CUSTODY AGREEMENT
THIS AGREEMENT made the day of , 19 , 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 XXXXXXXX HIGH INCOME FUND SERIES, a
trust organized under the laws of the Commonwealth of Massachusetts, having its
principal office and place of business at Xxx Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian and Recordkeeper of the securities and monies of Fund and its now
existing and future established portfolios (individually referred to herein as
Portfolio); 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 custodian of the Fund which is to include:
A. Appointment as custodian of the securities and monies at any
time owned by each Portfolio of the Fund; and
B. Appointment as agent to perform certain accounting and
recordkeeping functions required of a duly registered
investment company in compliance with applicable provisions of
federal, state, and local laws, rules and regulations
including, as may be required:
1. Providing information necessary for Fund and each
Portfolio to file required financial reports;
maintaining and preserving required books, accounts
and records as the basis for such reports; and
performing certain daily functions in connection with
such accounts and records, and
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2. Calculating daily net asset value of each Portfolio
of the Fund, and
3. Acting as liaison with independent auditors.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto, properly
certified or authenticated:
A. Resolutions of the Board of Trustees of Fund appointing
Custodian as custodian hereunder and approving the form of
this Agreement; and
B. Resolutions of the Board of Trustees of Fund designating certain
persons to give instructions on behalf of Fund to Custodian and
authorizing Custodian to rely upon such instructions.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
------------------
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 (except
as permitted by the Investment Company Act of 1940) 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. All securities so
delivered to Custodian (other than bearer securities) shall be
registered in the name of Fund or its nominee, or of a nominee
of Custodian, or shall be properly endorsed and in form for
transfer satisfactory to Custodian.
B. Delivery of Accounts and Records
--------------------------------
Fund shall turn over to Custodian all of the Fund's relevant
accounts and records previously maintained by it. Custodian
shall be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned over to it by
Fund, and Fund shall indemnify and hold Custodian harmless of
and from any
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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 any portion of such or to provide any
information needed by the Custodian knowledgeably to perform
its function 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 and 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 applicable Portfolio of the
Fund. 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 United Missouri Bank of Kansas City
(UMBKC) and United Missouri Trust Company of New York (UMBTC),
First National Bank of Chicago (FNBC) for which Custodian
remains responsible. Custodian shall be responsible for the
monies and securities of Fund(s) held by eligible foreign
subcustodians to the extent the domestic custodian with which
the Custodian contracts is responsible to Custodian. Custodian
may participate directly or indirectly through a subcustodian
in the Depository Trust Company, Treasury/Federal Reserve Book
Entry System, Participant Trust Company or other depository
approved by the Fund (as such entities are defined at 17 CFR
Section 270.17f-4(b)).
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D. Registration of Securities
--------------------------
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or its
nominee or in the name of any nominee of Custodian for whose
fidelity and liability Custodian will be fully responsible, or
in street certificate form, so-called, with or without any
indication of fiduciary capacity. Unless otherwise instructed,
Custodian will register all such portfolio securities in the
name of its authorized nominee, as defined in the Internal
Revenue Code and any Regulations of the Treasury Department
issued thereunder or in any provision of any subsequent
Federal tax law exempting such transaction from liability for
stock transfer taxes. All securities, and the ownership
thereof by a Portfolio of the 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 record holder 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 the applicable
Portfolio of the Fund for other securities or cash issued or
paid in connection with any reorganization, recapitalization,
merger, consolidation, split-up of shares, change of par
value, conversion or otherwise, and will deposit any such
securities in 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 an
earlier mandatory call for redemption, except that Custodian
shall receive instructions prior to surrendering any
convertible security. Pursuant to this paragraph, the
Custodian will inform the Fund of such corporate
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actions and capital changes when it is informed of them
through the publications it subscribes to.
F. Purchases of Investments of the Fund
------------------------------------
Fund will, on each business day on which a purchase of
securities shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the
security;
3. The number of shares or 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; and
8. The name of the person from whom or the broker or
dealer through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of such named Portfolio,
but only insofar as monies are available therein for such
purpose, and receive the portfolio securities so purchased by
such named Portfolio, 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. Such payment will be made only upon
receipt by Custodian of the securities so purchased in form
for transfer satisfactory to Custodian. Custodian agrees to
promptly inform Fund of any failures by sellers to make proper
deliveries of securities purchased by the Fund.
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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 of Fund has been made, deliver
to Custodian instructions specifying with respect to each such
sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the
securities;
3. The number of shares or 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 such Portfolio to the broker or other
person specified in the instructions relating to such sale,
such delivery to be made only upon receipt of payment therefor
in such form as is satisfactory to Custodian, with the
understanding that Custodian may deliver or cause to be
delivered securities for payment in accordance with the
customs prevailing among dealers in securities. Custodian
agrees to promptly inform Fund of any failures of purchasers
to make proper payment for securities sold by Fund.
H. PURCHASES OR SALES OF SECURITY OPTIONS, OPTIONS ON INDICES AND
SECURITY INDEX FUTURES CONTRACTS Fund will, on each business
day on which a purchase or sale of the following options
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and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such
purchase or sale:
1. 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;
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;
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;
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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. Option on Index Future Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
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.
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I. Securities Pledged or Loaned
----------------------------
If specifically allowed for in the prospectus of the
applicable Portfolio of the Fund:
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 a Portfolio of the 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.
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 Board of Trustees of Fund.
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K. Deposit Account
---------------
Custodian will open and maintain a special purpose deposit
account(s) in the name of Custodian on behalf of each
Portfolio (Accounts), subject only to draft or order by
Custodian upon receipt of instructions. All monies received by
Custodian from or for the account of a Portfolio 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 Fund's Account,
Custodian agrees to make Fed Funds available to the
appropriate Portfolio of 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 applicable Portfolio of the
Fund based on the schedule attached as Exhibit A, except that
income earned on portfolio securities held by domestic
subcustodians other than UMBKC, UMBTC, Bank of New York
(previously Irving Trust Company and hereinafter referred to
as BONY) and Xxxxxx Guaranty and Trust Company (MGT) will be
credited when received. The Custodian will be entitled to
reverse any credited amounts where credits have been made and
monies are not finally collected. If monies are collected
after such reversal, the Custodian will credit the applicable
Portfolio in that amount. Custodian may open and maintain an
Account in such other banks or trust companies as may be
designated by it and by properly authorized resolution of the
Board of Trustees of Fund, such Account, however, to be in the
name of Custodian on behalf of the applicable portfolio of the
Fund and subject only to its draft or order.
L. Income and other Payments to Fund
---------------------------------
Custodian will:
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1. Collect, claim and receive and deposit for the
Account of each Portfolio of the 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 the applicable
Portfolio of the Fund in accordance with the schedule
attached hereto as Exhibit A, except that income
earned on portfolio securities held by domestic
subcustodians other than UMBKC, UMBTC, BONY, and MGT
will be credited when received. Income from foreign
securities and assets held by eligible foreign
subcustodians shall be credited by Custodian upon
receipt of income from the domestic subcustodian
contracting with the foreign eligible subcustodians.
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 notice of
which is contained in publications
of the type to which a custodian
for investment companies normally
subscribes for such purpose; and
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b. the endorsement for collection, in the name of the
applicable Portfolio of the Fund, of all checks,
drafts or other negotiable instruments.
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 Beneficial Interest of any Portfolio ("Portfolio
Shares") by the Board of Trustees of Fund, Fund shall deliver
to Custodian instructions with respect thereto, including a
copy of the Resolution of said Board of Trustees certified by
the Secretary or an Assistant Secretary of Fund wherein there
shall be set forth the record date as of which shareholders
entitled to receive such dividend or other distribution shall
be determined, the date of payment of such dividend or
distribution, and the amount payable per share on such
dividend or distribution. Except if the ex-dividend date and
the reinvestment date of any dividend are the same, in which
case funds shall remain in the Custody Account, on the date
specified in such Resolution for the payment of such dividend
or other distribution, Custodian will pay out of the monies
held for the account of the applicable Portfolio of the Fund,
insofar as the same shall be available for such purposes, and
wire to the account of the Dividend Disbursing Agent for Fund,
such amount as may be necessary to pay the amount per share
payable in cash on Portfolio Shares issued and outstanding on
the record date established by such Resolution.
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N. Shares of Fund Purchased by Fund
--------------------------------
Whenever any Portfolio 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 Portfolio and either deposit the same in the
account maintained for the purpose of paying for the
repurchase or redemption of Portfolio 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 proper number of such shares have been canceled
and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
----------------------------------
Whenever Portfolio 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 Portfolio 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
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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
commissions, compensation to personnel, and other operating
expenses of Fund) 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 as of
the close of business on each day, a detailed statement of the
amounts received or paid and of securities received or
delivered for the account of Fund during said 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 and will
permit such persons as are authorized by Fund including Fund's
independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded,
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 give such persons as are authorized by Fund including
Fund's independent public accountants, access to such records
or confirmation of the contents of such records; and if
demanded, to
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permit federal and state regulatory agencies to examine the
books, records and securities held by subcustodian which
relate to Fund. Fund will be entitled to receive reports
produced by the Custodian's portfolio accounting system,
including without limitation, those listed on Exhibit C
hereof.
S. Appointment of Subcustodians
----------------------------
1. Notwithstanding any other provisions of this
Agreement, all of 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 selected by Custodian and approved by the
Fund's Board of Trustees. Any such subcustodian must
have the qualifications required for custodian under
the Investment Company Act of 1940, as amended. The
subcustodian may participate directly or indirectly
in the Depository Trust Company, Treasury/Federal
Reserve Book Entry System, Participant Trust Company
or other depository approved by the Fund (as such
entities are defined at 17 CFR Sec. 270.17f-4(b)).
The appointment of UMBKC or any other subcustodian,
depository, or clearing agency used by the Custodian
and approved by the Fund will not relieve Custodian
of any of its obligations hereunder except as
provided in Section 3.C hereof. The Custodian will
comply with Section 17f-4 of the Investment Company
Act of 1940, as amended, as to depositories and
clearing agencies used by Custodian and approved by
the Fund. The Custodian will not be entitled to
reimbursement by Fund for any fees or expenses of any
subcustodian, depository or clearing agency.
2. Notwithstanding any other provisions of this
Agreement, Fund's foreign securities (as defined in
Rule 17f-5(c)(1) under the Investment Company Act of
1940) and Fund's cash or cash equivalents, in amounts
reasonably necessary to effect Fund's foreign
securities transactions, may be held in the custody
of one or more banks or trust companies acting as
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subcustodians, according to Section 3.S.1; and thereafter,
pursuant to a written contract or contracts as approved by
Fund's Board of Trustees, may be transferred to an account
maintained by such subcustodian with an eligible foreign
custodian, as defined in Rule 17f-5(c)(2), provided that any
such arrangement involving a foreign custodian shall be in
accordance with the provisions of Rule 17f-5 under the
Investment Company Act of 1940 as that Rule may be amended
from time to time.
T. Accounts and Records
--------------------
Custodian, with the direction and as interpreted by the Fund,
Fund's accountants and/or other tax advisors, will prepare and
maintain as complete, accurate and current all accounts and
records required to be maintained by Fund under the Internal
Revenue Code of 1986 ("Code") as amended and under the general
Rules and Regulations under the Investment Company Act of 1940
("Rules") as amended, and as agreed upon between the parties
and will preserve said records in the manner and for the
periods prescribed in said Code and Rules, or for such longer
period as is agreed upon by the parties. Custodian relies upon
Fund to furnish, in writing, accurate and timely information
to complete Fund's records and perform daily calculation of
the Fund's net asset value, as provided in Section 3.W. below.
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 having jurisdiction over the Fund or
Custodian, in any requested review of Fund's accounts and
records but shall be reimbursed 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, Custodian will supply necessary data for Fund's
completion of any necessary tax returns, questionnaires,
periodic reports to Shareholders and such other reports and
information requests as Fund and Custodian shall agree upon
from time to time.
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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 by Fund, or directed by Fund, conflicts
with or violates any requirements of its prospectus,
"Declaration of Trust", Bylaws, or any rule or regulation of
any regulatory body or governmental agency. Fund will be
responsible to notify Custodian of any changes in statutes,
regulations, rules 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, once daily. Custodian will prepare and
maintain a daily evaluation of securities for which market
quotations are available by the use of outside services
normally used and contracted for this purpose; all other
securities will be evaluated 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 upon instructions.
X. Overdrafts
----------
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft because the
monies held by Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon a purchase
of securities as specified in Fund's instructions or for some
other reason, the amount of the overdraft shall be payable by
the Fund to Custodian upon demand and shall bear an interest
rate determined by Custodian from the date advanced until the
date of payment. Custodian shall have a lien on the assets of
the Fund in the amount of any outstanding overdraft.
4. INSTRUCTIONS.
-------------
A. The term "instructions", as used herein, means written or facsimile
instructions or advice to Custodian from two designated representatives
of Fund. Certified
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copies of resolutions of the Board of Trustees of Fund naming two or
more designated representatives to give instructions in the name and on
behalf of Fund, may be received and accepted from time to time by
Custodian as conclusive evidence of the authority of any two designated
representatives 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 the resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone else
will first have been obtained, Custodian will be under no obligation to
inquire into the right of the person giving such instructions to do so.
Notwithstanding any of the foregoing provisions of this Section 4. no
authorizations or instructions received by Custodian from Fund, will be
deemed to authorize or permit any director, trustee, officer, employee,
or agent of Fund to withdraw any of the securities or similar
investments of Fund upon the mere receipt of such authorization or
instructions from such director, trustee, officer, employee or agent.
Notwithstanding any other provision of this Agreement, Custodian, upon
receipt (and acknowledgement if required at the discretion of
Custodian) of the instructions of any two designated representatives of
Fund, will undertake to deliver for Fund's account monies, (provided
such monies are on hand or available) in connection with Fund's
transactions and to wire transfer such monies to such broker, dealer,
subcustodian, bank or other agent specified in such instructions.
B. If oral instructions are permitted pursuant to Section 4.A.
hereunder, no later than the next business day immediately
following such oral instruction the 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.
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5. LIMITATION OF LIABILITY OF CUSTODIAN.
-------------------------------------
A. Custodian shall hold harmless and indemnify Fund from and
against any loss or liability arising out of Custodian's
failure to comply with the terms of this Agreement or arising
out of Custodian's negligence or bad faith. Custodian may
request and obtain 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 counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements
of Fund's public accountants 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 statements.
C. If Fund requires Custodian in any capacity to take, with
respect to any securities, any action which involves the
payment of money by it, or which in Custodian's opinion might
make it or its nominee liable for payment of monies or in any
other way, Custodian, upon notice to Fund given prior to such
actions, shall be and be kept indemnified by Fund in an amount
and form satisfactory to Custodian against any liability on
account of such action.
D. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing
to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be
entitled to receive as conclusive proof of any fact or matter
required to be ascertained from Fund hereunder, a certificate
signed by the Fund's President, or other officer specifically
authorized for such purpose.
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E. Without limiting the generality of the foregoing, 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 thereof
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 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 shares of
the Beneficial Interest of Fund, or the sufficiency
of the amount to be received therefor;
4. The legality of the repurchase or redemption of any
shares of Beneficial Interest of, 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 shares of
Beneficial Interest of Fund in payment of any stock
dividend.
F. Custodian shall not be liable for, or considered to be
Custodian of, any money represented by any check, draft, wire
transfer, clearing house funds, uncollected funds, or
instrument for the payment of money received by it on behalf
of Fund, until Custodian actually receives such money,
provided only that it shall advise Fund promptly if it fails
to receive any such money in the ordinary course of business,
and use its best efforts and cooperate with Fund toward the
end that such money shall be received.
G. 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 in the absence of negligence, or bad faith on the part of
Custodian, except as provided in Section 3.S.1 hereof.
H. Notwithstanding anything herein to the contrary, Custodian
may, and with respect to any foreign subcustodian appointed
under Section 3.S.2. must, provide Fund
21
for its approval, agreements with banks or trust companies
which will act as subcustodians for Fund pursuant to Section
3.S of this Agreement.
6. COMPENSATION. Fund will pay to Custodian such compensation as is stated
in the Fee Schedule attached hereto as Exhibit B which may be changed
from time to time as agreed to in writing by Custodian and Fund.
Custodian may charge such compensation against monies held by it for
the account of Fund. Custodian will also be entitled, notwithstanding
the provisions of Sections 5.C. or 5.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to Custodian for other services provided to the Fund by
the Custodian. Custodian will not be entitled to reimbursement by Fund
for any loss or expenses of any subcustodian.
7. TERMINATION. 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. If the Custodian
terminates this Agreement, the Fund may extend the effective date of
the termination ninety (90) days by written request to the Custodian
thirty (30) days prior to the end of the initial ninety (90) days
notice period unless the Custodian in good faith could not perform the
duties hereunder. Upon termination of this Agreement, Fund will pay to
Custodian such compensation for its reimbursable disbursements, costs
and expenses paid or incurred to such date and Fund will use its best
efforts to obtain a successor custodian. Unless the holders of a
majority of the outstanding shares of "Beneficial Interest" of Fund
vote to have the securities, funds and other properties held under this
Agreement delivered and paid over to some other person, firm or
corporation specified in the vote, having not less the Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report, and meeting such other
qualifications for custodian as set forth in the Bylaws of Fund, the
Board of Trustees of Fund will, forthwith upon giving or receiving
notice of termination of this
22
Agreement, appoint as successor custodian a bank or trust company
having such qualifications. Custodian will, upon termination of this
Agreement, deliver to the successor custodian so specified or
appointed, at Custodian's office, all securities then held by Custodian
hereunder, duly endorsed and in form for transfer, all funds and other
properties of Fund deposited with or held by Custodian hereunder, or
will co-operate in effecting changes in book-entries at the Depository
Trust Company or in the Treasury/Federal Reserve Book-Entry System
pursuant to 31 CFR Sec. 306.118. In the event no such vote has been
adopted by the stockholders of shares of Beneficial Interest of Fund
and no written order designating a successor custodian has been
delivered to Custodian on or before the date when such termination
becomes effective, then Custodian will 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, if any, set
forth in the Bylaws of Fund and having not less that Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits,
as shown by its last published report. Upon either such delivery to a
successor custodian, Custodian will have no further obligations or
liabilities under this Agreement. Thereafter such bank or trust company
will be the successor custodian under this Agreement and will be
entitled to reasonable compensation for its services. In the event that
no such successor custodian can be found, Fund will submit to its
shareholders, before permitting delivery of the cash and securities
owned by Fund to anyone other than a successor custodian, the question
of whether Fund will be liquidated or function without a custodian.
Notwithstanding the foregoing requirement as to delivery upon
termination of this Agreement, Custodian may make any other delivery of
the securities, funds and property of Fund which is permitted by the
Investment Company Act of 1940, Fund's Deed of Trust and Bylaws then in
effect or apply to a court of competent jurisdiction for the
appointment of a successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received by
Fund at Xxx Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 such other
address as Fund may have designated to Custodian in writing, will be
deemed to have been properly given to Fund
23
hereunder; and notices, requests, instructions and other writings
received by Custodian at its offices at 000 Xxxx 00xx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000, 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. MISCELLANEOUS.
--------------
A. This Agreement is executed and delivered in the State of
Missouri and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of, and be enforceable by
the respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in
any manner except by a written agreement properly authorized
and executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement shall become effective at the close of business
on the day of , 19 .
F. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all
of which together will constitute one and the same instrument.
G. If any part, term or provision of this Agreement is by the
courts held to be illegal, in conflict with any law or
otherwise invalid, the remaining portion or portions shall be
considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
H. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the
24
specific purpose of direct communications between such issuer
and Fund unless the Fund directs the Custodian otherwise.
I. This Agreement may not be assigned by either party without
prior written consent of the other party.
J. If any provision of the Agreement, either in its present form
or as amended from time to time, limits, qualifies, or
conflicts with the Investment Company Act of 1940 and the
rules and regulations promulgated thereunder, such statutes,
rules and regulations shall be deemed to control and supersede
such provision without nullifying or terminating the remainder
of the provisions of this Agreement.
K. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of the Commonwealth of Massachusetts and notice
is hereby given that the Agreement has been executed on behalf
of Fund by the undersigned officer of Fund in his/her capacity
as an officer of Fund. The obligations of this Agreement shall
only be binding upon the assets and property of Fund and shall
not be binding upon any Trustee, officer or shareholder of
Fund individually.
25
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
-----------------------------
Xxxxxx X. Xxxxxx, Xx.
Senior Vice President
ATTEST:
----------------------
Xxxxxx X. Xxxxxxx
Assistant Secretary
XXXXXXXX HIGH INCOME FUND SERIES
By:
-----------------------------
Title:
-----------------------------
ATTEST:
-------------------
Secretary
26
