PROPER INSTRUCTIONS. Proper Instructions shall mean (i)
instructions (which may be continuing instructions) regarding the purchase or
sale of Portfolio Securities, and payments and deliveries in connection
therewith, given by an Authorized Person as shall have been designated in an
Officers' Certificate, such instructions to be given in such form and manner
as the Bank and the Company shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialed by such one or more persons from time to time designated
in an Officers' Certificate as having been authorized by the Board. Oral
instructions will be considered Proper Instructions if the Bank reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall
cause all oral instructions to be promptly confirmed in writing. The Bank
shall act upon and comply with any subsequent Proper Instruction which
modifies a prior instruction and the sole obligation of the Bank with respect
to any follow-up or confirmatory instruction shall be to make reasonable
efforts to detect any discrepancy between the original instruction and such
confirmation and to report such discrepancy to the Company. The Company shall
be responsible, at the Company's expense, for taking any action, including
any reprocessing, necessary to correct any such discrepancy or error, and to
the extent such action requires the Bank to act the Company shall give the
Bank specific Proper Instructions as to the action required. Upon receipt of
an Officers' Certificate as to the authorization by the Board accompanied by
a detailed description of procedures approved by the Company, Proper
Instructions may include communication effected
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directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate
safeguards for the Company's assets.
3. SEPARATE ACCOUNTS. If the Company has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all
investment earnings thereon). Unless the context otherwise requires, any
reference in this Agreement to any actions to be taken by the Company shall
be deemed to refer to the Company acting on behalf of one or more of its
series, any reference in this Agreement to any assets of the Company,
including, without limitation, any Portfolio Securities and cash and earnings
thereon, shall be deemed to refer only to assets of the applicable series,
any duty or obligation of the Bank hereunder to the Company shall be deemed
to refer to duties and obligations with respect to the individual series, and
any obligation or liability of the Company hereunder shall be binding only
with respect to the individual series, and shall be discharged only out of
the assets of such series.
4. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Bank his
or her certification to the Bank, in such form as may be acceptable to the
Bank, of (i) the names and signatures of the Authorized Persons and (ii) the
names of the members of the Board, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the
most recent certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Company, will sign a
new or amended certification setting forth the change and the new, additional
or omitted names or signatures. The Bank will be entitled to rely and act
upon any Officers' Certificate given to it by the Company which has been
signed by Authorized Persons named in the most recent certification.
5. CUSTODY OF CASH. As custodian for the Company, the Bank will open and
maintain a separate account or accounts in the name of the Company or in the
name of the Bank, as Custodian of the Company, and will deposit to the
account of the Company all of the cash of the Company, except for cash held
by a subcustodian appointed pursuant to Section 13.2 or Section 13.3 hereof,
including borrowed funds, delivered to the Bank, subject only to draft or
order by the Bank acting pursuant to the terms of this Agreement. Upon
receipt by the Bank of Proper Instructions (which may be continuing
instructions) or in the case of payments for redemptions and repurchases of
outstanding shares of common stock of the Company, notification from the
Company's transfer agent as provided in Section 7, requesting such payment,
designating the payee or the account or accounts to which the Bank will
release funds for deposit, and stating that it is for a purpose permitted
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under the terms of this Section 5, specifying the applicable subsection, the
Bank will make payments of cash held for the accounts of the Company, insofar
as funds are available for that purpose, only as permitted in subsections
5.1-5.9 below.
5.1 PURCHASE OF SECURITIES. Upon the purchase of securities for the
Company, against contemporaneous receipt of such securities by the Bank or,
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in
which the transaction occurs, registered in the name of the Company or in the
name of, or properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank pursuant to the
provisions of Section 6 below, each such payment to be made at the purchase
price shown on a broker's confirmation (or transaction report in the case of
Book Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made.
5.2 REDEMPTIONS. In such amount as may be necessary for the
repurchase or redemption of common shares of the Company offered for
repurchase or redemption in accordance with Section 7 of this Agreement.
5.3 DISTRIBUTIONS AND EXPENSES OF FUND. For the payment on the
account of the Company of dividends or other distributions to shareholders as
may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, distribution fees, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Company.
5.4 PAYMENT IN RESPECT OF SECURITIES. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or
securities subscribed to by the Company held by or to be delivered to the
Bank.
5.5 REPAYMENT OF LOANS. To repay loans of money made to the
Company, but, in the case of final payment, only upon redelivery to the Bank
of any Portfolio Securities pledged or hypothecated therefor and upon
surrender of documents evidencing the loan;
5.6 REPAYMENT OF CASH. To repay the cash delivered to the Company
for the purpose of collateralizing the obligation to return to the Company
certificates borrowed from the Company representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 FOREIGN EXCHANGE TRANSACTIONS. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may
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be entered into by the Bank on behalf of the Company upon the receipt of
Proper Instructions, such Proper Instructions to specify the currency broker
or banking institution (which may be the Bank, or any other subcustodian or
agent hereunder, acting as principal) with which the contract or option is
made, and the Bank shall have no duty with respect to the selection of such
currency brokers or banking institutions with which the Company deals or for
their failure to comply with the terms of any contract or option.
5.8 OTHER AUTHORIZED PAYMENTS. For other authorized transactions of
the Company, or other obligations of the Company incurred for proper Company
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by
its Secretary or Assistant Secretary, naming the person or persons to whom
such payment is to be made, and either describing the transaction for which
payment is to be made and declaring it to be an authorized transaction of the
Company, or specifying the amount of the obligation for which payment is to
be made, setting forth the purpose for which such obligation was incurred and
declaring such purpose to be a proper corporate purpose.
5.9 TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. SECURITIES.
6.1 SEGREGATION AND REGISTRATION. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian
appointed pursuant to Section 13.2 hereof, the Bank as custodian, will
receive and hold pursuant to the provisions hereof, in a separate account or
accounts and physically segregated at all times from those of other persons,
any and all Portfolio Securities which may now or hereafter be delivered to
it by or for the account of the Company. All such Portfolio Securities will
be held or disposed of by the Bank for, and subject at all times to, the
instructions of the Company pursuant to the terms of this Agreement. Subject
to the specific provisions herein relating to Portfolio Securities that are
not physically held by the Bank, the Bank will register all Portfolio
Securities (unless otherwise directed by Proper Instructions or an Officers'
Certificate), in the name of a registered nominee of the Bank as defined in
the Internal Revenue Code and any Regulations of the Treasury Department
issued thereunder, and will execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under
the laws of any state.
The Company will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or
to register in the name of its registered nominee, any Portfolio Securities
which may from time to time be registered in the name of the Company.
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6.2 VOTING AND PROXIES. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an Officers' Certificate. The Bank
will execute and deliver, or cause to be executed and delivered, to the
Company all notices, proxies and proxy soliciting materials with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Company), but
without indicating the manner in which such proxies are to be voted.
6.3 BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits
of Company assets in the Book-Entry System, and (ii) for any subsequent
changes to such arrangements following such approval, the Board has reviewed
and approved the arrangement and has not delivered an Officer's Certificate
to the Bank indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Company's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry Portfolio Securities which are
included with other securities deposited in the Account and shall at all
times during the regular business hours of the Bank (or such agent) be open
for inspection by duly authorized officers, employees or agents of the
Company. Where securities are transferred to the Company's account, the Bank
shall also, by book entry or otherwise, identify as belonging to the Company
a quantity of securities in fungible bulk of securities (i) registered in the
name of the Bank or its nominee, or (ii) shown on the Bank's account on the
books of the Federal Reserve Bank;
(c) The Bank (or its agent) shall pay for Portfolio Securities
purchased for the account of the Company or shall pay cash collateral against
the return of Portfolio Securities loaned by the Company upon (i) receipt of
advice from the Book-Entry System that such Portfolio Securities have been
transferred to the Account, and (ii) the making of an entry on the records of
the Bank (or its agent) to reflect such payment and transfer for the account
of the Company. The Bank (or its agent) shall transfer securities sold or
loaned for the account of the Company upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of Portfolio Securities loaned by
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the Company has been transferred to the Account; and
(ii) the making of an entry on the records of the Bank (or
its agent) to reflect such transfer and payment for the account of the
Company. Copies of all advices from the Book-Entry System of transfers of
Securities for the account of the Company shall identify the Company, be
maintained for the Company by the Bank and shall be provided to the Company
at its request. The Bank shall send the Company a confirmation, as defined by
Rule 17f-4 under the 1940 Act, of any transfers to or from the account of the
Company;
(d) The Bank will promptly provide the Company with any report
obtained by the Bank or its agent on the Book-Entry System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the Book-Entry System; and
(e) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of the Book-Entry System by reason
of any negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless disregard by
the Bank or any such agent of its duty to use its best efforts to enforce
such rights as it may have against the Book-Entry System; at the election of
the Company, it shall be entitled to be substituted for the Bank in any claim
against the Book-Entry System or any other person which the Bank or its agent
may have as a consequence of any such loss or damage if and to the extent
that the Company has not been made whole for any loss or damage;
6.4 USE OF A DEPOSITORY. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits
in DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and
remit to the Bank on behalf of the Company all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;
(b) Registration of Portfolio Securities may be made in the name
of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the
account of the Company and the Company
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shall pay cash collateral against the return of Portfolio Securities loaned
by the Company only upon delivery of the Portfolio Securities to or for the
account of the Company; and upon any sale of Portfolio Securities, delivery
of the securities will be made only against payment therefor or, in the event
Portfolio Securities are loaned, delivery of Portfolio Securities will be
made only against receipt of the initial cash collateral to or for the
account of the Company; and
(d) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of a Depository by reason of any
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts
to enforce such rights as it may have against a Depository. In this
connection, the Bank shall use its best efforts to ensure that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with
respect to Portfolio Securities deposited with such Depository are forwarded
immediately to the Bank for prompt transmittal to the Company;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Company's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Company to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank and the Company all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Company may
reasonably request in order to verify the Portfolio Securities held by such
Depository.
6.5 USE OF BOOK-ENTRY SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each
year following such approval the Board has received and approved the
arrangements, upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Company has purchased
such Issuer's Book-entry Paper, the Bank shall issue and hold in book-entry
form, on behalf of the Company, commercial paper
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issued by issuers with whom the Bank has entered into a book-entry agreement
(the "Issuers"). In maintaining its Book-entry Paper System, the Bank agrees
that:
(a) the Bank will maintain all Book-Entry Paper held by the
Company in an account of the Bank that includes only assets held by it for
customers;
(b) the records of the Bank with respect to the Company's
purchase of Book-entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging to the Company which is included in the Book-entry
Paper System and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or agents
of the Company;
(c) the Bank shall pay for Book-Entry Paper purchased for the
account of the Company upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the
making of an entry on the records of the Bank to reflect such payment and
transfer for the account of the Company;
(d) the Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment
for such Book-Entry Paper has been transferred to the Company, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Company;
(e) the Bank shall transmit to the Company a transaction journal
confirming each transaction in Book-Entry Paper for the account of the
Company on the next business day following the transaction; and
(f) the Bank will send to the Company such reports on its system
of internal accounting control with respect to the Book-Entry Paper System as
the Company may reasonably request from time to time.
6.6 USE OF IMMOBILIZATION PROGRAMS. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated
by a bank which meets the requirements of Section 26(a)(1) of the 1940 Act,
and (ii) for each year following such approval the Board has reviewed and
approved the arrangement and has not delivered an Officer's Certificate to
the Bank indicating that the Board has withdrawn its approval, the Bank shall
enter into such immobilization program with such bank acting as a
subcustodian hereunder.
6.7 EURODOLLAR CDS. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD
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(a "European Branch"), provided that such Securities are identified on the
books of the Bank as belonging to the Company and that the books of the Bank
identify the European Branch holding such Securities. Notwithstanding any
other provision of this Agreement to the contrary, except as stated in the
first sentence of this subsection 6.7, the Bank shall be under no other duty
with respect to such Eurodollar CDs belonging to the Company, and shall have
no liability to the Company or its shareholders with respect to the actions,
inactions, whether negligent or otherwise of such European Branch in
connection with such Eurodollar CDs, except for any loss or damage to the
Company resulting from the Bank's own negligence, willful misfeasance or bad
faith in the performance of its duties hereunder.
6.8 OPTIONS AND FUTURES TRANSACTIONS.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Company regarding
escrow or other arrangements (i) in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank,
any broker-dealer registered under the Exchange Act and a member of the
National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Company relating to the compliance with the rules of the
Options Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Company has deposited or is
maintaining adequate margin, if required, with any broker in connection with
any option, nor shall the Bank be under duty or obligation to present such
option to the broker for exercise unless it receives Proper Instructions from
the Company. The Bank shall have no responsibility for the legality of any
put or call purchased or sold on behalf of the Company, the propriety of any
such purchase or sale, or the adequacy of any collateral delivered to a
broker in connection with an option or deposited to or withdrawn from a
Segregated Account (as defined in subsection 6.9 below). The Bank
specifically, but not by way of limitation, shall not be under any duty or
obligation to: (i) periodically check or notify the Company that the amount
of such collateral held by a broker or held in a Segregated Account is
sufficient to protect such broker of the Company against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii) advise
the Company that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Company.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
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1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Company in accordance with the
provisions of any agreement among the Company, the Bank and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Company.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as
set forth in subparagraph (a)(2) of this Section 6.8 as if such subparagraph
referred to Futures Commission Merchants rather than brokers, and Futures and
puts and calls thereon instead of options.
6.9 SEGREGATED ACCOUNT. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and
on behalf of the Company.
1. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be transferred into the Segregated Account or Accounts:
(a) in accordance with the provisions of any agreement among the
Company, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or
the Commodity Futures Trading Commission or any registered Contract Market,
or of any similar organizations regarding escrow or other arrangements in
connection with transactions by the Company;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Company or commodity
futures purchased or written by the Company;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less
than the aggregate purchase price due on the settlement dates of all the
Company's then outstanding forward commitment or "when-issued" agreements
relating to the purchase of Portfolio Securities and all the Company's then
outstanding commitments under reverse repurchase agreements entered into with
broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the Company
has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
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(e) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies; or
(f) for other proper corporate purposes, BUT ONLY, in the case of
this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
2. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be withdrawn from the Segregated Account or Accounts.
(a) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(b) for sale or delivery to meet the Company's obligations under
outstanding firm commitment or when-issued agreements for the purchase of
Portfolio Securities and under reverse repurchase agreements;
(c) for exchange for other liquid assets of equal or greater
value deposited in the Segregated Account;
(d) to the extent that the Company's outstanding forward
commitment or when-issued agreements for the purchase of portfolio securities
or reverse repurchase agreements are sold to other parties or the Company's
obligations thereunder are met from assets of the Company other than those in
the Segregated Account; or
(e) for delivery upon settlement of a forward commitment
agreement for the sale of Portfolio Securities.
6.10 INTEREST BEARING CALL OR TIME DEPOSITS. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Company of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect
to the assets of the Company appropriate notation as to the amount of each
such deposit, the banking institution with which such deposit is made (the
"Deposit Bank"), and shall retain such forms of advice or receipt evidencing
the deposit, if any, as may be forwarded to the Bank by the Deposit Bank.
Such deposits shall be deemed Portfolio Securities of the Company and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the
Company.
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6.11 TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section
6.11, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the account of the
Company, against contemporaneous receipt by the Bank of payment therefor in
full, or, against payment to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale of the Portfolio Securities received
by the Bank before such transfer is made, as confirmed in the Proper
Instructions received by the Bank before such transfer is made;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for
failure to so tender in a timely manner unless such Proper Instructions are
received by the Bank at least two business days prior to the date required
for tender, and unless the Bank (or its agent or subcustodian hereunder) has
actual possession of such Security at least two business days prior to the
date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Company
upon authorization from the Company;
(e) in the case of option contracts owned by the Company, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the
Company by any bank, including the Bank;
13
provided, however, that such Portfolio Securities will be released only upon
payment to the Bank for the account of the Company of the moneys borrowed,
except that in cases where additional collateral is required to secure a
borrowing already made, and such fact is made to appear in the Proper
Instructions, further Portfolio Securities may be released for that purpose
without any such payment. In the event that any such pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Company from the lender in accordance with
the normal procedures of the lender, that an event of deficiency or default
on the loan has occurred, the Bank may deliver such pledged Portfolio
Securities to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions
received by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Company
to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Company and the Bank, and
upon receipt of payment in connection with any repurchase agreement relating
to such securities entered into by the Company;
(j) for other authorized transactions of the Company or for other
proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed
by an authorized officer of the Company (other than the officer certifying
such resolution) and certified by its Secretary or Assistant Secretary,
specifying the Portfolio Securities to be delivered, setting forth the
transaction in or purpose for which such delivery is to be made, declaring
such transaction to be an authorized transaction of the Company or such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b), (c),
(e), (f), (g), (h) and (i) securities or cash receivable in exchange therefor
shall be delivered to the Bank.
7. REDEMPTIONS. In the case of payment of assets of the Company held by
the Bank in connection with redemptions and repurchases by the Company of
outstanding common shares, the Bank will rely on notification by the
Company's transfer agent of receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment is
made. Payment shall be made in accordance with the Articles and By-laws of the
14
Company, from assets available for said purpose.
8. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of
the Company into or the consolidation of the Company with another investment
company where the Company is not the surviving entity, the sale by the
Company of all, or substantially all, of its assets to another investment
company, or the liquidation or dissolution of the Company and distribution of
its assets, the Bank will deliver the Portfolio Securities held by it under
this Agreement and disburse cash only upon the order of the Company set forth
in an Officers' Certificate, accompanied by a certified copy of a resolution
of the Board authorizing any of the foregoing transactions. Upon completion
of such delivery and disbursement and the payment of the fees, disbursements
and expenses of the Bank, this Agreement will terminate.
9. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwith-standing
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Company or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name of
the Company all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Company and hold for the account of the Company all income,
dividends, interest and other payments or distribution of cash with respect
to the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by it
for the account of the Company which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Company;
9.3 Receive and hold for the account of the Company all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder;
9.4 Execute as agent on behalf of the Company all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code
or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Company's name
on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection with Portfolio Securities delivered to it or by it under this
Agreement as may be required under the provisions of the
15
Internal Revenue Code and any Regulations of the Treasury Department issued
thereunder, or under the laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it
upon payment for the account of the Company; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. COLLECTIONS AND DEFAULTS. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Company notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which
such income is payable are in default or payment is refused after due demand
or presentation, the Bank will notify the Company in writing of any default
or refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the
Company a written report once each month showing any income on any Portfolio
Security held by it which is more than ten days overdue on the date of such
report and which has not previously been reported.
11. MAINTENANCE OF RECORDS AND ACCOUNTING SERVICES. The Bank will
maintain records with respect to transactions for which the Bank is
responsible pursuant to the terms and conditions of this Agreement, and in
compliance with the applicable rules and regulations of the 1940 Act and will
furnish the Company daily with a statement of condition of the Company. The
Bank will furnish to the Company at the end of every month, and at the close
of each quarter of the Company's fiscal year, a list of the Portfolio
Securities and the aggregate amount of cash held by it for the Company. The
books and records of the Bank pertaining to its actions under this Agreement
and reports by the Bank or its independent accountants concerning its
accounting system, procedures for safeguarding securities and internal
accounting controls will be open to inspection and audit at reasonable times
by officers of or auditors employed by the Company and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Company.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
16
The books and records maintained by the Bank on behalf of the Company are
the property of the Company and will be surrendered upon request in
accordance with Section 14.
12. FUND EVALUATION. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading
and as of such other hours, if any, as may be authorized by the Board the net
asset value and the public offering price of a share of capital stock of the
Company, such determination to be made in accordance with the provisions of
the Articles and By-laws of the Company and Prospectus and Statement of
Additional Information relating to the Company, as they may from time to time
be amended, and any applicable resolutions of the Board at the time in force
and applicable; and promptly to notify the Company, the proper exchange and
the NASD or such other persons as the Company may request of the results of
such computation and determination. In computing the net asset value
hereunder, the Bank may rely in good faith upon information furnished to it
by any Authorized Person in respect of (i) the manner of accrual of the
liabilities of the Company and in respect of liabilities of the Company not
appearing on its books of account kept by the Bank, (ii) reserves, if any,
authorized by the Board or that no such reserves have been authorized, (iii)
the source of the quotations to be used in computing the net asset value,
(iv) the value to be assigned to any security for which no price quotations
are available, and (v) the method of computation of the public offering price
on the basis of the net asset value of the shares, and the Bank shall not be
responsible for any loss occasioned by such reliance or for any good faith
reliance on any quotations received from a source pursuant to (iii) above.
13. CONCERNING THE BANK.
13.1 PERFORMANCE OF DUTIES AND STANDARD OF CARE. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any,
the Bank will be entitled to receive and act upon the advice of independent
counsel of its own selection, which may be counsel for the Company, and will
be without liability for any action taken or thing done or omitted to be done
in accordance with this Agreement in good faith in conformity with such
advice. In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for
any action taken or omitted to be taken by it in good faith reliance upon the
terms of this Agreement, any Officers' Certificate, Proper Instructions,
resolution of the Board, telegram, notice, request, certificate or other
instrument reasonably believed by the Bank to be genuine and for any other
loss to the Company except in the case of its negligence, willful misfeasance
or bad faith in the performance of its duties or reckless disregard of its
obligations and duties hereunder.
17
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities purchased by
or for the Company, the legality of the purchases thereof or the propriety of
the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or for the
Company or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of the
Company or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the Company
or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Company or
the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; and
(f) any property or moneys of the Company unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to
the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for
the account of the Company are such as may properly be held by the Company
under the provisions of its Articles, By-laws, any federal or state statutes
or any rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of God,
earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear
fusion, fission or radiation, the interruption, loss or malfunction of
utilities, transportation, or computers (hardware or software) and computer
facilities, the unavailability of energy sources and other similar happenings
or events except as results from the Bank's own negligence; or
(b) for special, punitive or consequential damages arising from the
provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 AGENTS AND SUBCUSTODIANS WITH RESPECT TO PROPERTY OF
00
XXX XXXX XXXX XX XXX XXXXXX XXXXXX. The Bank may employ agents in the
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Company's assets with respect to property of the Company
held in the United States. The Bank shall have no liability to the Company or
any other person by reason of any act or omission of such subcustodian and
the Company shall indemnify the Bank and hold it harmless from and against
any and all actions, suits and claims, arising directly or indirectly out of
the performance of such subcustodian. Upon request of the Bank, the Company
shall assume the entire defense of any action, suit, or claim subject to the
foregoing indemnity. The Company shall pay all fees and expenses of such
subcustodian.
13.3 DUTIES OF THE BANK WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES.
(a) APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Company hereby
authorizes and instructs the Bank to employ as sub-custodians for the
Company's Portfolio Securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities depositories
designated on the Schedule attached hereto (each, a "Selected Foreign
Sub-Custodian"). Upon receipt of Proper Instructions, together with a
certified resolution of the Company's Board of Directors, the Bank and the
Company may agree to designate additional foreign banking institutions and
foreign securities depositories to act as Selected Foreign Sub-Custodians
hereunder. Upon receipt of Proper Instructions, the Company may instruct the
Bank to cease the employment of any one or more such Selected Foreign
Sub-Custodians for maintaining custody of the Company's assets, and the Bank
shall so cease to employ such sub-custodian as soon as alternate custodial
arrangements have been implemented.
(b) FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise
be agreed upon in writing by the Bank and the Company, assets of the Company
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
Selected Foreign Sub-Custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into agreements containing
the provisions set forth in subparagraph (d) hereof. Notwithstanding the
foregoing, except as may otherwise be agreed upon in writing by the Bank and
the Company, the Company authorizes the deposit in Euro-clear, the securities
clearance and depository facilities operated by Xxxxxx Guaranty Trust Company
of New York in Brussels, Belgium, of Foreign Portfolio Securities eligible
for deposit therein and to utilize such securities depository in connection
with settlements of purchases and sales of securities and deliveries and
returns of
19
securities, until notified to the contrary pursuant to subparagraph (a)
hereunder.
(c) SEGREGATION OF SECURITIES. The Bank shall identify on its
books as belonging to the Company the Foreign Portfolio Securities held by
each Selected Foreign Sub-Custodian. Each agreement pursuant to which the
Bank employs a foreign banking institution shall require that such
institution establish a custody account for the Bank and hold in that
account, Foreign Portfolio Securities and other assets of the Company, and,
in the event that such institution deposits Foreign Portfolio Securities in a
foreign securities depository, that it shall identify on its books as
belonging to the Bank the securities so deposited.
(d) AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each of the
agreements pursuant to which a foreign banking institution holds assets of
the Company (each, a "Foreign Sub-Custodian Agreement") shall be
substantially in the form previously made available to the Company and shall
provide that: (a) the Company's assets will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the foreign
banking institution or its creditors or agent, except a claim of payment for
their safe custody or administration (including, without limitation, any fees
or taxes payable upon transfers or reregistration of securities); (b)
beneficial ownership of the Company's assets will be freely transferable
without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Company, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with the
Bank; and (e) assets of the Company held by the Selected Foreign
Sub-Custodian will be subject only to the instructions of the Bank or its
agents.
(e) ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of
the Company, the Bank will use its best efforts to arrange for the
independent accountants of the Company to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Sub-Custodian insofar as such books and records relate to the performance of
such foreign banking institution under its Foreign Sub-Custodian Agreement.
(f) REPORTS BY BANK. The Bank will supply to the Company from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Company held by Selected Foreign Sub-Custodians,
including but not limited to an identification of entities having possession
of the Foreign Portfolio Securities and other assets of the Company.
20
(g) TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. Trans-actions with
respect to the assets of the Company held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Company to the
Bank and shall be effected in accordance with the applicable Foreign
Sub-Custodian Agreement. If at any time any Foreign Portfolio Securities
shall be registered in the name of the nominee of the Selected Foreign
Sub-Custodian, the Company agrees to hold any such nominee harmless from any
liability by reason of the registration of such securities in the name of
such nominee.
Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Portfolio Securities received
for the account of the Company and delivery of Foreign Portfolio Securities
maintained for the account of the Company may be effected in accordance with
the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities to
the purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later payment
for such securities from such purchaser or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation,
the exercise of any voting rights, subscription rights, redemption rights,
exchange rights, conversion rights or tender rights, or any other action in
connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to
the Company such information in connection therewith as is made available to
the Bank by the Foreign Sub-Custodian, and shall promptly forward to the
applicable Foreign Sub-Custodian any instructions, forms or certifications
with respect to such Rights, and any instructions relating to the actions to
be taken in connection therewith, as the Bank shall receive from the Company
pursuant to Proper Instructions. Notwithstanding the foregoing, the Bank
shall have no further duty or obligation with respect to such Rights,
including, without limitation, the determination of whether the Company is
entitled to participate in such Rights under applicable U.S. and foreign
laws, or the determination of whether any action proposed to be taken with
respect to such Rights by the Company or by the applicable Foreign
Sub-Custodian will comply with all applicable terms and conditions of any
such Rights or any applicable laws or regulations, or market practices within
the market in which such action is to be taken or omitted.
(h) LIABILITY OF SELECTED FOREIGN SUB-CUSTODIANS. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Bank and each Company from and against
certain losses, damages, costs, expenses, liabilities or claims arising out
of or in
21
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject to the
Terms and Conditions Governing the Euro-Clear System, a copy of which has
been made available to the Fund. The Fund acknowledges that pursuant to such
Terms and Conditions, Xxxxxx Guaranty Brussels shall have the sole right to
exercise or assert any and all rights or claims in respect of actions or
omissions of, or the bankruptcy or insolvency of, any other depository,
clearance system or custodian utilized by Euro-clear in connection with the
Fund's securities and other assets.
(i) LIABILITY OF BANK. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any
Selected Foreign Sub-Custodian employed hereunder than any such Selected
Foreign Sub-Custodian has to the Bank and, without limiting the foregoing,
the Bank shall not be liable for any loss, damage, cost, expense, liability
or claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism, political risk (including, but not
limited to, exchange control restrictions, confiscation, insurrection, civil
strife or armed hostilities) other losses due to Acts of God, nuclear
incident or any loss where the Selected Foreign Sub-Custodian has otherwise
exercised reasonable care.
(j) MONITORING RESPONSIBILITIES. The Bank shall furnish annually
to the Company, information concerning the Selected Foreign Sub-Custodians
employed hereunder for use by the Fund in evaluating such Selected Foreign
Sub-Custodians to ensure compliance with the requirements of Rule 17f-5 of
the Act. In addition, the Bank will promptly inform the Fund in the event
that the Bank is notified by a Selected Foreign Sub-Custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles) or
any other capital adequacy test applicable to it by exemptive order, or if
the Bank has actual knowledge of any material loss of the assets of the Fund
held by a Foreign Sub-Custodian.
(k) TAX LAW. The Bank shall have no responsibility or liability for
any obligations now or hereafter imposed on the Company or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed
on the Fund or the Bank as the custodian of the Fund by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with regard
to such tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
22
13.4 INSURANCE. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Company held by it as it
uses in respect of its own similar property but it need not maintain any
special insurance for the benefit of the Company.
13.5 FEES AND EXPENSES OF BANK. The Company will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on Schedule A)
including any indemnities for any loss, liabilities or expense to the Bank as
provided above. For the services rendered by the Bank hereunder, the Company
will pay to the Bank such compensation or fees at such rate and at such times
as shall be agreed upon in writing by the parties from time to time. The Bank
will also be entitled to reimbursement by the Company for all reasonable
expenses incurred in conjunction with termination of this Agreement by the
Company.
13.6 ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Company to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Company. Should such a payment or payments, with
advanced funds, result in an overdraft (due to insufficiencies of the
Company's account with the Bank, or for any other reason) this Agreement
deems any such overdraft or related indebtedness, a loan made by the Bank to
the Company payable on demand and bearing interest at the current rate
charged by the Bank for such loans unless the Company shall provide the Bank
with agreed upon compensating balances. The Company agrees that the Bank
shall have a continuing lien and security interest to the extent of any
overdraft or indebtedness, in and to any property at any time held by it for
the Company's benefit or in which the Company has an interest and which is
then in the Bank's possession or control (or in the possession or control of
any third party acting on the Bank's behalf). The Company authorizes the
Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon against any balance of
account standing to the credit of the Company on the Bank's books.
14. TERMINATION.
14.1 This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such sixty days this Agreement
will terminate; provided, however, that the effective date of such
termination may be postponed to a date not more than ninety days from the
date of delivery of such notice (i) by the Bank in order to prepare for the
transfer by the Bank of all of the assets of the Company held hereunder, and
(ii) by the Company in order to give the Company an opportunity to make
23
suitable arrangements for a successor custodian. At any time after the
termination of this Agreement, the Company will, at its request, have access
to the records of the Bank relating to the performance of its duties as
custodian. Notwithstanding the foregoing, this Agreement may not be
terminated prior to November 1, 1998 except for cause after written notice
and a reasonable opportunity to cure.
14.2 In the event of the termination of this Agreement, the
Bank will immediately upon receipt or transmittal, as the case may be,
of notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio Securities duly
endorsed and all records maintained under Section 11 to the successor
custodian when appointed by the Company. The obligation of the Bank
to deliver and transfer over the assets of the Company held by it
directly to such successor custodian will commence as soon as such successor
is appointed and will continue until completed as aforesaid. If the Company
does not select a successor custodian within ninety (90) days from the date
of delivery of notice of termination the Bank may, subject to the provisions
of subsection (14.3), deliver the Portfolio Securities and cash of the
Company held by the Bank to a bank or trust company of its own selection
which meets the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Company under terms similar to
those on which they were held by the Bank, whereupon such bank or trust
company so selected by the Bank will become the successor custodian of such
assets of the Company with the same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Company may furnish the Bank with an order of
the Company advising that a successor custodian cannot be found willing and
able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Company the question of whether the
Company will be liquidated or will function without a custodian for the
assets of the Company held by the Bank. In that event the Bank will deliver
the Portfolio Securities and cash of the Company held by it, subject as
aforesaid, in accordance with one of such alternatives which may be approved
by the requisite vote of shareholders, upon receipt by the Bank of a copy of
the minutes of the meeting of shareholders at which action was taken,
certified by the Company's Secretary and an opinion of counsel to the Company
in form and content satisfactory to the Bank.
15. CONFIDENTIALITY. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other
party, except as may be required by applicable law or at the request of a
governmental agency. The parties further agree that a breach of this
provision would
24
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it
at its office at the address set forth below; namely:
(a) In the case of notices sent to the Company to:
Atlas Assets, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Counsel
or at such other place as such party may from time
to time designate in writing.
17. AMENDMENTS. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the
Company, such alteration or amendment will be authorized and approved by its
Board.
18. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Company
without the written consent of the Bank or by the Bank without the written
consent of the Company, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 14 hereof will not
be deemed to be an assignment within the meaning of this provision.
19. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. COUNTERPARTS. 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.
25
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 written above.
Atlas Funds
By:
------------------------------
Xxxxx X. XxXxxxx
Group Senior Vice President
ATTEST:
-------------------------------
Investors Bank & Trust Company
By:
----------------------------
Xxxxx Xxxxx
Director, Client Management
:
ATTEST:
-----------------------------
DATE:
-----------------------------
26
