CUSTODY AGREEMENT
THIS AGREEMENT made the 3rd day of January, 1994, 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 FOUNDERS FUNDS, INC., a Maryland
corporation, having its principal office and place of business at Founders
Financial Center, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio; and
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.
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Fund hereby constitutes and appoints Custodian as custodian of the
securities and monies at any time owned by the Fund.
2. REPRESENTATIONS AND WARRANTIES.
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A. Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a corporation or trust (as specified above) duly
organized and existing and in good standing under the laws
of its state of organization, and that it is registered under
the Investment Company Act of 1940 (the "1940 Act"); and
2. That it has the requisite power and authority under applicable
law, its articles of incorporation and its bylaws to enter
into this Agreement; that it has taken all requisite action
necessary to appoint Custodian as custodian for the Fund; that
this Agreement has been duly executed and delivered by Fund;
and that this Agreement constitutes a legal, valid and binding
obligation of Fund, enforceable in accordance with its terms.
B. Custodian hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in
good standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable
law, its charter and its bylaws to enter into and perform
this Agreement; that this Agreement has been duly executed
and delivered by Custodian; and that this Agreement
constitutes a legal, valid and binding obligation of
Custodian, enforceable in accordance with its terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
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A. Delivery of Assets
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Except as permitted by the 1940 Act, Fund will deliver or cause to
be delivered to Custodian on the effective date of this Agreement,
or as soon thereafter as practicable, and from time to time
thereafter, all portfolio securities acquired by it and monies then
owned by it or from time to time coming into its possession during
the time this Agreement shall continue in effect. Custodian shall
have no responsibility or liability whatsoever for or on account of
securities or monies not so delivered. 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 or cause to be turned over to Custodian all of
the Fund's relevant accounts and records previously maintained.
Custodian shall be entitled to rely conclusively on the completeness
and correctness of the accounts and records turned over to it, and
Fund shall indemnify and hold Custodian harmless of and from any and
all expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency
of such accounts and records or in the failure of Fund to provide,
or to provide in a timely manner, any accounts, records or
information needed by the Custodian to perform its functions
hereunder.
C. Delivery of Assets to Third Parties
-----------------------------------
Custodian will receive delivery of and keep safely the assets of
Fund delivered to it from time to time segregated in a separate
account, and if Fund is comprised of more than one portfolio of
investment securities (each a "Portfolio") Custodian shall keep the
assets of each Portfolio segregated in a separate account. Custodian
will not deliver, assign, pledge or hypothecate any such assets to
any person except as permitted by the provisions of this Agreement
or any agreement executed by it according to the terms of Section
3.S. of this Agreement. Upon delivery of any such assets to a
subcustodian pursuant to Section 3.S. of this Agreement, Custodian
will create and maintain records identifying those assets which have
been delivered to the subcustodian as belonging to the Fund, by
Portfolio if applicable. The Custodian is responsible for the
safekeeping of the securities and monies of Fund only until they
have been transmitted to and received by other persons as permitted
under the terms of this Agreement, except for securities and monies
transmitted to subcustodians appointed under Section 3.S. of this
Agreement, for which Custodian remains responsible to the extent
provided in Section 3.S. hereof. Custodian may participate directly
or indirectly through a subcustodian in the Depository Trust Company
(DTC), Treasury/Federal Reserve Book Entry System (Fed System),
Participant Trust Company (PTC) or other depository approved by the
Fund (as such entities are defined at 17 CFR Section 270.17f-4(b))
(each a "Depository" and collectively, the "Depositories").
D. Registration of Securities
--------------------------
Custodian will hold stocks and other registerable portfolio
securities of Fund registered in the name of Fund or in the name of
any nominee of Custodian for whose fidelity and liability Custodian
will be fully responsible, or in "street name," 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. If, however, the Fund directs the Custodian
to maintain securities in "street name", notwithstanding anything
contained herein to the
contrary, the Custodian shall be obligated only to utilize its best
efforts to timely collect income due the Fund on such securities and
to notify the Fund of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange
offers. All securities, and the ownership thereof by Fund, which are
held by Custodian hereunder, however, shall at all times be
identifiable on the records of the Custodian. The Fund agrees to
hold Custodian and its nominee harmless for any liability as a
shareholder of record of securities held in custody.
E. Exchange of Securities
----------------------
Upon receipt of instructions as defined herein in Section 4.A,
Custodian will exchange, or cause to be exchanged, portfolio
securities held by it for the account of Fund for other securities
or cash issued or paid in connection with any reorganization,
recapitalization, merger, consolidation, split-up of 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 earlier call for redemption, except that Custodian shall
receive instructions prior to surrendering any convertible security.
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. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares 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 Fund, but only insofar as such monies
are available for such purpose, and receive the portfolio securities
so purchased by or for the account of Fund, except that Custodian
may in its sole discretion advance funds to the Fund which may
result in an overdraft because the monies held by the Custodian on
behalf of the Fund are insufficient to pay the total amount payable
upon such purchase. Such payment will be made only upon receipt by
Custodian of the securities so purchased in form for transfer
satisfactory to Custodian.
G. Sales and Deliveries of Investments of the Fund - Other than Options
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and Futures
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Fund will, on each business day on which a sale of investment
securities (other than options and futures) of Fund has been made,
deliver to Custodian instructions specifying with respect to each
such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares 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 Fund 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.
H. Purchases or Sales of Options and Futures
-----------------------------------------
Fund will, on each business day on which a purchase or sale of the
following options and/or futures shall be made by it, deliver to
Custodian instructions which shall specify with respect to each such
purchase or sale:
1. If applicable, the name of the Portfolio making such purchase
or sale;
2. Security Options
a The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom
the sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through
whom the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and,
when available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of
Custodian, Fund shall deliver a substantially complete
and executed custodial safekeeping account and
procedural agreement which shall be incorporated by
reference into this Custody Agreement); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or other
applicable settlement instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
----------------------------
If specifically allowed for in the prospectus of Fund, and subject
to such additional terms and conditions as Custodian may require:
1. Upon receipt of instructions, Custodian will release or cause
to be released securities held in custody to the pledgee
designated in such instructions by way of pledge or
hypothecation to secure any loan incurred by Fund; provided,
however, that the securities shall be released only upon
payment to Custodian of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will
pay, but only from funds available for such purpose, any such
loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in such
instructions; provided, however, that the securities will be
released only upon deposit with Custodian of full cash
collateral as specified in such instructions, and that Fund
will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will release
the cash collateral to the borrower.
J. Routine Matters
---------------
Custodian will, in general, attend to all routine and mechanical
matters in connection with the sale, exchange, substitution,
purchase, transfer, or other
dealings with securities or other property of Fund except as may be
otherwise provided in this Agreement or directed from time to time
by the Fund in writing.
K. Deposit Accounts
----------------
Custodian will open and maintain one or more special purpose deposit
accounts in the name of Custodian ("Accounts"), subject only to
draft or order by Custodian upon receipt of instructions. All monies
received by Custodian from or for the account of Fund shall be
deposited in said Accounts. Barring events not in the control of the
Custodian such as strikes, lockouts or labor disputes, riots, war or
equipment or transmission failure or damage, fire, flood, earthquake
or other natural disaster, action or inaction of governmental
authority or other causes beyond its control, at 9:00 a.m., Kansas
City time, on the second business day after deposit of any check
into an Account, Custodian agrees to make Fed Funds available to the
Fund in the amount of the check. Deposits made by Federal Reserve
wire will be available to the Fund immediately and ACH wires will be
available to the Fund on the next business day. Income earned on the
portfolio securities will be credited to the Fund based on the
schedule attached as Exhibit A. The Custodian will be entitled to
reverse any credited amounts where credits have been made and monies
are not finally collected. If monies are collected after such
reversal, the Custodian will credit the Fund in that amount.
Custodian may open and maintain Accounts in its own banking
department, or in such other banks or trust companies as may be
designated by it or by Fund in writing, all such Accounts, however,
to be in the name of Custodian and subject only to its draft or
order. Funds received and held for the account of different
Portfolios shall be maintained in separate Accounts established for
each Portfolio.
L. Income and other Payments to Fund
---------------------------------
Custodian will:
1. Collect, claim and receive and deposit for the account of Fund
all income and other payments which become due and payable on
or after the effective date of this Agreement with respect to
the securities deposited under this Agreement, and credit the
account of Fund in accordance with
the schedule attached hereto as Exhibit A. If, for any reason,
the Fund is credited with income that is not subsequently
collected, Custodian may reverse that credited amount.
2. Execute ownership and other certificates and affidavits for
all federal, state and local tax purposes in connection with
the collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. the collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be called,
redeemed, retired or otherwise become payable and
regarding which the Custodian has actual knowledge,
or should reasonably be expected to have knowledge;
and
b. the endorsement for collection, in the name of 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 capital stock of Fund ("Fund Shares") by the Board of
Directors of Fund, Fund shall deliver to Custodian instructions with
respect thereto. On the date specified in
such instructions for the payment of such dividend or other
distribution, Custodian will pay out of the monies held for the
account of Fund, insofar as the same shall be available for such
purposes, and credit to the account of the Dividend Disbursing Agent
for Fund, such amount as may be necessary to pay the amount per
share payable in cash on Fund Shares issued and outstanding on the
record date established by such resolution.
N. Shares of Fund Purchased by Fund
--------------------------------
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund
or its agent shall advise Custodian of the aggregate dollar amount
to be paid for such shares and shall confirm such advice in writing.
Upon receipt of such advice, Custodian shall charge such aggregate
dollar amount to the account of Fund and either deposit the same in
the account maintained for the purpose of paying for the repurchase
or redemption of Fund Shares or deliver the same in accordance with
such advice. Custodian shall not have any duty or responsibility to
determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of Fund
Shares have been canceled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
----------------------------------
Whenever Fund Shares are purchased from Fund, Fund will deposit or
cause to be deposited with Custodian the amount received for such
shares. Custodian shall not have any duty or responsibility to
determine that Fund Shares purchased from Fund have been added to
the proper shareholder account or accounts or that the proper number
of such shares have been added to the shareholder records.
P. Proxies and Notices
-------------------
Custodian will promptly deliver or mail or have delivered or mailed
to Fund all proxies properly signed, all notices of meetings, all
proxy statements and other notices, requests or announcements
affecting or relating to securities held by Custodian for Fund and
will, upon receipt of instructions, execute and deliver or cause its
nominee to execute and deliver or mail or have delivered or mailed
such proxies or other authorizations as may be required. Except as
provided by this
Agreement or pursuant to instructions hereafter received by
Custodian, neither it nor its nominee will exercise any power
inherent in any such securities, including any power to vote the
same, or execute any proxy, power of attorney, or other similar
instrument voting any of such securities, or give any consent,
approval or waiver with respect thereto, or take any other similar
action.
Q. Disbursements
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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 a detailed
statement of the amounts received or paid and of securities received
or delivered for the account of Fund during each business day.
Custodian will render a detailed statement of the securities and
monies held for Fund under this Agreement twice each month, one as
of the fifteenth (or the last business day of Custodian prior
thereto) of the month and one as of Custodian's last business day of
the month, and Custodian will maintain such books and records as are
necessary to enable it to do so. Custodian will permit such persons
as are authorized by Fund, including Fund's independent public
accountants, reasonable access to such records or will provide
reasonable confirmation of the contents of such records, and if
demanded, Custodian will permit federal and state regulatory
agencies to examine the securities, books and records. Upon the
written instructions of Fund or as demanded by federal or state
regulatory agencies, Custodian will instruct any subcustodian to
permit such persons as are authorized by Fund, including Fund's
independent public accountants, reasonable access to such records or
to provide reasonable confirmation of the contents of such records,
and to permit such agencies to examine the books, records and
securities held by such subcustodian which relate to Fund.
S. Appointment of Subcustodian
---------------------------
1. Notwithstanding any other provisions of this Agreement, all or
any of the monies or securities of Fund may be held in
Custodian's own custody or in the custody of one or more
other banks or trust companies acting as subcustodians as may
be selected by Custodian. Any such subcustodian selected by the
Custodian must have the qualifications required for a custodian
under the 1940 Act, as amended. It is understood that Custodian
initially intends to appoint United Missouri Bank N.A. (UMB)
and United Missouri Trust Company of New York (UMTCNY) as
subcustodians. Custodian shall be responsible to the Fund for
any loss, damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of UMB, UMTCNY and any
other subcustodians selected and appointed by Custodian (except
subcustodian appointed at the request of Fund and as provided
in Subsection 2 below) to the same extent Custodian would be
responsible to the Fund under Section 5. of this Agreement if
it committed the act or omission itself. Upon request of the
Fund, Custodian shall be willing to contract with other
subcustodians reasonably acceptable to the Custodian for
purposes of (i) effecting third-party repurchase transactions
with banks, brokers, dealers, or other entities through the use
of a common custodian or subcustodian, or (ii) providing
depository and clearing agency services with respect to
certain variable rate demand note securities, or (iii) for
other reasonable purposes specified by Fund; provided, however,
that the Custodian shall be responsible to the Fund for any
loss, damage or expense suffered or incurred by the Fund
resulting from the actions or omissions of any such
subcustodian only to the same extent such subcustodian
is responsible to the Custodian. The Fund shall
be entitled to review the Custodian's contracts with any such
subcustodians appointed at the request of Fund. Custodian
shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the
actions or omissions of any Depository only to the same extent
such Depository is responsible to Custodian.
2. Notwithstanding any other provisions of this Agreement, Fund's
foreign securities (as defined in Rule 17f-5(c)(1) under the
0000 Xxx) and Fund's cash or cash equivalents, in amounts
deemed by the Fund to be reasonably necessary to effect Fund's
foreign securities transactions, may be held in the custody of
one or more banks or trust companies acting as subcustodians,
and thereafter, pursuant to a written contract or contracts as
approved by Fund's Board of Directors, may be transferred to
accounts maintained by any such subcustodian with eligible
foreign custodians, as defined in Rule 17f-5(c)(2). Custodian
shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the
actions or omissions of any foreign subcustodians or a
domestic subcustodian contracting with such foreign
subcustodians only to the same extent such domestic
subcustodian is responsible to the Custodian.
T. Accounts and Records Property of Fund
-------------------------------------
Custodian acknowledges that all of the accounts and records
maintained by Custodian pursuant to this Agreement are the property
of Fund, and will be made available to Fund for inspection or
reproduction within a reasonable period of time, upon demand.
Custodian will assist Fund's independent auditors, or upon approval
of Fund, or upon demand, any regulatory body, in any requested
review of Fund's accounts and records but shall be reimbursed by
Fund for all expenses and employee time invested in any such review
outside of routine and normal periodic reviews. Upon receipt from
Fund of the necessary information or instructions, Custodian will
supply information from the books and records it maintains for Fund
that Fund needs for tax returns, questionnaires, periodic
reports to shareholders and such other reports and information
requests as Fund and Custodian shall agree upon from time to time.
U. Adoption of Procedures
----------------------
Custodian and Fund may from time to time adopt procedures as they
agree upon, and Custodian may conclusively assume that no procedure
approved or directed by Fund or its accountants or other advisors
conflicts with or violates any requirements of its prospectus,
articles of incorporation, bylaws, any applicable law, rule or
regulation, or any order, decree or agreement by which Fund may be
bound. Fund will be responsible to notify Custodian of any changes
in statutes, regulations, rules, requirements or policies which
might necessitate changes in Custodian's responsibilities or
procedures.
V. Overdrafts
----------
If Custodian shall in its sole discretion advance funds to the
account of the Fund which results in an overdraft in any Account
because the monies held therein 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 together with the overdraft charge set forth
on the then-current Fee Schedule from the date advanced until the
date of payment. Fund hereby grants Custodian a lien on and security
interest in the assets of the Fund to secure the full amount of any
outstanding overdraft and related overdraft charges.
4. INSTRUCTIONS.
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A. The term "instructions", as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund shall
deliver to Custodian, prior to delivery of any assets to Custodian and
thereafter from time to time as changes therein are necessary, written
instructions naming one or more designated representatives to give
instructions in the name and on behalf of Fund, which instructions may
be received and accepted by Custodian as conclusive evidence of the
authority of any designated representative to act for Fund and may be
considered to be in full force and effect (and Custodian will be
fully protected in acting in reliance thereon) until receipt by
Custodian of notice to the contrary. Unless such written
instructions delegating authority to any person to give instructions
specifically limit such authority to specific matters or require
that the approval of anyone else will first have been obtained,
Custodian will be under no obligation to inquire into the right of
such person, acting alone, to give any instructions whatsoever which
Custodian may receive from such person. If Fund fails to provide
Custodian any such instructions naming designated representatives,
any instructions received by Custodian from a person reasonably
believed to be an appropriate representative of Fund shall
constitute valid and proper instructions hereunder.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such
oral instruction. At Custodian's sole discretion, Custodian may
record on tape, or otherwise, any oral instruction whether given in
person or via telephone, each such recording identifying the
parties, the date and the time of the beginning and ending of such
oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
-------------------------------------
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify
and hold Custodian harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted against Custodian, incurred by
Custodian or for which Custodian may be held to be liable, arising out
of or attributable to:
1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian
has acted in good faith and with due diligence and reasonable
care; and
2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay
or reimburse
Custodian under this indemnification provision), the Fund's
negligence or willful misconduct, or the failure of any
representation or warranty of the Fund hereunder to be and
remain true and correct in all respects at all times.
B. Custodian may request and obtain at the expense of Fund the advice
and opinion of counsel for Fund or of its own counsel with respect
to questions or matters of law, and it shall be without liability to
Fund for any action taken or omitted by it in good faith, in
conformity with such advice or opinion. If Custodian reasonably
believes that it could not prudently act according to the
instructions of the Fund or the Fund's accountants or counsel, it
may in its discretion, with notice to the Fund, not act according to
such instructions.
C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or other authorized individuals, and other
persons believed by it in good faith to be expert in matters upon
which they are consulted, and Custodian shall not be liable for any
actions taken, in good faith, upon such advice and statements,
provided, however, that in the case of such advice and statements of
such other persons, Custodian shall maintain compliance with the
terms of this Agreement.
D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money of Custodian, or which might make it
or its nominee liable for payment of its monies or in any other way,
Custodian shall be indemnified and held harmless by Fund against any
liability on account of such action; provided, however, that nothing
herein shall obligate Custodian to take any such action except in
its sole discretion.
E. Custodian shall be protected in acting as custodian hereunder upon
any instructions, advice, notice, request, consent, certificate or
other instrument or paper appearing to it to be genuine and to have
been properly executed and shall be entitled to receive upon request
as conclusive proof of any fact or matter required to be ascertained
from Fund hereunder a certificate signed by an officer or designated
representative of Fund.
F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase of any securities or
foreign currency positions or evidence of ownership required
by Fund to be received by Custodian, or the propriety of the
decision to purchase or amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for
which the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund
Shares, or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or
the legality of the issue of any Fund Shares in payment of any
stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the
payment of money to be received by it on behalf of Fund until
Custodian actually receives such money; provided, however, that it
shall advise Fund promptly if it fails to receive any such money in
the ordinary course of business and shall cooperate with Fund toward
the end that such money shall be received.
H. Except as provided in Section 3.S., Custodian shall not be
responsible for loss occasioned by the acts, neglects, defaults or
insolvency of any broker, bank, trust company, or any other person
with whom Custodian may deal.
I. Custodian shall not be responsible or liable for the failure or
delay in performance of its obligations under this Agreement, or
those of any entity for which it is responsible hereunder, arising
out of or caused, directly or indirectly, by circumstances beyond
the affected entity's reasonable control, including, without
limitation: any interruption, loss or malfunction of any utility,
transportation, computer (hardware or software) or communication
service; inability to obtain
labor, material, equipment or transportation, or a delay in mails;
governmental or exchange action, statute, ordinance, rulings,
regulations or direction; war, strike, riot, emergency, civil
disturbance, terrorism, vandalism, explosions, labor disputes,
freezes, floods, fires, tornados, acts of God or public enemy,
revolutions, or insurrection; or any other cause, contingency,
circumstance or delay not subject to the control of and which
prevents or hinders the performance hereunder of Custodian or any
entity for which it is responsible hereunder.
J. IN NO EVENT AND UNDER NO CIRCUMSTANCES SHALL EITHER PARTY TO THIS
AGREEMENT BE LIABLE TO ANYONE, INCLUDING, WITHOUT LIMITATION TO THE
OTHER PARTY, FOR CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT
UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THIS
POSSIBILITY THEREOF.
6. COMPENSATION.
-------------
In consideration for its services hereunder, Fund will pay to
Custodian such compensation as shall be set forth in a separate fee
schedule to be agreed to by Fund and Custodian from time to time. A
copy of the initial fee schedule is attached hereto and incorporated
herein by reference. Custodian shall also be entitled to receive, and
Fund agrees to pay to Custodian, on demand, reimbursement for
Custodian's cash disbursements and reasonable out-of-pocket costs and
expenses, including attorney's fees, incurred by Custodian in
connection with the performance of services hereunder. Custodian may
charge such compensation against monies held by it for the account of
Fund. Custodian will also be entitled to charge against any monies
held by it for the account of Fund the amount of any loss, damage,
liability, advance, overdraft or expense for which it shall be
entitled to reimbursement from Fund, including but not limited to fees
and expenses due to Custodian for other services provided to the Fund
by Custodian. Custodian will be entitled to reimbursement by the Fund
for the losses, damages, liabilities, advances, overdrafts and
expenses of subcustodians only to the extent that (i) Custodian would
have been entitled to reimbursement hereunder if it had incurred the
same itself directly, and (ii) Custodian is obligated to reimburse the
subcustodian therefor.
7. TERM AND 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. Upon termination of this
Agreement, Fund will pay Custodian its fees and compensation due
hereunder and its reimbursable disbursements, costs and expenses paid
or incurred to such date and Fund shall designate a successor
custodian by notice in writing to Custodian by the termination date.
In the event no written order designating a successor custodian has
been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian may, at its option,
deliver the securities, funds and properties of Fund to a bank or
trust company at the selection of Custodian, and meeting the
qualifications for custodian set forth in the 1940 Act and having not
less than Five Million Dollars ($5,000,000) aggregate capital, surplus
and undivided profits, as shown by its last published report, or apply
to a court of competent jurisdiction for the appointment of a
successor custodian or other proper relief, or take any other lawful
action under the circumstances; provided, however, that Fund shall
reimburse Custodian for its costs and expenses, including reasonable
attorney's fees, incurred in connection therewith. Custodian will,
upon termination of this Agreement and payment of all sums due to
Custodian from Fund hereunder or otherwise, deliver to the successor
custodian so specified or appointed, or as specified by the court, at
Custodian's office, all securities then held by Custodian hereunder,
duly endorsed and in form for transfer, and all funds and other
properties of Fund deposited with or held by Custodian hereunder, and
Custodian will co-operate in effecting changes in book-entries at all
Depositories. Upon delivery to a successor custodian or as specified
by the court, Custodian will have no further obligations under this
Agreement. Thereafter such successor will be the successor custodian
under this Agreement and will be entitled to reasonable compensation
for its services. In the event that securities, funds and other
properties remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to appoint a successor
custodian, the Custodian shall be entitled to compensation as provided
in the then-current fee schedule hereunder for its services during
such period as the Custodian retains possession of such securities,
funds and other properties, and the provisions of this Agreement
relating to the duties and obligations of the Custodian shall remain
in full force and effect.
8. NOTICES.
--------
Notices, requests, instructions and other writings addressed to Fund
at Founders Financial Center, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxx Xxxxxxxx
00000, or at such other address as Fund may have designated to
Custodian in writing, will be deemed to have been properly given to
Fund hereunder; and notices, requests, instructions and other writings
addressed to Custodian at its offices at 000 Xxxx 00xx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000, Attention: Custody Department, or to such other
address as it may have designated to Fund in writing, will be deemed
to have been properly given to Custodian hereunder.
9. MULTIPLE PORTFOLIOS.
--------------------
If Fund is comprised of more than one Portfolio:
A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by
this Agreement, every reference herein to the Fund shall be deemed
to relate solely to the particular Portfolio to which such
transaction relates. Under no circumstances shall the rights,
obligations or remedies with respect to a particular Portfolio
constitute a right, obligation or remedy applicable to any other
Portfolio. The use of this single document to memorialize the
separate agreement of each Portfolio is understood to be for
clerical convenience only and shall not constitute any basis for
joining the Portfolios for any reason.
B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund
in writing.
10. MISCELLANEOUS.
--------------
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties and the indemnifications extended
hereunder are intended to and shall continue after and survive the
expiration, termination or cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and
executed by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed
as a continuing or permanent waiver of any such terms, conditions,
rights or privileges, but the same shall continue and remain in full
force and effect as if no such forbearance or waiver had occurred.
No waiver, release or discharge of any party's rights hereunder
shall be effective unless contained in a written instrument signed
by the party sought to be charged.
F. The captions in the Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
H. If any part, term or provision of this Agreement is determined by
the courts or any regulatory authority 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.
I. This Agreement may not be assigned by either party hereto without
the prior written consent of the other party.
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Custodian and Fund.
K. Except as specifically provided herein, this Agreement does not in
any way affect any other agreements entered into among the parties
hereto and any actions taken or omitted by either party hereunder
shall not affect any rights or obligations of the other party
hereunder. This Agreement cancels and supersedes all previous
custody agreements by and between Fund (and its various
predecessors) and Custodian; provided, however, that all duties and
liabilities of the parties thereunder with respect to any act, error
or omission which occurred prior to the effective date hereof shall
survive the execution hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx
-----------------------------
Title: EVP
-----------------------------
FOUNDERS FUNDS, INC.
By: /s/ Xxxxx X. Xxx
-----------------------------
Title: Vice President
-----------------------------
EXHIBIT A
---------
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
========================================================================================================================
TRANSACTION DTC PHYSICAL FED
------------------------------------------------------------------------------------------------------------------------
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
------------------------------------------------------------------------------------------------------------------------
Calls Puts As Received C or F* As Received C or F*
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
Tender Reorgs. As Received C As Received C N/A
Dividends Paydate C Paydate C N/A
Floating Rate Int. Paydate C Paydate C N/A
Floating Rate Int. N/A As Rate Received C N/A
(No Rate)
Mtg. Backed P&I Paydate C Paydate + 1 Bus. C Paydate F
Day
Fixed Rate Int. Paydate C Paydate C Paydate F
Euroclear N/A C Paydate C
========================================================================================================================
Legend
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
