EXHIBIT 8
FORM OF
CUSTODIAN AGREEMENT
Between
THE DLB FUND GROUP
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
Page
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1. Bank Appointed Custodian.................................................................................5
2. Definitions..............................................................................................5
2.1. Authorized Person......................................................................5
2.2. Security...............................................................................5
2.3. Portfolio Security.....................................................................6
2.4. Officers' Certificate..................................................................6
2.5. Book-Entry System......................................................................6
2.6. Depository.............................................................................6
2.7. Proper Instruction.....................................................................6
3. Separate Accounts........................................................................................7
4. Certification as to Authorized Persons...................................................................7
5. Custody of Cash..........................................................................................7
5.1. Purchase of Securities.................................................................7
5.2. Redemptions............................................................................8
5.3. Distributions and Expenses of Fund.....................................................8
5.4. Payment in Respect of Securities.......................................................8
5.5. Repayment of Loans.....................................................................8
5.6. Repayment of Cash......................................................................8
5.7. Foreign Exchange Transactions..........................................................8
5.8. Other Authorized Payments..............................................................8
5.9. Termination:...........................................................................9
6. Securities...............................................................................................9
6.1. Segregation and Registration...........................................................9
6.2. Voting and Proxies.....................................................................9
6.3. Book-Entry System......................................................................9
6.4. Use of a Depository...................................................................11
6.5. Use of Book-Entry System for Commercial Paper.........................................12
6.6. Use of Immobilization Programs........................................................13
6.7. Eurodollar CDs........................................................................14
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6.8. Options and Futures Transactions......................................................14
6.9. Segregated Account....................................................................15
6.10. Interest Bearing Call or Time Deposits.......................................17
6.11. Transfer of Securities.......................................................17
7. Redemption..............................................................................................19
8. Merger..................................................................................................19
9. Actions of Bank Without Prior Authorization.............................................................19
10. Collections and Defaults................................................................................20
11. Maintenance of Records and Accounting Services..........................................................21
12. Fund Evaluation.........................................................................................21
13. Concerning the Bank.....................................................................................21
13.1. Performance of Duties and Standard of Care...................................21
13.2. Agents and Subcustodians with Respect to Property of the Fund
Held in the United States....................................................23
13.3. Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.................................................24
13.4. Insurance....................................................................28
13.5. Fees and Expenses of Bank....................................................28
13.6. Advances by Bank.............................................................28
14. Termination.............................................................................................28
15. Confidentiality.........................................................................................29
16. Notices.................................................................................................30
17. Amendments..............................................................................................30
18. Parties.................................................................................................30
19. Governing Law...........................................................................................30
20. Counterparts............................................................................................30
21. Limitation of Liability.................................................................................31
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FORM OF
CUSTODIAN AGREEMENT
AGREEMENT made as of this 19th day of July, 1995 between THE DLB FUND
GROUP, a Massachusetts business trust (the "Fund") and INVESTORS BANK &TRUST
COMPANY (the "Bank").
The Fund, an open-end management investment company, consisting of four
portfolios, The DLB Fixed Income Fund, the DLB Global Small Capitalization Fund,
the DLB Value Fund and the DLB Mid Capitalization Fund (each referred to as a
"Portfolio") desires to place and maintain all of its portfolio securities and
cash in the custody of the Bank. The Bank has at least the minimum
qualifications required by Section 17(f)(1) of the Investment Company Act of
1940 (the "1940 Act") to act as custodian of the portfolio securities and cash
of the Fund, and has indicated its willingness to so act, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as custodian of
its portfolio securities and cash delivered to the Bank as hereinafter described
and the Bank agrees to act as such upon the terms and conditions hereinafter set
forth.
2. Definitions. Whenever used herein, the terms listed below will have the
following meaning:
2.1. Authorized Person. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of its Board of Trustees (the "Board"), and set
forth in a certificate as required by Section 4 hereof.
2.2. Security. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or
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option contract to purchase or sell any of the foregoing, and futures, forward
contracts and options thereon.
2.3. Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
2.4. Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.5. Book-Entry System. Book-Entry System shall mean the Federal
Reserve- Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6. Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.7. Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions to
be given in such form and manner as the Bank and the Fund shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initialed by such one or more persons from
time to time designated in an Officers' Certificate as having been authorized by
the Board. Oral instructions will be considered Proper Instructions if the Bank
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund shall cause all
oral instructions to be promptly confirmed in writing. The Bank shall act upon
and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act the Fund shall give the Bank specific Proper Instructions as to the
action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or
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electronic devices provided that the Board and the Bank are satisfied that such
procedures afford adequate safeguards for the Fund's assets.
3. Separate Accounts. The Bank will segregate the assets of each Portfolio to
which this Agreement relates into a separate account for each Portfolio
containing the assets of such Portfolio (and all investment earnings thereon).
4. Certification as to Authorized Persons. The Secretary or Assistant Secretary
of the Fund will at all times maintain on file with the Bank his or her
certification to the Bank, in such form as may be acceptable to the Bank, of (i)
the names and signatures of the Authorized Persons and (ii) the names of the
Board, it being understood that upon the occurrence of any change in the
information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Fund which has been signed by Authorized Persons named in the most recent
certification.
5. Custody of Cash. As Custodian for the Fund, the Bank will open and maintain a
separate account or accounts in the name of the Fund or in the name of the Bank,
as Custodian of the Fund, and will deposit to the account of the Fund all of the
cash of the Fund, except for cash held by a subcustodian appointed pursuant to
Section 13.2 hereof, including borrowed funds, delivered to the Bank, subject
only to draft or order by the Bank acting pursuant to the terms of this
Agreement. Upon receipt by the Bank of Proper Instructions (which may be
continuing instructions) or in the case of payments for redemptions and
repurchases of outstanding shares of beneficial interest of the Fund,
notification from the Fund's transfer agent as provided in Section 7, requesting
such payment, designating the payee or the account or accounts to which the Bank
will release funds for deposit, and stating that it is for a purpose permitted
under the terms of this Section 5, specifying the applicable subsection, the
Bank will make payments of cash held for the accounts of the Fund, insofar as
funds are available for that purpose, only as permitted in subsections 5.1-5.9
below.
5.1. Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of Such securities by the Bank or, against
delivery of such securities to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, registered in the name of the Fund or in the name of, or
properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (of transaction report in the case of Book Entry Paper) of
purchase of the securities received
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by the Bank before such payment is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made.
5.2. Redemptions. In such amount as may be necessary for the repurchase
or redemption of shares of beneficial interest of the Fund offered for
repurchase or redemption in accordance with Section 7 of this Agreement.
5.3. Distributions and Expenses of Fund. For the payment on the account
of the Fund of dividends or other distributions to shareholders as may from time
to time be declared by the Board, interest, taxes, management or supervisory
fees, distribution fees, fees of the Bank for its services hereunder and
reimbursement of the expenses and liabilities of the Bank as provided hereunder,
fees of any transfer agent, fees for legal, accounting, and auditing services,
or other operating expenses of the Fund.
5.4. Payment in Respect of Securities. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Fund held by or to be delivered to the Bank.
5.5. Repayment of Loans. To repay loans of money made to the Fund, but,
in the case of final payment, only upon redelivery to the Bank of any Portfolio
Securities pledged or hypothecated therefor and upon surrender of documents
evidencing the loan.
5.6. Repayment of Cash. To repay the cash delivered to the Fund for the
purpose of collateralizing the obligation to return to the Fund certificates
borrowed from the Fund representing Portfolio Securities, but only upon
redelivery to the Bank of such borrowed certificates.
5.7. Foreign Exchange Transactions. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Fund upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the Fund
deals or for their failure to comply with the terms of any contract or option.
5.8. Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the
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obligation for which payment is to be made, setting forth the purpose for which
such obligation was incurred and declaring such purpose to be a proper corporate
purpose.
5.9. Termination. Upon the termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1. Segregation and Registration. Except as otherwise provided herein,
and except for securities to be delivered to any subcustodian appointed pursuant
to Section 13.2 hereof, the Bank as custodian, will receive and hold pursuant to
the provisions hereof, in a separate account or accounts and physically
segregated at all times from those of other persons, any and all Portfolio
Securities which may now or hereafter be delivered to it by or for the account
of the Fund. All such Portfolio Securities will be held or disposed of by the
Bank for, and subject at all times to, the instructions of the Fund pursuant to
the terms of this Agreement. Subject to the specific provisions herein relating
to Portfolio Securities that are not physically held by the Bank, the Bank will
register all Portfolio Securities (unless otherwise directed by Proper
Instructions or an Officers' Certificate), in the name of a registered nominee
of the Bank as defined in the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, and will execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2. Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Fund all notices, proxies
and proxy soliciting materials with respect to such Securities, such proxies to
be executed by the registered holder of such Securities (if registered otherwise
than in the name of the Fund), but without indicating the manner in which such
proxies are to be voted.
6.3. Book-Entry System. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits of Fund assets
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
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(a) The Bank may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio
Securities are represented in an account ("Account")
of the Bank (or its agent) in such System which shall
not include any assets of the Bank (or such agent)
other than assets held as a fiduciary, custodian, or
otherwise for customers;
(b) The records of the Bank (and any such agent) with
respect to the Fund's participation in the Book-Entry
System through the Bank (or any such agent) will
identify by book entry Portfolio Securities which are
included with other securities deposited in the
Account and shall at all times during the regular
business hours of the Bank (or such agent) be open
for inspection by duly authorized officers, employees
or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall
also, by book entry or otherwise, identify as
belonging to the Fund a quantity of securities in
fungible bulk of securities (i) registered in the
name of the Bank or its nominee, or (ii) shown on the
Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities
purchased for the account of the Fund or shall pay
cash collateral against the return of Portfolio
Securities loaned by the Fund upon (i) receipt of
advice from the Book-Entry System that such
Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such payment and
transfer for the account of the Fund. The Bank (or
its agent) shall transfer securities sold or loaned
for the account of the Fund upon
(i) receipt of advice from the Book-Entry System
that payment for securities sold or payment
of the initial cash collateral against the
delivery of securities loaned by the Fund
has been transferred to the Account; and
(ii) the making of an entry on the records of the
Bank (or its agent) to reflect such transfer
and payment for the account of the Fund.
Copies of all advices from the Book-Entry
System of transfers of securities for the
account of the Fund shall identify the Fund,
be maintained for the Fund by the Bank and
shall be provided to the Fund at its
request. The Bank shall send the Fund a
confirmation, as defined by Rule 17f-4 of
the 1940 Act, of any transfers to or from
the account of the Fund;
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(d) The Bank will promptly provide the Fund with any
report obtained by the Bank or its agent on the
Book-Entry System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the Book-Entry System;
(e) The Bank shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the
Book-Entry System by reason of any gross negligence,
willful misfeasance or bad faith of the Bank or any
of its agents or of any of its or their employees or
from any reckless disregard by the Bank or any such
agent of its duty to use its best efforts to enforce
such rights as it may have against the Book-Entry
System; at the election of the Fund, it shall be
entitled to be subrogated for the Bank in any claim
against the Book-Entry System of any other person
which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that
the Fund has not been made whole for any loss or
damage.
6.4. Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive,
exchange, release, lend, deliver and otherwise deal
with Portfolio Securities including stock dividends,
rights and other items of like nature, and to receive
and remit to the Bank on behalf of the Fund all
income and other payments thereon and to take all
steps necessary and proper in connection with the
collection thereof;
(b) Registration of Portfolio Securities may be made in
the name of any nominee or nominees used by such
Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such
Depository for transactions of participants acting
through it. Upon any purchase of Portfolio
Securities, payment will be made only upon delivery
of the securities to or for the account of the Fund
and the Fund shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund
only upon delivery of the Securities to or for the
account of the Fund; and upon any sale of Portfolio
Securities, delivery of the Securities will be made
only against payment thereof or, in the event
Portfolio Securities are
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loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or
for the account of the Fund; and
(d) The Bank shall be subject to the same liability and
duty to the Fund with respect to all securities of
the Fund, and all cash, stock dividends, rights and
items of like nature to which the Fund is entitled,
held or received by a central securities system as
agent for the Bank pursuant to the foregoing
authorization, as if the same were held or received
by the Bank at its own offices. In this connection,
the Bank shall use its best efforts to ensure that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited
with it in the event such Portfolio Security
is lost, destroyed, wrongfully taken or
otherwise not available to be returned to
the Bank upon its request;
(ii) Any proxy materials received by a Depository
with respect to Portfolio Securities
deposited with such Depository are forwarded
immediately to the Bank for prompt
transmittal to the Fund;
(iii) Such Depository immediately forwards to the
Bank confirmation of any purchase or sale of
Portfolio Securities and of the appropriate
book entry made by such Depository to the
Fund's account;
(iv) Such Depository prepares and delivers to the
Bank such records with respect to the
performance of the Bank's obligations and
duties hereunder as may be necessary for the
Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940
Act and Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the
Fund all internal accounting control
reports, whether or not audited by an
independent public accountant, as well as
such other reports as the Fund may
reasonably request in order to verify the
Portfolio Securities held by such
Depository.
6.5. Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of
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confirmation from an Issuer (as defined below) that the Fund has purchased such
Issuer's Book-Entry Paper, the Bank shall issue and hold in book-entry form, on
behalf of the Fund, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its
Book-Entry Paper System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by
the Fund in an account of the Bank that includes only
assets held by it for customers;
(b) the records of the Bank with respect to the Fund's
purchase of Book- Entry Paper through the Bank will
identify, by book-entry, Commercial Paper belonging
to the Fund which is included in the Book-Entry Paper
System and shall at all times during the regular
business hours of the Bank be open for inspection by
duly authorized officers, employees or agents of the
Fund;
(c) the Bank shall pay for Book-Entry Paper purchased for
the account of the Fund upon contemporaneous (i)
receipt of advice from the Issuer that such sale of
Book-Entry Paper has been effected, and (ii) the
making of an entry on the records of the Bank to
reflect such payment and transfer for the account of
the Fund;
(d) the Bank shall cancel such Book-Entry Paper
obligation upon the maturity thereof upon
contemporaneous (i) receipt of advice that payment
for such Book-Entry Paper has been transferred to the
Fund. and (ii) the making of an entry on the records
of the Bank to reflect such payment for the account
of the Fund;
(e) the Bank shall transmit to the Fund a transaction
journal confirming each transaction in Book-Entry
Paper for the account of the Fund on the next
business day following the transaction; and
(f) the Bank will send to the Fund such reports on its
system of internal accounting control with respect to
the Book-Entry Paper System as the Fund any
reasonably request from time to time.
6.6. Use of Immobilization Programs. Provided (i) the Bank has received
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act and (ii)
for each year following such approval the Board has reviewed and approved the
arrangement and has not delivered an Officers' Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
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6.7. Eurodollar CDs. Any Portfolio Securities which are Eurodollar CDs
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Securities are identified on the books of the Bank as belonging to the Fund
and that the books of the Bank identify the European Branch holding such
Securities. Notwithstanding any other provision of this Agreement to the
contrary, except as stated in the first sentence of this subsection 6.7, the
Bank shall be under no other duty with respect to such Eurodollar CDs belonging
to the Fund, and shall have no liability to the Fund or its shareholders with
respect to the actions, inactions, whether negligent or otherwise of such
European Branch in connection with such Eurodollar CDs, except for any loss or
damage to the Fund resulting from the Bank's own gross negligence, willful
misfeasance or bad faith in the performance of its duties hereunder.
6.8. Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ
or Over- the-Counter.
1. The Bank shall take action as to put options ("puts") and call
options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with
the provisions of any agreement entered into upon receipt of
Proper Instructions between the Bank, any broker-dealer
registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Fund relating to the compliance with the rules
of the Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization
or organizations.
2. Unless another agreement requires it to do so, the Bank shall
be under no duty or obligation to see that the Fund has
deposited or is maintaining adequate margin, if required, with
any broker in connection with any option, nor shall the Bank
be under any duty or obligation to present such option to the
broker for exercise unless it receives Proper Instructions
from the Fund. The Bank shall have no responsibility for the
legality of any put or call purchased or sold on behalf of the
Fund, the propriety of any such purchase or sale, or the
adequacy of any collateral delivered to a broker in connection
with an option or deposited to or withdrawn from a Segregated
Account (as defined in subsection 6.9 below). The Bank
specifically, but not by way of limitation, shall not be under
any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker
or held in a Segregated Account is sufficient to protect such
broker of the Fund against any loss; (ii) effect the return of
any collateral delivered to a broker; or (iii) advise the Fund
that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the
Fund.
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(b) Puts, Calls and Futures Traded on Commodities Exchanges.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in
accordance with the provisions of any agreement among the
Fund, the Bank and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with
the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any
Futures Commission Merchant account and the Segregated Account
shall be limited as set forth in subparagraph (a)(2) of this
Section 6.8 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts
and calls thereon instead of options.
6.9. Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:
(a) In accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer
registered under the Exchange Act and a member of the
NASD or any Futures Commission Merchant registered
under the Commodity Exchange Act, relating to
compliance with the rules of the Options Clearing
Corporation and of any registered national securities
exchange or the Commodity Funds Trading Commission or
any registered Contract Market, or of any sirnilar
organizations regarding escrow or other arrangements
in connection with transactions by the Fund;
(b) for the purpose of segregating cash or securities, in
connection with options purchased or written by the
Fund or commodity futures purchased or written by the
Fund;
(c) for the deposit of liquid assets, such as cash, U. S.
Government securities or other high grade debt
obligations, having a market value (marked to market
on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement
dates of all the Fund's then outstanding forward
commitment or "when-issued" agreements relating to
the purchase of Portfolio Securities and all the
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Fund's then outstanding commitments under reverse
repurchase agreements entered into with broker-dealer
firms;
(d) for the deposit of any Portfolio Securities which the
Fund has agreed to sell on a forward commitment
basis, all in accordance with Investment Company Act
Release No. 10666;
(e) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of
the Securities and Exchange Commission relating to
the maintenance of Segregated Accounts by registered
investruent companies;
(f) for other proper corporate purposes, but only, in the
case of this clause (f), upon receipt of, in addition
to Proper Instructions, a certified copy of a
resolution of the Board, or of the Executive
Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such
Segregated Account and declaring such purposes to be
proper corporate purposes.
(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any
agreements referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's
obligations under outstanding firm
commitment or when-issued agreements for the
purchase of Portfolio Securities and under
reverse repurchase agreements;
(iii) for exchange for other liquid assets of
equal or greater value deposited in the
Segregated Account,
(iv) to the extent that the Fund's outstanding
forward commitment or when-issued agreements
for the purchase of portfolio securities or
reverse repurchase agreements are sold to
other parties or the Fund's obligations
thereunder are met from assets of the Fund
other than those in the Segregated Account;
or
(v) for delivery upon Settlement of a forward
commitment agreement for the sale of
Portfolio Securities.
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6.10. Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.11. Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making
any transfer, exchange, delivery or release under this Section the Bank
will receive Proper Instructions requesting such transfer, exchange or
delivery stating that it is for a purpose permitted under the terms of
this Section 6.1 1. specifying the applicable subsection, or describing
the purpose of the transaction with sufficient particularity to permit
the Bank to ascertain the applicable subsection, only
(a) upon sales of Portfolio Securities for the account of
the Fund, against contemporaneous receipt by the Bank
of payment therefor in full, or, against payment to
the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction
or market in which the transaction occurs, each such
payment to be in the amount of the sale price shown
in a broker's confirmation of sale of the Portfolio
Securities received by the Bank before such payment
is made, as confirmed in the Proper Instructions
received by the Bank before such payment is made;
(b) in exchange for or upon conversion into other
securities alone or other securities and cash
pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon
exercise of subscription, purchase or sale or other
similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in
the event of a tender offer therefor, provided
however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring
the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for
failure to so tender in a timely manner unless such
Proper Instructions are received by the Bank at least
two business days prior to the date required for
tender, and unless the Bank (or its agent or
subcustodian
-16-
hereunder) has actual possession of such Security at
least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to
their terms into other securities;
(d) for the purpose of redeeming in kind shares of the
Fund upon authorization from the Fund;
(e) in the case of option contracts owned by the Fund,
for presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed
or retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of
Portfolio Securities held by the Bank in order to
collateralize loans made to the Fund by any bank,
including the Bank; provided, however, that such
Portfolio Securities will be released only upon
payment to the Bank for the account of the Fund of
the moneys borrowed, except that in cases where
additional collateral is required to secure a
borrowing already made, and such fact is made to
appear in the Proper Instructions, further Portfolio
Securities may be released for that purpose without
any such payment. In the event that any such pledged
Portfolio Securities are held by the Bank, they will
be so held for the account of the lender, and after
notice to the Fund from the lender in accordance with
the normal procedures of the lender, that an event of
deficiency or default on the loan has occurred, the
Bank may deliver such pledged Portfolio Securities to
or for the account of the lender;
(h) for the purpose of releasing certificates
representing Portfolio Securities, against
contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the
Proper Instructions received by the Bank before such
payment is made;
(i) for the purpose of delivering securities lent by the
Fund to a bank or broker dealer, but only against
receipt in accordance with street delivery custom
except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the
Fund and the Bank, and upon receipt of payment in
connection with any repurchase agreement relating to
such securities entered into by the Fund;
-17-
(j) for other authorized transactions of the Fund or for
other proper corporate purposes; provided that before
making such transfer, the Bank will also receive a
certified copy of resolutions of the Board, signed by
an authorized officer of the Fund (other than the
officer certifying such resolution) and certified by
its Secretary or Assistant Secretary, specifying the
Portfolio Securities to be delivered, setting forth
the transaction in or purpose for which such delivery
is to be made, declaring such transaction to be an
authorized transaction of the Fund or such purpose to
be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall
be made, and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this
Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b), (c),
(e), (f), (g), (h) and (i) securities or cash receivable in exchange therefor
shall be delivered to the Bank.
7. Redemption. In the case of payment of assets of the Fund held by the Bank in
connection with redemptions and repurchases by the Fund of outstanding shares of
beneficial interest, the Bank will rely on notification by the Fund's transfer
agent of receipt of a request for redemption and certificates, if issued, in
proper form for redemption before such payment is made. Payment shall be made in
accordance with the Agreement and Declaration of Trust of the Fund dated August
1, 1994 (the "Declaration") and By-laws of the Fund, from assets available for
said purpose.
8. Merger. Dissolution etc. of Fund. In the case of the following transactions,
not in the ordinary course of business, namely, the merger of the Fund into or
the consolidation of the Fund with another investment company, the sale by the
Fund of all, or substantially all, of its assets to another investment company,
or the liquidation or dissolution of the Fund and distribution of its assets,
the Bank will deliver the Portfolio Securities held by it under this Agreement
and disburse cash only upon the order of the Fund set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything herein
to the contrary, unless and until the Bank receives an Officers'Certificate to
the contrary, it will without prior authorization or instruction of the Fund or
the transfer agent;
9.1. Endorse for collection and collect on behalf of and in the name of the Fund
all checks, drafts, or other negotiable or transferable instruments or other
orders for the payment of money received by it for the account of the Fund and
hold for the account of the Fund all
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income, dividend, interest and other payments or distribution of cash with
respect to the Portfolio Securities held thereunder;
9.2. Present for payment all coupons and other income items held by it
for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3. Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4. Execute as agent on behalf of the Fund all necessary ownership and
other certificates and affidavits required by the Internal Revenue Code or the
regulations of the Treasury Department issued thereunder, or by the laws of any
state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5. Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6. Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of
-19-
the 1940 Act and will furnish the Fund daily with a statement of condition of
the Fund. The Bank will furnish to the Fund at the end of every month, and at
the close of each quarter of the Fund's fiscal year, a list of the Portfolio
Securities and the aggregate amount of cash held by it for the Fund. The books
and records of the Bank pertaining to its actions under this Agreement and
reports by the Bank or its independent accountants concerning its accounting
system, procedures for safeguarding securities and internal accounting controls
will be open to inspection and audit at reasonable times by officers of or
auditors employed by the Fund and will be preserved by the Bank in the manner
and in accordance with the applicable rules and regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Evaluation. The Bank shall compute and, unless otherwise directed by
the Board, determine as of the close of business on the New York Stock Exchange
on each day on which said Exchange is open for unrestricted trading and as of
such other hours, if any, as may be authorized by the Board the net asset value
and the public offering price of a share of capital stock of the Fund, such
determination to be madc in accordance with the provisions of the Declaration
and By-laws of the Fund and Prospectus and Statement of Additional Information
relating to the Fund, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have
been authorized, (iii) the source of the quotations to be used in computing the
net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
13. Concerning the Bank.
13.1. Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Fund, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such
-20-
advice. In the performance of its duties hereunder, the Bank will be protected
and not be liable, and will be indemnified and held harmless for any action
taken or omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its negligence. willful misfeasance or bad faith in the performance
of its duties or reckless disregard of its obligations and duties hereunder.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the
purchases thereof or the propriety of the price
incurred therefore;
(b) the legality of any sale of any Portfolio Securities
by or for the Fund or the propriety of the amount for
which the same are sold;
(c) the legality of an issue or sale of any shares of
beneficial interest of the Fund or the sufficiency of
the amount to be received therefor;
(d) the legality of the repurchase of any shares of
beneficial interest of the Fund of the propriety of
the amount to be paid therefor;
(e) the legality of the declaration of any dividend by
the Fund or the legality of the distribution of any
Portfolio Securities as payment in kind of such
dividend; and (f) (g) any property or moneys of the
Fund unless and until received by it, and any such
property or moneys delivered or paid by it pursuant
to the terms hereof
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Declaration, By-laws, any federal or state statutes
or any rule or regulation of any governmental agency.
In order that the indemnification provision contained in this Section
13.1 shall apply, however, it is understood that if any case the Fund may be
asked to indemnify or save the Bank harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Bank will use all reasonable care to
identify and notify the Fund promptly concerning any situation which presents or
appears likely to present the probability of such claim for indemnification. The
Fund shall have the option to defend the Bank against any claim which may be the
subject of this
-21-
indemnification, and in the event that the Fund so elects it will so notify the
Bank and thereupon the Fund shall take over the complete defense of the claim,
and the Bank shall in such situations incur no further legal or other expenses
in connection with such claim, provided however, if the defendants in any such
action include both the Fund and the Bank, and the Bank shall have reasonably
concluded that there may be legal defenses available to it which are different
from or additional to those available to the Fund, the Bank shall have the right
to select separate counsel to assent such legal defenses and to otherwise
participate in the defense of such action on behalf of the Bank with such cost
to be borne by the party hereto ultimately liable with respect to such claim.
The Bank shall in no case confess any claim or make any compromise in any case
in which the Fund will be asked to indemnify the Bank except with prior written
consent of the Fund. which consent shall not be unreasonably withheld. The Fund
shall not settle any claim without the Bank's prior written consent, provided
however that the Bank shall not unreasonably withhold its consent.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from
acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes,
riots, nationalization, expropriation, currency
restrictions, acts of war, civil war of terrorism,
insurrection, nuclear fusion, fission or radiation,
the interruption, loss or malfunction of utilities or
transportation, the unavailability of energy sources
and other similar happenings or events except as
results from the Bank's own gross negligence; or
(b) for special, punitive or consequential damages
arising from the provision of services hereunder,
even if the Bank has been advised of the possibility
of such damages.
13.2. Agents and Subcustodians with Respect to Property of the Fund
Held in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ subcustodians, provided
that any such subcustodian meets at least the minimum qualifications required by
Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund's assets with
respect to property of the Fund held in the United States. The Bank shall have
no liability to the Fund or any other person by reason of any act or omission of
any subcustodian acting outside the scope of instructions received from the Bank
and the Fund shall indemnify the Bank and hold it harmless from and against any
and all actions, suits and claims, arising directly or indirectly out of such
performance of any subcustodian. Upon request of the Bank, the Fund shall assume
the
-22-
entire defense of any action, suit, or claim subject to the foregoing indemnity.
The Fund shall pay all fees and expenses of any subcustodian.
13.3. Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Fund
hereby authorizes and instructs the Bank to employ as
sub-custodians for the Fund's Portfolio Securities
and other assets maintained outside the United States
the foreign banking institutions and foreign
securities depositories designated on the Schedule
attached hereto (each, a "Selected Foreip
Sub-Custodian"). Upon receipt of Proper Instructions,
together with a certified resolution of the Fund's
Board of Trustees, the Bank and the Fund may agree to
designate additional foreign banking institutions and
foreign securities depositories to act as Selected
Foreign Sub-Custodians hereunder. Upon receipt of
Proper Instructions, the Fund may instruct the Bank
to cease the employment of any one or more such
Selected Foreign Sub-Custodians for maintaining
custody of the Fund's assets, and the Bank shall so
cease to employ such sub-custodian as soon as
alternate custodial arrangements have been
implemented.
(b) Foreign Securities Depositories. Except as may
otherwise be agreed upon in writing by the Bank and
the Fund, assets of the Fund shall be maintained in
foreign securities depositories only through
arrangements implemented by the foreign banking
institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof. Where
possible, such arrangements shall include entry into
agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the
foregoing, except as may otherwise be agreed upon in
writing by the Bank and the Fund, the Fund authorizes
the deposit in Euro-clear, the securities clearance
and depository facilities operated by Xxxxxx Guaranty
Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit
therein and to utilize such securities depository in
connection with settlements of purchases and sales of
securities and deliveries and returns of securities,
until notified to the contrary pursuant to
subparagraph (a) hereunder.
(c) Segregatation of Securities. The Bank shall identify
on its books as belonging to the Fund the Foreign
Portfolio Securities held by each Selected Foreign
Sub-Custodian. Each agreement pursuant to which the
Bank employs a foreign banking institution shall
require that such
-23-
institution establish a custody account for the Bank
and hold in that accounts Foreign Portfolio
Securities and other assets of the Fund, and, in the
event that such institution deposits Foreign
Portfolio Securities in a foreign securities
depository, that it shall identify on its books as
belonging to the Bank the securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of
the agreements pursuant to which a foreign banking
institution holds assets of the Fund (each, a
"Foreign Sub-Custodian Agreement") shall be
substantially in the form previously made available
to the Fund and shall provide that: (a) the Fund's
assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor
of the foreign banking institution or its creditors
or agent, except a claim of payment for their safe
custody or administration (including, without
limitation, any fees or taxes payable upon transfers
or registration of securities); (b) beneficial
ownership of the Fund's assets will be freely
transferable without the payment of money or value
other than for custody or administration (including,
without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c)
adequate records will be maintained identifying the
assets as belonging to Bank; (d) officers of or
auditors employed by, or other representatives of the
Bank, including to the extent permitted under
applicable law, the independent public accountants
for the Fund, will be given access to the books and
records of the foreign banking institution relating
to its actions under its agreement with the Bank; and
(e) assets of the Fund held by the Selected Foreign
Sub-Custodian will be subject only to the
instructions of the Bank or its agents.
(e) Access of Independent Accountants of the Fund. Upon
request of the Fund, the Bank will use its best
efforts to arrange for the independent accountants of
the Fund to be afforded access to the books and
records of any foreign banking institution employed
as a Selected Foreign Sub- Custodian insofar as such
books and records relate to the performance of such
foreign banking institution under its Foreign
Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund
from time to time, as mutually agreed upon,
statements in respect of the securities and other
assets of the Fund held by Selected Foreign
Sub-Custodians, including but not limited to an
identification of entities having possession of the
Foreign Portfolio Securities and other assets of the
Fund.
-24-
(g) Transactions in Foreign Custody Account. Transactions
with respect to the assets of the Fund held by a
Selected Foreign Sub-Custodian shall be effected
pursuant to Proper Instructions from the Fund to the
Bank and shall be effected in accordance with the
applicable Foreign Sub-Custodian Agreement. If at any
time any Foreign Portfolio Securities shall be
registered in the name of the nominee of the Selected
Foreign Sub-Custodian, the Fund agrees to hold any
such nominee harmless from any liability by reason of
the registration of such securities in the name of
such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of the Fund and delivery of Foreign Portfolio Securities maintained for the
account of the Fund may be effected in accordance with the customary established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such purchaser
or dealer.
In connection with any action to be taken with respect to the Foreign
Portfolio Securities held hereunder, including, without limitation, the exercise
of any voting rights, subscription rights, redemption rights, exchange rights,
conversion rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall upon receipt transmit to the Fund
such infomation in connection therewith as is made available to the Bank by the
Foreign Sub- Custodian, and shall forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Fund pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Fund is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liabilility of Selected Foreign Sub-Custodians. Each
Foreign Sub- Custodian Agreement with a foreign
banking institution shall require the institution to
exercise reasonable care in the performance of its
duties and to indemnify, and hold harmless, the Bank
and each Fund from and against certain losses,
damages, costs, expenses, liabilities or claims
arising out of or in connection with the
institution's performance of such obligations, all as
set forth in the applicable
-25-
Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in
Euro-clear, is subject to the Terms and Conditions
Governing the Euro-Clear System, a copy of which has
been made available to the Fund. The Fund
acknowledges that pursuant to such Terms and
Conditions, Xxxxxx Guaranty Brussels shall have the
sole right to exercise or assert any and all rights
or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other
depository, clearance system or custodian utilized by
Euro-clear in connection with the Fund's securities
and other assets.
(i) Liability of Bank. The Bank shall have no more or
less responsibility or liability on account of the
acts or omissions of any Selected Foreign
Sub-Custodian employed hereunder than any such
Selected Foreign Sub-Custodian has to the Bank and,
without limiting the foregoing, the Bank shall not be
liable for any loss, damage, cost, expense, liability
or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war
or terrorism, political risk (including, but not
limited to, exchange control restrictions,
confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear
incident or any loss where the Selected Foreign
Sub-Custodian has otherwise exercised reasonable
care.
(j) Monitoring Responsibilities. The Bank shall furnish
annually to the Fund, information concerning the
Selected Foreign Sub-Custodians employed hereunder
for use by the Fund in evaluating such Selected
Foreign Sub-Custodians to ensure compliance with the
requirements of Rule 17f-5 of the Act. In addition,
the Bank will promptly inform the Fund in the event
that the Bank is notified by a Selected Foreign
Sub-Custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline
below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders'equity has declined
below $200 million (in each case computed in
accordance with generally accepted U.S. accounting
principles) or any other capital adequacy test
applicable to it by exemptive order, or if the Bank
has actual knowledge of any material loss of the
assets of the Fund held by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no responsibility or
liability for any obligations now or hereafter
imposed on the Fund or the Bank as custodian of the
Fund by the tax laws of any jurisdiction, and it
shall be the responsibility of the Fund to notify the
Bank of the obligations imposed on the Fund or the
Bank as the custodian of the Fund by the
-26-
tax law of any non-U.S. jurisdiction, including
responsibility for withholding and other taxes,
assessments or other governmental charges,
certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such
tax law shall be to use reasonable efforts to assist
the Fund with respect to any claim for exemption or
refund under the tax law of jurisdictions for which
the Fund has provided such information.
13.4. Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
13.5. Fees and Expenses of Bank. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as providcd above.
For the services rendered by the Bank hereunder, the Fund will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement by the Fund.
13.6. Advances by Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such overdraft or related
indebtedness, a loan made by the Bank to the Fund payable on demand and bearing
interest at the current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances. The Fund agrees
that the Bank shall have a continuing lien and security interest to the extent
of any overdraft or indebtedness, in and to any property at any time held by it
for the Fund's benefit or in which the Fund has an interest and which is then in
the Bank's possession or control (or in the possession or control of any third
party acting on the Bank's behalf). The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon against any balance of account standing to the credit of
the Fund on the Bank's books
14. Termination.
14.1. This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon
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the expiration of such sixty days this Agreement will terminate; provided,
however, that the effective date of such termination may be postponed to a date
not more than ninety days from the date of delivery of such notice (i) by the
Bank in order to prepare for the transfer by the Bank of all of the assets of
the Fund held hereunder, and (ii) by the Fund in order to give the Fund an
opportunity to make suitable arrangements for a successor custodian. At any time
after the termination of this Agreement, the Fund will, at its request have
access to the records of the Bank relating to the performance of its duties as
custodian.
14.2. In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (14.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and his a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Fund under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Fund with the
same effect as though selected by the Board.
14.3. Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meering of shareholders at
which action was taken, certified by the Fund's Secretary.
15. Confidentiality. Both parties hereto agree than any non-public information
obtained hereunder concerning the other party is confidential and may not be
disclosed to any other person without the consent of the other party, except as
may be required by applicable law or at the request of a governmental agency.
The parties further agree that a breach of this provision would irreparably
damage the other party and accordingly agree that each of them is entitled,
without bond or other security, to an injunction or injunctions to Prevent
breaches of this provision.
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16. Notices. Any notice or other instrument in writing authorized or required by
this Agreement to be given to either party hereto will be sufficiently given if
addressed to such party and mailed or delivered to it at its office at the
address set forth below; namely:
(a) In the case of notices sent to the Fund to:
The DLB Fund Group
c/o Xxxxx X. Xxxxxx & Co., Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Fund,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall inure to the benefit
of the parties hereto and their respective successor and assigns; provided,
however, that this Agreement will not be assignable by the Fund without the
written consent of the Bank or by the Bank without the written consent of the
Fund, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 14 hereof will not be deemed to be
an assignment within the meaning of this provision.
19. Governing Law. This Agreemetit and all performance hereunder will be
governed by the laws of The Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
21. Limitation of Liability. The term The DLB Fund Group means and refers to the
Trustees from time to time serving under the Declaration dated August 1, 1994,
as the same may subsequently thereto have been, or subsequently hereto be,
amended. It is expressly agreed that the obligations of the Fund hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Fund, personally, but
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shall bind only the trust property of the Fund as provided in the Declaration.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Fund and this Agreement has been signed by an authorized officer
of the Fund, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them, but shall bind only the trust property of the Fund as provided in
the Declaration.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their respective officers hereunto duly authorized as of
the day and year first written above.
The DLB Fund Group
By:
----------------------------------------
Name:
Title:
ATTEST:
Investors Bank & Trust Company
By:
----------------------------------------
Name:
Title:
ATTEST:
DATE:
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