EXHIBIT 23(G)
CUSTODIAN AGREEMENT BETWEEN
REGISTRANT, LEVERAGED INDEX MANAGEMENT COMPANY, AND
FIRST UNION NATIONAL BANK, N.A.
CUSTODY AGREEMENT
CUSTODIAN AGREEMENT
OPTIMAL FUNDS, INC.
THIS AGREEMENT, dated as of the 1st day of May, 1999 is by an between
Optimal Funds, Inc. (the "Company"), a corporation duly organized under the laws
of the state of Maryland, Leveraged Index Management Company, a corporation
organized under the laws of the state of Vermont (the "Adviser"), and First
Union National Bank, N.A. (the "Bank")
WHEREAS, the Company and the Adviser have entered into an Operating
Services Agreement wherein the Adviser is obligated to provide, or arrange to
provide, certain services to the Company, including custodial services, and;
WHEREAS, the Adviser desires to appoint the Bank to act as Custodian of the
Company's portfolio securities, cash and other property from time to time
deposited with or collected by the Bank for the Company, and the Company
consents to such appointment, and;
WHEREAS, the Bank is qualified and authorized to act as Custodian for the
Company and the separate series thereof (each a "Fund", and collectively, the
"Funds"), and is willing to act in such capacity upon the terms and conditions
herein set forth;
NOW THERFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto, intending to be legally bound, do hereby agree as
follows:
SECTION 1. The terms defined in this Section 1, wherever used in this Agreement,
or in any amendment or supplement hereto, shall have the meanings herein
specified unless the context otherwise requires.
Custodian: The term Custodian shall mean the Bank in its capacity as Custodian
under this Agreement.
Depository: The term depository means any depository service which acts as a
system for the central handling of securities where all securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred by bookkeeping entry without physical
delivery.
Proper Instructions: For purposes of this Agreement, the Custodian shall be
deemed to have Proper Instructions upon receipt of written (including
instructions received by means of computer terminals or facsimile
transmissions), telephone or telegraphic instructions from a person or persons
authorized from time to time by the Directors of the Company to give the
particular class of instructions. Telephone or telegraphic instructions shall be
confirmed in writing by such persons as said Directors shall have from time to
time authorized to give the particular instructions without awaiting receipt of
written confirmation, and the Custodian shall not be liable for the Company's
failure to confirm such instructions in writing.
Securities: The term Securities means stocks, bonds, rights, warrants and all
other negotiable or non-negotiable paper issued in certificated or book-entry
form commonly known as "Securities" in banking custom or practice.
Shareholder: The term Shareholder shall mean the registered owner from time to
time of the Shares of the Company in accordance with the registry records
maintained by the Company or any agent on the Company's behalf.
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SECTION 2. The Adviser hereby appoints the Custodian as Custodian of the
Company's cash, Securities and other property, to be held by the Custodian as
provided in this Agreement. The Custodian hereby accepts such appointment
subject to the terms and conditions hereinafter provided. The Bank shall open a
separate custodial account in the name of the Company on the books and records
of the Bank to hold the Securities of the Company deposited with, transferred to
or collected by the Bank for the account of each Fund of the Company, and a
separate cash account to which the Bank shall credit monies received by the Bank
for the account of or from each Fund of the Company. Such cash shall be
segregated from the assets of any and all other accounts of the Company and
shall be and remain the sole property of the Company.
SECTION 3. The Company shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Directors authorizing certain
person or persons to give Proper Instructions and specifying the class of
instructions that may be given by each person to the Custodian under this
Agreement, together with certified signatures of such persons authorized to
sign, which shall constitute conclusive evidence of the authority of the
officers and signatories designated therein to act, and shall be considered in
full force and effect with the Custodian fully protected in acting in reliance
thereon until it receives written notice to the contrary; provided, however,
that if the certifying officer is authorized to give Proper Instructions, the
certification shall be also signed by a second officer of the Company.
SECTION 4. The Company will cause to be deposited with the Custodian hereunder
the applicable net asset value of the Shares sold from time to time whether
representing initial issue, other stock or reinvestments of dividends and/or
distributions payable to Shareholders.
SECTION 5. The Bank, acting as agent for the Company, is authorized, directed
and instructed, subject to the further provisions of this Agreement:
(a) to hold Securities issued only on bearer form in bearer form
(b) to register in the name of the nominee of the Bank, the Bank's
Depositories, or sub-custodians, (I) Securities issued only in registered
form, and (ii) Securities issued in both bearer and registered form, which
are freely interchangeable without penalty;
(c) to deposit any securities which are eligible foe deposit (I) with any
domestic or foreign Depository on such terms and conditions as such
Depository may require, including provisions for limitation or exclusion of
liability on the part of the Depository; and (ii) with any sub-custodian
which the Bank uses, including any subsidiary or affiliate of the Bank;
(d) (i) to credit for the account of the Company all proceeds received and
payable on or in respect of the assets maintained hereunder.
(ii) to debit the account of the Company for the cost of acquiring
Securities the Bank has received for the Company, against delivery of
such Securities to the Bank;
(iii) to present for payment Securities and other obligations (including
coupons) upon maturity, when called foe redemption, and when income
payments are due, and
(iv) to make exchanges of Securities which, in the Bank's opinion, are
purely ministerial as, for example, the exchange of Securities in
temporary for Securities in definitive form or the mandatory exchange
of certificates;
(e) to forward to the Company, and/or any other person designated by the
Company, all proxies and proxy materials received by the Bank in connection
with Securities held in the Company's account, which have been registered
in the name of the Bank's nominee , or being held by any Depository, or
sub-custodian, on behalf of the Bank;
(f) to sell any fractional interest of any Securities which the Bank has
received resulting from any stock dividend, stock split, distribution,
exchange, conversion or similar activity;
(g) to release the Company's name, address and aggregate share position to the
issuers of any domestic Securities in the account of the Company, provided
any such information to any issuer;
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(h) to endorse and collect all checks, drafts or other orders for the payment
of money received by the Bank for the account of or from the Company;
(i) at the direction of the Company, to enroll designated Securities belonging
to the Company and held hereunder in a program for the automatic
reinvestment of all income and capital gains distributions on those
Securities in new shares (an "Automatic Reinvestment Program"), or instruct
any Depository holding such Securities to enroll those Securities in an
Automatic Reinvestment Program;
(j) At the direction of the Company, to receive, deliver and transfer
Securities and make payments and collections of monies in connection
therewith, enter purchase and sale orders and perform any other acts
incidental or necessary to the performance of the above acts with brokers,
dealer or similar agents selected by the Company, including any broker,
dealer or similar agent affiliated with the Bank, for the account and risk
of the Company in accordance with accepted industry practice in the
relevant market, provided, however, if it so determined that any
certificated Securities transferred to a Depository or sub-custodian, the
Bank, or the Banks nominee, the Bank's sole responsibility for such
Securities under this Agreement shall be to safekeep the Securities in
accordance with Section 11 hereof; and
(k) to notify the Company and/or any other person designated by the Company
upon receipt of notice by the Bank of any call for redemption, render
offer, subscription, rights, merger, consolidation, reorganization or
recapitalization which (I) appears in The Wall Street Journal (New York
edition), The Standard & Poor's Called Bond Record for Preferred Stocks,
Financial Daily Called Bond Service, The Xxxxx Services, any official
notifications from The Depository Trust Company and such other publications
or services to which the Bank may from time to time subscribe, (ii)
requires the Bank to act in response thereto and (iii) pertain to
Securities belonging to the Company and held hereunder which have been
registered in the name of the Bank's nominee or are being held by a
Depository or sub-custodian on behalf of the Bank. Notwithstanding anything
contained herein to the contrary, the Company shall have the sole
responsibility for monitoring the applicable dates on which Securities with
put option features must be exercised. All solicitation fees payable to the
Bank unless expressly agreed to the contrary in writing by the Bank.
Notwithstanding anything in this Section to the contrary, the Bank is authorized
to hold Securities for the Company which have transfer limitations imposed upon
them by the Securities Act of 1933, as amended , or represent shares of mutual
funds (I) in the name of the Company, (ii) in the name of the Bank's nominee, or
(iii) with any Depository or sub-custodian
Section 6. The Custodian's compensation shall be as set forth in Schedule A
hereto attached, or as shall be set forth in amendments to such schedule
approved by the Company and the Adviser and to the extent such compensation
relates to services provided hereunder to such Fund. All expenses and taxes
payable with respect to the Securities in the account of the Company including,
without limitation, commission charges on purchases and sales and the amount of
any loss or liability for stockholders' assessments or otherwise, claimed or
asserted against the Bank's nominee by reason of any registration hereunder
shall be charged to the Adviser.
SECTION 7. In connection with its functions under this Agreement, the Custodian
shall:
(a) render to the Company a daily report of all monies received or paid on
behalf of the Company; and
(b) create, maintain, and retain all records relating to its activities
and obligations under this Agreement in such manner as will meet the
obligations of the Company with respect to the Custodian's activities
in accordance with generally accepted accounting principles. All
records maintained by the Custodian in connection with the performance
of its duties under this Agreement will remain the property of the
Company, and in the event of termination of this Agreement, will be
relinquished to the Company.
SECTION 8. Any Securities deposited with any Depository or with any
sub-custodian will be represented in accounts in the name of the Bank which
include only property held by the Bank as Custodian for customers in which the
Bank acts in a fiduciary or agency capacity.
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Should any Securities which are forwarded to the Bank by the Company, and which
are subsequently deposited to the Bank's account in any Depository or with any
sub-custodian, or which the Company may arrange to deposit in the Bank's account
in any Depository or with any sub-custodian, not be deemed acceptable for
deposit by such Depository or sub-custodian, for any reason, and as a result
thereof there is a short position in the account of the Bank with the Depository
for such Security, the Company agrees to furnish the Bank immediately with like
Securities in acceptable form.
SECTION 9. The Company represents and warrants that: (I) it has the legal right,
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated and
performance of this Agreement and the carrying out of any of the transactions
contemplated hereby will not be in conflict with, result in a breach of or
constitute a default under any agreement or other instrument to which the
Company is a party of which is otherwise known to the Company; (iv) it does not
require the consent of approval of any governmental agency or instrumentality,
except any such consents and approvals which the Company has obtained; (v) the
execution and delivery of this Agreement by the Company will not violate any
law, regulation, charter, by-law, order of any court or governmental agency or
judgement applicable to the Company; and (vi) all persons executing this
Agreement on behalf of the Company are duly authorized to do so.
In the event any of the foregoing representation should become untrue, incorrect
or misleading, the Company agrees to notify the Bank immediately in writing
thereof.
The Adviser represents and warrants that: (I) it has the legal right, power and
authority to execute, deliver and perform this Agreement and to carry out all of
the transactions contemplated hereby; (ii) it has obtained all necessary
authorizations; (iii) the execution, delivery and performance of this Agreement
and the carrying out of any of the transactions contemplated and performance of
this Agreement and the carrying out of any of the transactions contemplated
hereby will not be in conflict with, result in a breach of or constitute a
default under any agreement or other instrument to which the Adviser is a party
of which is otherwise known to the Adviser; (iv) it does not require the consent
of approval of any governmental agency or instrumentality, except any such
consents and approvals which the Adviser has obtained; (v) the execution and
delivery of this Agreement by the Adviser will not violate any law, regulation,
charter, by-law, order of any court of governmental agency or judgement
applicable to the Adviser; and (vi) all persons executing this Agreement on
behalf of the Adviser are duly authorized to do so.
In the event any of the foregoing representation should become untrue, incorrect
or misleading, the Adviser agrees to notify the Bank immediately in writing
thereof.
SECTION 10. The Bank represents and warrants that: (I) it has the legal right,
power and authority to execute, deliver and perform this Agreement and to carry
out all of the transactions contemplated hereby; (ii) it has obtained all
necessary authorizations; (iii) the execution, delivery and performance of this
Agreement and the carrying out of any of the transactions contemplated hereby
will not be in conflict with, result in a breach of or constitute a default
under any agreement or other instrument to which the Bank is a party or which is
otherwise known to the Bank; (iv) it does not require the consent or approval of
any governmental agency or instrumentality, except any such consents or
approvals which the Bank has obtained; (v) the execution and delivery of this
Agreement by the Bank will not violate any law, regulation, charter, by-law,
order of any court or governmental agency or judgement applicable to the Bank;
and (vi) all persons executing this Agreement on behalf of the Bank and carrying
out the transactions contemplated hereby on behalf of the Bank are duly
authorized to do so. In the event that any of the foregoing representations
should become untrue, incorrect or misleading, the Bank agrees to notify the
Company and the Adviser immediately in writing thereof.
SECTION 11. All cash and Securities held by the Bank hereunder shall be kept
with the care exercised as to the Bank's own similar property. The Bank may at
its option insure itself against loss from any cause but shall be under no
obligation to insure for the benefit of the Company.
SECTION 12. No liability of any kind shall by attached to or incurred by the
Custodian by reason of its custody of the Company's assets held by it from time
to time under this Agreement, or otherwise by reason of its position as
Custodian hereunder except only for its own negligence, bad faith, or willful
misconduct in the performance of its duties as specifically set forth in the
this Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel for the Company; and for any
action taken or suffered in good faith based upon such advice or
statements the Custodian shall not be liable to anyone;
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(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon
information furnished by, the Company or its authorized officers or
agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Company, or Proper Instructions, to the effect that a
resolution in the form submitted has been duly adopted by its Board of
Directors or by the Shareholders, as conclusive evidence that such
resolution has been duly adopted and is in full force and effect; and
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request,
letter of transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or document
reasonably believed by it to b genuine and to have been signed,
forwarded or presented by the purchaser, Company or other proper party
or parties.
SECTION 13. The Company, its successors and assigns do hereby fully indemnify
and hold harmless the Custodian its successors and assigns, from any and all
loss, liability, claims, demand, actions, suits and expenses of any nature as
the same may arise from the failure of the Company to comply with any law, rule,
regulation, or order of the United States, any state or any other jurisdiction,
governmental authority, body, or board relating to the sale, registration,
qualification of units of beneficial interest in the Company, or from the
failure of the Company to perform any duty or obligation under this Agreement.
Upon written request of the Custodian, the Company shall assume the entire
defense of any claim subject to the foregoing indemnity, or the joint defense
with the Custodian of such claim, as the Custodian shall request. The
indemnities and defense provisions of this Section 13 shall indefinitely survive
termination of this Agreement.
SECTION 14. This Agreement may be amended from time to time without notice to or
approval of the Shareholders by a supplemental agreement executed by the
Company, the Adviser and the Bank amending and supplementing this Agreement in
the manner mutually agreed.
SECTION 15. Either the Company or the Custodian may give one-hundred and twenty
days' (120) written notice to the other of the termination of this Agreement,
such termination to take effect at the time specified in the notice. In case
such notice of termination is given either by the Company or by the Custodian,
the Directors of the Company shall, by resolution duly adopted, promptly appoint
a successor Custodian, (the "Successor Custodian") which Successor Custodian
shall be a bank or a Trust company in good standing, with legal capacity to
accept custody of the cash and Securities of a mutual fund. Upon receipt of
Proper Instructions, the Custodian shall deliver such cash and Securities as it
may then be holding hereunder directly as above provided, the Custodian then
acting shall continue to act as Custodian under this Agreement.
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Company and the Successor Custodian and upon payment of its charges and
disbursements, execute and instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties, obligations and custody.
Subject to the provisions of Section 21 hereof, in case the Custodian shall
consolidate with or merge into any other corporation, the corporation remaining
after or resulting from such consolidation or merger shall ipso facto without
the execution or filing of any papers or other documents, succeed to and be
substituted for the Custodian with like effect as though originally named as
such, provided, however, in every case that said Successor corporation maintains
the qualifications set out in Section 17(f) of the Investment Company Act of
1940, as amended.
SECTION 16. This Agreement shall take effect when assets of the Company are
first delivered to the Custodian.
SECTION 17. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
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SECTION 18. A copy of the Articles of Incorporation of the Company is on file
with the Secretary of State of Maryland, and notice is hereby given that this
instrument is executed on behalf of the Company only, and that the obligations
of this instrument are not binding upon any of the Directors, officers or
Shareholders of the Company individually, but binding only upon the assets and
property of the Company. No Fund of the Company shall be liable for the
obligations of any other Fund of the Company.
SECTION 19. The Custodian shall create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Company under the Investment Company Act of 1940, as amended,
with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Company.
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian, the books and
records of the Custodian pertaining to this Agreement shall be open to
inspection and audit at any reasonable times by officers of, attorneys for, and
auditors employed by, the Company.
SECTION 20. Any sub-custodian appointed hereunder shall be qualified under
Section 17(f) of the 1940 act and will perform its duties in accordance with the
requirements of this Agreement.
SECTION 21. Nothing contained in this Agreement is intended to or shall require
the Custodian in any capacity hereunder to perform any functions or duties on
any holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
SECTION 22. This Agreement shall extent to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Company without the written consent of
the Custodian, or by the Custodian without the written consent of the Company,
authorized or approved by a resolution of its Board of Directors.
SECTION 23. All communications (other that Proper Instructions which are to be
furnished hereunder to either party, or under any amendment hereto, shall be
sent by mail to the address listed below, provided that in the event that the
Bank, in its sole discretion, shall determine that an emergency exists, the Bank
may use such other means of communication as the Bank deems advisable.
To the Company: Optimal Funds, Inc.
000 X XX Xxxxx 00
Xxxxxxx, XX 00000
To the Adviser: Leveraged Index Management Company
000 X XX Xxxxx 00
Xxxxxxx, XX 00000
To the Bank: First Union National Bank N.A.
000 Xxxxxx Xx.
Xxxxxxxxxxxx, XX 00000-0000
SECTION 24. This Agreement, and any amendments hereto, shall be governed,
construed, and interpreted in accordance with the laws of The Commonwealth of
Pennsylvania applicable to agreements made and to be performed entirely within
such Commonwealth.
SECTION 25. Fees and expenses
As compensation for its services under this Agreement, the Custodian may retain
those fees which are specified in its published or otherwise generally
applicable fee schedule in effect at the time its services are being rendered.
The Company recognizes that this schedule might be changed from time to time
with prior notice to the Company.
Mutual Fund Custody Administrative Fees
1.0 basis points on the first $2.5 billion
.75 basis points on the next $2.5 billion
.50 basis points on the next $5.0 billion
.40 basis points on the remainder
Minimum Annual Fee: $3,500
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Transaction Fees
$ 4.00 per trade and maturity through Depository Trust Company via DepLink
$10.00 per trade and maturity through Depository Trust Company via non DepLink
$10.00 per trade and maturity clearing book entry through Federal Reserve
$30.00 per transaction for GIC contracts/Physical Securities
$10.00 per trade and maturity clearing through Participants Trust Company
$ 4.00 paydowns on mortgage-backed securities
$ 5.50 Fed wire charge on Repo collateral in/out
$ 5.50/$7.50 other wired transfers in/out
$ 5.50 dividend reinvestment
$ 2.50 Fed charge for sale/return of collateral
$ 8.00 future contracts
$15.00 options
IN WITNESS WHEREOF, The Company, the Adviser and the Custodian have caused this
Agreement to be signed by their respective officers as of the day and year first
above written.
OPTIMAL FUNDS, INC. LEVERAGED INDEX FIRST UNION
MANAGEMENT COMPANY NATIONAL BANK
----------------------- ---------------------- -----------------
By: Xxxxxxxx X. Xxxxxxx By: Xxxxxxxx X. Xxxxxxx By: Xxxx X. Xxxxxx
President President Vice President
