EXHIBIT (g)
Custodian Agreement
CUSTODY AGREEMENT
AGREEMENT dated as of December 15, 2003, between Sit Mutual
Funds Trust a business trust organized under the laws of the State of Delaware
having its principal office and place of business at 4600 Xxxxx Fargo Center, 00
Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, 00000 (the "Fund"), and THE
NORTHERN TRUST COMPANY (the "Custodian"), an Illinois company with its principal
place of business at 00 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H:
That for and in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this
Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
(a) "Articles of Incorporation " shall mean the [Articles of
Incorporation] [Declaration of Trust] of the Fund, including
all amendments thereto.
(b) "Authorized Person" shall be deemed to include the
Chairman of the Board of Directors, the President, and any
Vice President, the Secretary, the Treasurer or any other
person, whether or not any such person is an officer or
employee of the Fund, duly authorized by the Board of
Directors to give Instructions on behalf of the Fund and
listed in the certification annexed hereto as Schedule A or
such other certification as may be received by the Custodian
from time to time pursuant to Section 18(a).
(c) "Board of Directors" shall mean the Board of Directors or
Trustees of the Fund.
(d) "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and its
nominee or nominees.
(e) "Delegate of the Fund" shall mean and include any entity
to whom the Board of Directors of the Fund has delegated
responsibility under Rule 17f-5 of the 1940 Act.
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(f) "Depository" shall mean The Depository Trust Company, a
clearing agency registered with the Securities and Exchange
Commission under Section 17(a) of the Securities Exchange Act
of 1934, as amended, its successor or successors and its
nominee or nominees, the use of which is hereby specifically
authorized. The term "Depository" shall further mean and
include any other person named in an Instruction and approved
by the Fund to act as a depository in the manner required by
Rule 17f-4 of the 1940 Act, its successor or successors and
its nominee or nominees.
(g) "Instruction" shall mean written (including telecopied,
telexed, or electronically transmitted in a form that can be
converted to print) or oral instructions actually received by
the Custodian which the Custodian reasonably believes were
given by an Authorized Person. An Instruction shall also
include any instrument in writing actually received by the
Custodian which the Custodian reasonably believes to be
genuine and to be signed by any two officers of the Fund,
whether or not such officers are Authorized Persons. Except as
otherwise provided in this Agreement, "Instructions" may
include instructions given on a standing basis.
(h) "1940 Act" shall mean the Investment Company Act of 1940,
and the Rules and Regulations thereunder, all as amended from
time to time.
(i) "Portfolio" refers to each of the separate and distinct
investment portfolios of the Fund which the Fund and the
Custodian shall have agreed in writing shall be subject to
this Agreement, as identified in Schedule B hereto.
(j) "Prospectus" shall include each current prospectus and
statement of additional information of the Fund with respect
to a Portfolio.
(k) "Rule 17f-5" shall mean Rule 17f-5 under the 1940 Act.
(l) "Rule 17f-7" shall mean Rule 17f-7 under the 1940 Act.
(m) "Shares" refers to the shares of the Fund.
(n) "Security" or "Securities" shall be deemed to include
bonds, debentures, notes, stocks, shares, evidences of
indebtedness, and other securities, commodity interests and
investments from time to time owned by the Fund and held in a
Portfolio.
(o) "Sub-Custodian" shall mean and include (i) any branch of
the Custodian, and (ii) any "eligible foreign custodian," as
that term is defined in Rule 17f-5 under the 1940 Act,
approved by the Fund or a Delegate of the Fund in the manner
required by Rule 17f-5. For the avoidance of doubt, the term
"Sub-Custodian" shall not include any central securities
depository or clearing agency.
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(o) "Eligible Securities Depository" shall have the same
meaning as set forth in Rule 17f-7(b)(1).
(p) "Transfer Agent" shall mean the person which performs as
the transfer agent, dividend disbursing agent and shareholder
servicing agent for the Fund.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all the Securities and moneys owned by or in the
possession of a Portfolio during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set
forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians to
act as sub-custodian or sub-custodians of Securities and
moneys at any time held in any Portfolio, upon the terms and
conditions specified in this Agreement. The Custodian shall
oversee the maintenance by any Sub-Custodian of any Securities
or moneys of any Portfolio.
(b) The Agreement between the Custodian and each Sub-Custodian
described in clause (ii) of Section 1(o) and acting hereunder
shall contain any provisions necessary to comply with Rule
17f-5 under the 1940 Act.
(c) Prior to the Custodian's use of any Sub-Custodian
described in clause (ii) of Paragraph 1(o), the Fund or a
Delegate of the Fund must approve such Sub-Custodian in the
manner required by Rule 17f-5 and provide the Custodian with
satisfactory evidence of such approval.
(d) The Custodian shall promptly take such steps as may be
required to remove any Sub-Custodian that has ceased to be an
"eligible foreign custodian" or has otherwise ceased to meet
the requirements under Rule 17f-5. If the Custodian intends to
remove any Sub-Custodian previously approved by the Fund or a
Delegate of the Fund pursuant to paragraph 3(c), and the
Custodian proposes to replace such Sub-Custodian with a
Sub-Custodian that has not yet been approved by the Fund or a
Delegate of the Fund, it will so notify the Fund or a Delegate
of the Fund and provide it with information reasonably
necessary to determine such proposed Sub-Custodian's
eligibility under Rule 17f-5, including a copy of the proposed
agreement with such Sub-Custodian. The Fund shall at the
meeting of the Board of Directors next following receipt of
such notice and information,
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or a Delegate of the Fund shall promptly after receipt of such
notice and information, determine whether to approve the
proposed Sub-Custodian and will promptly thereafter give
written notice of the approval or disapproval of the proposed
action.
(e) The Custodian hereby represents to the Fund that in its
opinion, after due inquiry, the established procedures to be
followed by each Sub-Custodian in connection with the
safekeeping of property of a Portfolio pursuant to this
Agreement afford reasonable care for the safekeeping of such
property based on the standards applicable in the relevant
market.
4. Use of Sub-Custodians and Securities Depositories.
With respect to property of a Portfolio which is maintained by
the Custodian in the custody of a Sub-Custodian pursuant to
Section 3:
(a) The Custodian will identify on its books as belonging to
the particular Portfolio any property held by such
Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the
Securities placed in its care to be held in a foreign
securities depository, such Sub-Custodian will be required by
its agreement with the Custodian to identify on its books such
Securities as being held for the account of the Custodian as a
custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject
only to the instructions of the Custodian or its agents; and
any Securities held in an foreign securities depository for
the account of a Sub-Custodian will be subject only to the
instructions of such Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in
an account with a Sub-Custodian which includes exclusively the
assets held by the Custodian for its customers, and will cause
such account to be designated by such Sub-Custodian as a
special custody account for the exclusive benefit of customers
of the Custodian.
(e) Before any Securities are placed in a foreign securities
depository, the Custodian shall provide the fund's Board of
Directors with an analysis of the custody risks associated
with maintaining assets with the foreign securities
depository.
(f) The Custodian or its agent shall continue to monitor the
custody risks associated with maintaining the Securities with
a foreign securities depository and shall promptly notify the
Fund's Board of Directors of any material changes in said
risks.
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5. Compensation.
(a) The Fund will compensate the Custodian for its services
rendered under this Agreement in accordance with the fees set
forth in the Fee Schedule annexed hereto as Schedule C and
incorporated herein. Such Fee Schedule does not include
out-of-pocket disbursements of the Custodian for which the
Custodian shall be entitled to xxxx separately; provided that
out-of-pocket disbursements may include only the items
specified in Schedule C.
(b) If the Fund requests that the Custodian act as Custodian
for any Portfolio hereafter established, at the time the
Custodian commences serving as such for said Portfolio, the
compensation for such services shall be reflected in a fee
schedule for that Portfolio, dated and signed by an officer of
each party hereto, which shall be attached to or otherwise
reflected in Schedule C of this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule C, or replacing Schedule
C with, a revised Fee Schedule, dated and signed by an officer
of each party hereto.
(d) The Custodian will xxxx the Fund for its services to each
Portfolio hereunder as soon as practicable after the end of
each calendar quarter, and said xxxxxxxx will be detailed in
accordance with the Fee Schedule for the Fund. The Fund will
promptly pay to the Custodian the amount of such billing. The
Custodian shall have a claim of payment against the property
in each Portfolio for any compensation or expense amount owing
to the Custodian in connection with such Portfolio from time
to time under this Agreement.
(e) The Custodian (not the Fund) will be responsible for the
payment of the compensation of each Sub-Custodian.
6. Custody of Cash and Securities
(a) Receipt and Holding of Assets. The Fund will deliver or
cause to be delivered to the Custodian and any Sub-Custodians
all Securities and moneys of any Portfolio at any time during
the period of this Agreement and shall specify the Portfolio
to which the Securities and moneys are to be specifically
allocated. The Custodian will not be responsible for such
Securities and moneys until actually received by it or by a
Sub-Custodian. The Fund may, from time to time in its sole
discretion, provide the Custodian with Instructions as to the
manner in which and in what amounts Securities, and moneys of
a Portfolio are to be held on behalf of such Portfolio in the
Book-Entry System or a Depository. Securities and moneys of a
Portfolio held in the Book-Entry System or a Depository will
be held in accounts which include only assets of Custodian
that are held for its customers.
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(b) Accounts and Disbursements. The Custodian shall establish
and maintain a separate account for each Portfolio and shall
credit to the separate account all moneys received by it or a
Sub-Custodian for the account of such Portfolio and shall
disburse, or cause a Sub-Custodian to disburse, the same only:
1. In payment for Securities purchased for the
Portfolio, as provided in Section 7 hereof;
2. In payment of dividends or distributions with
respect to the Shares of such Portfolio, as provided
in Section 11 hereof;
3. In payment of original issue or other taxes with
respect to the Shares of such Portfolio, as provided
in Section 12(c) hereof;
4. In payment for Shares which have been redeemed by
such Portfolio, as provided in Section 12 hereof;
5. In payment of fees and in reimbursement of the
expenses and liabilities of the Custodian
attributable to the Fund, as provided in Sections 5
and 16(h) hereof;
6. Pursuant to Instructions setting forth the name of
the Portfolio and the name and address of the person
to whom the payment is to be made, the amount to be
paid and the purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a
Portfolio under this Section 6 exceeds the funds available in
that Portfolio's account, the Custodian or relevant
Sub-Custodian, as the case may be, may, in its discretion,
advance the Fund on behalf of that Portfolio an amount equal
to such excess and such advance shall be deemed an overdraft
from the Custodian or such Sub-Custodian to that Portfolio
payable on demand, bearing interest at the rate of interest
customarily charged by the Custodian or such Sub-Custodian on
similar overdrafts.
(d) Confirmation and Statements. At least monthly, the
Custodian shall furnish the Fund with a detailed statement of
the Securities and moneys held by it and all Sub-Custodians
for each Portfolio. Where securities purchased for a Portfolio
are in a fungible bulk of securities registered in the name of
the Custodian (or its nominee) or shown on the Custodian's
account on the books of a Depository, the Book-Entry System or
a Sub-Custodian, the Custodian shall maintain such records as
are necessary to enable it to identify the quantity of those
securities held for such Portfolio. In the absence of the
filing in writing with the Custodian by the Fund of exceptions
or objections to any such statement within 60 days after the
date
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that a material defect is reasonably discoverable, the Fund
shall be deemed to have approved such statement; and in such
case or upon written approval of the Fund of any such
statement the Custodian shall, to the extent permitted by law
and provided the Custodian has met the standard of care in
Section 16 hereof, be released, relieved and discharged with
respect to all matters and things set forth in such statement
as though such statement had been settled by the decree of a
court of competent jurisdiction in an action in which the Fund
and all persons having any equity interest in the Fund were
parties.
(e) Registration of Securities and Physical Separation. All
Securities held for a Portfolio which are issued or issuable
only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian or a
Sub-Custodian in that form; all other Securities held for a
Portfolio may be registered in the name of that Portfolio, in
the name of any duly appointed registered nominee of the
Custodian or a Sub-Custodian as the Custodian or such
Sub-Custodian may from time to time determine, or in the name
of the Book-Entry System or a Depository or their successor or
successors, or their nominee or nominees. The Fund reserves
the right to instruct the Custodian as to the method of
registration and safekeeping of the Securities. The Fund
agrees to furnish to the Custodian appropriate instruments to
enable the Custodian or any Sub-Custodian to hold or deliver
in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or
a Depository, any Securities which the Custodian of a
Sub-Custodian may hold for the account of a Portfolio and
which may from time to time be registered in the name of a
Portfolio. The Custodian shall hold all such Securities
specifically allocated to a Portfolio which are not held in
the Book-Entry System or a Depository in a separate account
for such Portfolio in the name of such Portfolio physically
segregated at all times from those of any other person or
persons.
(f) Segregated Accounts. Upon receipt of an Instruction, the
Custodian will establish segregated accounts on behalf of a
Portfolio to hold liquid or other assets as it shall be
directed by such Instruction and shall increase or decrease
the assets in such segregated accounts only as it shall be
directed by subsequent Instruction.
(g) Collection of Income and Other Matters Affecting
Securities. Except as otherwise provided in an Instruction,
the Custodian, by itself or through the use of the Book-Entry
System or a Depository with respect to Securities therein
maintained, shall, or shall instruct the relevant
Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities in accordance with this Agreement;
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2. Present for payment and collect the amount payable
upon all Securities which may mature or be called,
redeemed or retired, or otherwise become payable;
3. Surrender Securities in temporary form for
derivative Securities;
4. Execute any necessary declarations or certificates
of ownership under the federal income tax laws or the
laws or regulations of any other taxing authority now
or hereafter in effect; and
5. Hold directly, or through the Book-Entry System or
a Depository with respect to Securities therein
deposited, for the account of each Portfolio all
rights and similar Securities issued with respect to
any Securities held by the Custodian or relevant
Sub-Custodian for each Portfolio.
(h) Delivery of Securities and Evidence of Authority. Upon
receipt of an Instruction, the Custodian, directly or through
the use of the Book-Entry System or a Depository, shall, or
shall instruct the relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and
delivered to such persons as may be designated in
such Instructions, proxies, consents, authorizations,
and any other instruments whereby the authority of
the Fund as owner of any Securities may be exercised;
2. Deliver or cause to be delivered any Securities
held for a Portfolio in exchange for other Securities
or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities
held for a Portfolio to any protective committee,
reorganization committee or other person in
connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of
assets of any corporation, and receive and hold under
the terms of this Agreement in the separate account
for each such Portfolio certificates of deposit,
interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or
exchanges of the assets specifically allocated to the
separate account of a Portfolio and take such other
steps as shall be stated in Written Instructions to
be for the purpose of effectuating
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any duly authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities
for the account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to
such Securities entered into on behalf of a
Portfolio;
7. Deliver Securities of a Portfolio to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable;
provided, however, that in any such case the cash or
other consideration is to be delivered to the
Custodian or Sub-Custodian, as the case may be;
8. Deliver Securities for delivery in connection with
any loans of securities made by a Portfolio but only
against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund which
may be in the form of cash or obligations issued by
the United States Government, its agencies or
instrumentalities;
9. Deliver Securities for delivery as security in
connection with any borrowings by a Portfolio
requiring a pledge of Portfolio assets, but only
against receipt of the amounts borrowed;
10. Deliver Securities to the Transfer Agent or its
designee or to the holders of Shares in connection
with distributions in kind, in satisfaction of
requests by holders of Shares for repurchase or
redemption;
11. Deliver Securities for any other proper business
purpose, but only upon receipt of, in addition to
written Instructions, a copy of a resolution or other
authorization of the Fund certified by the Secretary
of the Fund, specifying the Securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be
a proper business purpose, and naming the person or
persons to whom delivery of such Securities shall be
made.
(i) Endorsement and Collection of Checks, Etc. The Custodian
is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received by the
Custodian for the account of a Portfolio.
(j) Execution of Required Documents. The Custodian is hereby
authorized to execute any and all applications or other
documents required by a regulatory agency or similar entity as
a condition
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of making investments in the foreign market under such
entity's jurisdiction.
7. Purchase and Sale of Securities.
(a) Promptly after the purchase of Securities, the Fund or its
designee shall deliver to the Custodian an Instruction
specifying with respect to each such purchase: (1) the name of
the Portfolio to which such Securities are to be specifically
allocated; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or the principal amount
purchased and accrued interest, if any; (4) the date of
purchase and settlement; (5) the purchase price per unit; (6)
the total amount payable upon such purchase; and (7) the name
of the person from whom or the broker through whom the
purchase was made, if any. The Custodian or specified
Sub-Custodian shall receive the Securities purchased by or for
a Portfolio and upon receipt thereof (or upon receipt of
advice from a Depository or the Book-Entry System that the
Securities have been transferred to the Custodian's account)
shall pay to the broker or other person specified by the Fund
or its designee out of the moneys held for the account of such
Portfolio the total amount payable upon such purchase,
provided that the same conforms to the total amount payable as
set forth in such Instruction.
(b) Promptly after the sale of Securities, the Fund or its
designee shall deliver to the Custodian an Instruction
specifying with respect to each such sale: (1) the name of the
Portfolio to which the Securities sold were specifically
allocated; (2) the name of the issuer and the title of the
Securities; (3) the number of shares or principal amount sold,
and accrued interest, if any; (4) the date of sale; (5) the
sale price per unit; (6) the total amount payable to the
Portfolio upon such sale; and (7) the name of the broker
through whom or the person to whom the sale was made. The
Custodian or relevant Sub-Custodian shall deliver or cause to
be delivered the Securities to the broker or other person
designated by the Fund upon receipt of the total amount
payable to such Portfolio upon such sale, provided that the
same conforms to the total amount payable to such Portfolio as
set forth in such Instruction. Subject to the foregoing, the
Custodian or relevant Sub-Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the
customs prevailing among dealers in Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the
Portfolios may be invested by the Custodian for short term
purposes pursuant to standing Instructions from the Fund.
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8. Lending of Securities.
If the Fund and the Custodian enter into a separate written
agreement authorizing the Custodian to lend Securities, the
Custodian may lend Securities pursuant to such agreement. Such
agreement must be approved by the Fund in the manner required
by any applicable law, regulation or administrative
pronouncement, and may provide for the payment of additional
reasonable compensation to the Custodian.
9. Investment in Futures and Options
The Custodian shall pursuant to Instructions (which may be
standing instructions) (i) transfer initial margin to a
safekeeping bank or, with respect to options, broker; (ii) pay
or demand variation margin to or from a designated futures
commission merchant or other broker based on daily marking to
market calculations and in accordance with accepted industry
practices; and (iii) subject to the Custodian's consent, enter
into separate procedural, safekeeping or other agreements with
safekeeping banks, futures commission merchants and other
brokers pursuant to which such banks and, in the case of
options, brokers, will act as custodian for initial margin
deposits in transactions involving futures contracts and
options. The Custodian shall have no custodial or investment
responsibility for any assets transferred to a safekeeping
bank, futures commission merchant or broker pursuant to this
paragraph.
10. Provisional Credits and Debits.
(a) The Custodian is authorized, but shall not be obligated,
to credit the account of a Portfolio provisionally on payable
date with interest, dividends, distributions, redemptions or
other amounts due. Otherwise, such amounts will be credited to
the Portfolio on the date such amounts are actually received
and reconciled to the Portfolio. In cases where the Custodian
has credited a Portfolio with such amounts prior to actual
collection and reconciliation, the Fund acknowledges that the
Custodian shall be entitled to recover any such credit on
demand from the Fund and further agrees that the Custodian may
reverse such credit if and to the extent that Custodian does
not receive such amounts in the ordinary course of business.
(b) If the Portfolio is maintained as a global custody account
it shall participate in the Custodian's contractual settlement
date processing service ("CSDP") unless the Custodian directs
the Fund, or the Fund informs the Custodian, otherwise.
Pursuant to CSDP the Custodian shall be authorized, but not
obligated, to automatically credit or debit the Portfolio
provisionally on contractual settlement date with cash or
securities in connection with any sale, exchange or purchase
of securities. Otherwise, such cash or securities shall be
credited to the Portfolio on the day such cash or securities
are actually received by the Custodian and reconciled to the
Portfolio. In
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cases where the Custodian credits or debits the Portfolio with
cash or securities prior to actual receipt and reconciliation,
the Custodian may reverse such credit or debit as of
contractual settlement date if and to the extent that any
securities delivered by the Custodian are returned by the
recipient, or if the related transaction fails to settle (or
fails, due to market change or other reasons, to settle on
terms which provide the Custodian full reimbursement of any
provisional credit the Custodian has granted) within a period
of time judged reasonable by the Custodian under the
circumstances. The Fund agrees that it will not make any claim
or pursue any legal action against the Custodian for loss or
other detriment allegedly arising or resulting from the
Custodian's good faith determination to effect, not effect or
reverse any provisional credit or debit to the Portfolio.
The Fund acknowledges and agrees that funds debited
from the Portfolio on contractual settlement date including,
without limitation, funds provided for the purchase of any
securities under circumstances where settlement is delayed or
otherwise does not take place in a timely manner for any
reason, shall be held pending actual settlement of the related
purchase transaction in a non-interest bearing deposit at the
Custodian's London Branch; that such funds shall be available
for use in the Custodian's general operations; and that the
Custodian's maintenance and use of such funds in such
circumstances are, without limitation, in consideration of the
Custodian's providing CSDP.
(c) The Fund recognizes that any decision
to effect a provisional credit or an advancement of the
Custodian's own funds under this agreement will be an
accommodation granted entirely at the Custodian's option and
in light of the particular circumstances, which circumstances
may involve conditions in different countries, markets and
classes of assets at different times. The Fund shall make the
Custodian whole for any loss which it may incur from granting
such accommodations and acknowledges that the Custodian shall
be entitled to recover any relevant amounts from the Fund on
demand. All amounts thus due to the Custodian shall be paid by
the Fund from the account of the relevant Portfolio unless
otherwise paid on a timely basis and in that connection the
Fund acknowledges that the Custodian has a continuing lien on
all assets of such Portfolio to secure such payments and
agrees that the Custodian may apply or set off against such
amounts any amounts credited by or due from the Custodian to
the Fund. If funds in the Portfolio are insufficient to make
any such payment the Fund shall promptly deliver to the
Custodian the amount of such deficiency in immediately
available funds when and as specified by the Custodian's
written or oral notification to the Fund.
(d) In connection with the Custodian's global custody
service the Fund will maintain deposits at the Custodian's
London
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Branch. The Fund acknowledges and agrees that such deposits
are payable only in the currency in which an applicable
deposit is denominated; that such deposits are payable only on
the Fund's demand at the Custodian's London Branch; that such
deposits are not payable at any of the Custodian's offices in
the United States; and that the Custodian will not in any
manner directly or indirectly promise or guarantee any such
payment in the United States.
The Fund further acknowledges and agrees that such
deposits are subject to cross-border risk, and therefore the
Custodian will have no obligation to make payment of deposits
if and to the extent that the Custodian is prevented from
doing so by reason of applicable law or regulation or any
Sovereign Risk event affecting the London Branch or the
currency in which the applicable deposit is denominated.
"Sovereign Risk" for this purpose means
nationalization,expropriation, devaluation, revaluation,
confiscation, seizure, cancellation,destruction or similar
action by any governmental authority, de facto or de jure; or
enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange
controls, taxes, levies or other charges affecting the
property rights of persons who are not residents of the
affected jurisdiction; or acts of war, terrorism, insurrection
or revolution; or any other act or event beyond the
Custodian's control.
THE FUND ACKNOWLEDGES AND AGREES THAT DEPOSIT
ACCOUNTS MAINTAINED AT FOREIGN BRANCHES OF UNITED STATES BANKS
(INCLUDING, IF APPLICABLE, ACCOUNTS IN WHICH CUSTOMER FUNDS
FOR THE PURCHASE OF SECURITIES ARE HELD ON AND AFTER
CONTRACTUAL SETTLEMENT DATE), ARE NOT INSURED BY THE U.S.
FEDERAL DEPOSIT INSURANCE CORPORATION; MAY NOT BE GUARANTEED
BY ANY LOCAL OR FOREIGN GOVERNMENTAL AUTHORITY; ARE UNSECURED;
AND IN A LIQUIDATION MAY BE SUBORDINATED IN PRIORITY OF
PAYMENT TO DOMESTIC (U.S.- DOMICILED) DEPOSITS.
THEREFORE,BENEFICIAL OWNERS OF SUCH FOREIGN BRANCH DEPOSITS
MAY BE UNSECURED CREDITORS OF THE NORTHERN TRUST COMPANY.
Deposit account balances that are owned by United
States residents are expected to be maintained in an aggregate
amount of at least $100,000 or the equivalent in other
currencies.
11. Payment of Dividends or Distributions.
(a) In the event that the Board of Directors of the Fund (or a
committee thereof) authorizes the declaration of dividends or
distributions with respect to a Portfolio, an Authorized
Person shall provide the Custodian with Instructions
specifying the record date, the date of payment of such
distribution and the total amount payable to the Transfer
Agent or its designee on such payment date.
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(b) Upon the payment date specified in such Instructions, the
Custodian shall pay the total amount payable to the Transfer
Agent or its designee out of the moneys specifically allocated
to and held for the account of the appropriate Portfolio.
12. Sale and Redemption of Shares.
(a) Whenever the Fund shall sell any Shares, the Fund shall
deliver or cause to be delivered to the Custodian an
Instruction specifying the name of the Portfolio whose Shares
were sold and the amount to be received by the Custodian for
the sale of such Shares.
(b) Upon receipt of such amount from the Transfer Agent or its
designee, the Custodian shall credit such money to the
separate account of the Portfolio specified in the Instruction
described in paragraph (a) above.
(c) Upon issuance of any Shares in accordance with the
foregoing provisions of this Section 12, the Custodian shall
pay all original issue or other taxes required to be paid in
connection with such issuance upon the receipt of an
Instruction specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares are
redeemed, the Fund shall deliver or cause to be delivered to
the Custodian an Instruction specifying the name of the
Portfolio whose Shares were redeemed and the total amount to
be paid for the Shares redeemed.
(e) Upon receipt of an Instruction described in paragraph (d)
above, the Custodian shall pay to the Transfer Agent (or such
other person as the Transfer Agent directs) the total amount
specified in such Instruction. Such payment shall be made from
the separate account of the Portfolio specified in such
Instruction.
13. Indebtedness.
(a) The Fund or its designee will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which the
Fund borrows money, using Securities as collateral, a notice
or undertaking in the form currently employed by any such bank
setting forth the amount which such bank will loan to the Fund
against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian an Instruction stating
with respect to each such borrowing: (1) the name of the
Portfolio for which the borrowing is to be made; (2) the name
of the bank; (3) the amount and terms of the borrowing, which
may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement; (4) the
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time and date, if known, on which the loan is to be entered
into (the "borrowing date"); (5) the date on which the loan
becomes due and payable; (6) the total amount payable to the
Fund for the separate account of the Portfolio on the
borrowing date; (7) the market value of Securities to be
delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the
principal amount of any particular Securities; (8) whether the
Custodian is to deliver such collateral through the Book-Entry
System or a Depository; and (9) a statement that such loan is
in conformance with the 1940 Act and the Prospectus.
(b) Upon receipt of the Instruction referred to in paragraph
(a) above, the Custodian shall deliver on the borrowing date
the specified collateral and the executed promissory note, if
any, against delivery by the lending bank of the total amount
of the loan payable, provided that the same conforms to the
total amount payable as set forth in the Instruction. The
Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue
of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the
Fund from time to time such Securities specifically allocated
to such Portfolio as may be specified in the Instruction to
collateralize further any transaction described in this
Section 13. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return
of collateral as may be tendered to it. In the event that the
Fund fails to specify in such Instruction all of the
information required by this Section 13, the Custodian shall
not be under any obligation to deliver any Securities.
Collateral returned to the Custodian shall be held hereunder
as it was prior to being used as collateral.
14. Corporate Action.
Whenever the Custodian or any Sub-Custodian receives
information concerning Securities held for a Portfolio which
requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription rights,
bond issues, stock repurchase plans and rights offerings, or
legal notices or other material intended to be transmitted to
Securities holders ("Corporate Actions"), the Custodian will
give the Fund or its designee notice of such Corporate Actions
to the extent that the Custodian's central corporate actions
department has actual knowledge of a Corporate Action in time
to notify the Fund.
When a rights entitlement or a fractional interest resulting
from a rights issue, stock dividend, stock split or similar
Corporate Action which bears an expiration date is received,
the Custodian will endeavor to obtain an Instruction relating
to such Corporate Action from an Authorized Person, but if
such Instruction is not
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received in time for the Custodian to take timely action, or
actual notice of such Corporate Action was received too late
to seek such an Instruction, the Custodian is authorized to
sell, or cause a Sub-Custodian to sell, such rights
entitlement or fractional interest and to credit the
applicable account with the proceeds and to take any other
action it deems, in good faith, to be appropriate, in which
case, provided it has met the standard of care in Section 16
hereof, it shall be held harmless by the particular Portfolio
involved for any such action.
The Custodian will deliver proxies to the Fund or its
designated agent pursuant to special arrangements which may
have been agreed to in writing between the parties hereto.
Such proxies shall be executed in the appropriate nominee name
relating to Securities registered in the name of such nominee
but without indicating the manner in which such proxies are to
be voted; and where bearer Securities are involved, proxies
will be delivered in accordance with an applicable
Instruction, if any.
15. Persons Having Access to the Portfolios.
(a) Neither the Fund nor any officer, director, employee or
agent of the Fund, the Fund's investment adviser, or any
sub-investment adviser, shall have physical access to the
assets of any Portfolio held by the Custodian or any
Sub-Custodian or be authorized or permitted to withdraw any
investments of a Portfolio, nor shall the Custodian or any
Sub-Custodian deliver any assets of a Portfolio to any such
person. No officer, director, employee or agent of the
Custodian who holds any similar position with the Fund's
investment adviser, with any sub-investment adviser of the
Fund or with the Fund shall have access to the assets of any
Portfolio.
(b) Nothing in this Section 15 shall prohibit any Authorized
Person from giving Instructions to the Custodian so long as
such Instructions do not result in delivery of or access to
assets of a Portfolio prohibited by paragraph (a) of this
Section 15.
(c) The Custodian represents that it maintains a system that
is reasonably designed to prevent unauthorized persons from
having access to the assets that it holds (by any means) for
its customers.
16. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to
perform only such services as are set forth in this Agreement
or expressly contained in an Instruction given to the
Custodian which is not contrary to the provisions of this
Agreement.
(b) Standard of Care.
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1. The Custodian will use reasonable care, prudence and
diligence with respect to its obligations under this Agreement
and the safekeeping of property of the Portfolios. The
Custodian shall be liable to, and shall indemnify and hold
harmless the Fund from and against any loss which shall occur
as the result of the failure of the Custodian or a
Sub-Custodian to exercise reasonable care, prudence and
diligence with respect to their respective obligations under
this Agreement and the safekeeping of such property. The
determination of whether the Custodian or Sub-Custodian has
exercised reasonable care, prudence and diligence in
connection with their obligations under this Agreement shall
be made in light of prevailing standards applicable to
professional custodians in the jurisdiction in which such
custodial services are performed. In the event of any loss to
the Fund by reason of the failure of the Custodian or a
Sub-Custodian to exercise reasonable care, prudence and
diligence, the Custodian shall be liable to the Fund only to
the extent of the Fund's direct damages and expenses, which
damages, for purposes of property only, shall be determined
based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without
reference to any special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, or default of, or for the solvency of, any central
securities depository or clearing agency.
3. The Custodian will not be responsible for any act,
omission, or default of, or for the solvency of, any broker or
agent (not referred to in paragraph (b)(2) above) which it or
a Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the event
such an appointment and use is made or done negligently or in
bad faith, the Custodian shall be liable to the Fund only for
direct damages and expenses (determined in the manner
described in paragraph (b)(1) above) resulting from such
appointment and use and, in the case of any loss due to an
act, omission or default of such agent or broker, only to the
extent that such loss occurs as a result of the failure of the
agent or broker to exercise reasonable care ("reasonable care"
for this purpose to be determined in light of the prevailing
standards applicable to agents or brokers, as appropriate, in
the jurisdiction where the services are performed).
4. The Custodian shall be entitled to rely, and may act, upon
the advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
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5. The Custodian shall be entitled to rely upon any
Instruction it receives pursuant to the applicable Sections of
this Agreement that it reasonably believes to be genuine and
to be from an Authorized Person. In the event that the
Custodian receives oral Instructions, the Fund or its designee
shall cause to be delivered to the Custodian, by the close of
business on the same day that such oral Instructions were
given to the Custodian, written Instructions confirming such
oral Instructions, whether by hand delivery, telex or
otherwise. The Fund agrees that the fact that no such
confirming written Instructions are received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in connection with (i) acting upon oral
Instructions given to the Custodian hereunder, provided such
instructions reasonably appear to have been received from an
Authorized Person or (ii) deciding not to act solely upon oral
Instructions, provided that the Custodian first contacts the
giver of such oral Instructions and requests written
confirmation immediately following any such decision not to
act.
6. The Custodian shall supply the Fund or its designee with
such daily information regarding the cash and Securities
positions and activity of each Portfolio as the Custodian and
the Fund or its designee shall from time to time agree. It is
understood that such information will not be audited by the
Custodian and the Custodian represents that such information
will be the best information then available to the Custodian.
The Custodian shall have no responsibility whatsoever for the
pricing of Securities, accruing for income, valuing the effect
of Corporate Actions, or for the failure of the Fund or its
designee to reconcile differences between the information
supplied by the Custodian and information obtained by the Fund
or its designee from other sources, including but not limited
to pricing vendors and the Fund's investment adviser. Subject
to the foregoing, to the extent that any miscalculation by the
Fund or its designee of a Portfolio's net asset value is
attributable to the willful misfeasance, bad faith or
negligence of the Custodian (including any Sub-Custodian ) in
supplying or omitting to supply the Fund or its designee with
information as aforesaid, the Custodian shall be liable to the
Fund for any resulting loss (subject to such de minimis rule
of change in value as the Board of Directors may from time to
time adopt).
C-59
(c) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation
to inquire into, and shall not be liable for:
1. The validity of the issue of any Securities
purchased by any Portfolio, the legality of the
purchase thereof, or the propriety of the amount
specified by the Fund or its designee for payment
therefor;
2. The legality of the sale of any Securities by any
Portfolio or the propriety of the amount of
consideration for which the same are sold;
3. The legality of the issue or sale of any Shares,
or the sufficiency of the amount to be received
therefor;
4. The legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
dividend or distribution by the Fund; or
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the
exclusive benefit of the Fund, but hereby warrants that as of
the date of this Agreement it is maintaining a bankers Blanket
Bond and hereby agrees to notify the Fund in the event that
such bond is canceled or otherwise lapses.
(e) Consistent with and without limiting the language
contained in Section 16(a), it is specifically acknowledged
that the Custodian shall have no duty or responsibility to:
1. Question any Instruction or make any suggestions
to the Fund or an Authorized Person regarding any
Instruction;
2. Supervise or make recommendations with respect to
investments or the retention of Securities;
3. Subject to Section 16(b)(3) hereof, evaluate or
report to the Fund or an Authorized Person regarding
the financial condition of any broker, agent or other
party to which Securities are delivered or payments
are made pursuant to this Agreement; or
4. Review or reconcile trade confirmations received
from brokers.
(f) Amounts Due from or to Transfer Agent. The Custodian shall
not be under any duty or obligation to take action to effect
collection of any amount due to any Portfolio from the
Transfer
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Agent or its designee nor to take any action to effect payment
or distribution by the Transfer Agent or its designee of any
amount paid by the Custodian to the Transfer Agent in
accordance with this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be
under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the Fund
and specifically allocated to a Portfolio are such as may
properly be held by the Fund under the provisions of the
Articles of Incorporation and the Prospectus.
(h) Indemnification. The Fund agrees to indemnify and hold the
Custodian harmless from all loss, cost, taxes, charges,
assessments, claims, and liabilities (including, without
limitation, liabilities arising under the Securities Act of
1933, the Securities Exchange Act of 1934 and the 1940 Act and
state or foreign securities laws) and expenses (including
reasonable attorneys fees and disbursements) arising directly
or indirectly from any action taken or omitted by the
Custodian (i) at the request or on the direction of or in
reliance on the advice of the Fund or in reasonable reliance
upon the Prospectus or (ii) upon an Instruction; provided,
that the foregoing indemnity shall not apply to any loss,
cost, tax, charge, assessment, claim, liability or expense to
the extent the same is attributable to the Custodian's or any
Sub-Custodian's negligence, willful misconduct, bad faith or
reckless disregard of duties and obligations under this
Agreement or any other agreement relating to the custody of
Fund property.
(i) The Fund agrees to hold the Custodian harmless from any
liability or loss resulting from the imposition or assessment
of any taxes or other governmental charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be
liable for any loss which results from:
1. the general risk of investing;
2. subject to Section 16(b) hereof, investing or
holding property in a particular country including,
but not limited to, losses resulting from
nationalization, expropriation or other governmental
actions; regulation of the banking or securities
industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the
orderly execution of securities transactions or
affect the value of property held pursuant to this
Agreement; or
3. consequential, special or punitive damages for any
act or failure to act under any provision of this
Agreement, even if advised of the possibility
thereof.
C-61
(k) Force Majeure. No party shall be liable to the other for
any delay in performance, or non- performance, of any
obligation hereunder to the extent that the same is due to
forces beyond its reasonable control, including but not
limited to delays, errors or interruptions caused by the other
party or third parties, any industrial, juridical,
governmental, civil or military action, acts of terrorism,
insurrection or revolution, nuclear fusion, fission or
radiation, failure or fluctuation in electrical power, heat,
light, air conditioning or telecommunications equipment, or
acts of God.
(1) Inspection of Books and Records. 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 Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder, and under applicable federal and state laws.
All such records shall be the property of the Fund and shall
at all times during regular business hours of the Custodian be
open for inspection by duly authorized officers, employees and
agents of the Fund and by the appropriate employees of the
Securities and Exchange Commission. The Custodian shall, at
the Fund's request, supply the Fund with a tabulation of
Securities and shall, when requested to do so by the Fund and
for such compensation as shall be agreed upon between the Fund
and the Custodian, include certificate numbers in such
tabulations.
(m) Accounting Control Report. The Custodian shall provide,
promptly, upon request of the Fund, such reports as are
available concerning the internal accounting controls and
financial strength of the Custodian.
17. Term and Termination.
(a) This Agreement shall become effective on the date first
set forth above (the "Effective Date") and shall continue in
effect thereafter until terminated in accordance with Section
17(b).
(b) Either of the parties hereto may terminate this Agreement
with respect to any Portfolio by giving to the other party a
notice in writing specifying the date of such termination,
which, in case the Fund is the terminating party, shall be not
less than 60 days after the date of Custodian receives such
notice or, in case the Custodian is the terminating party,
shall be not less than 90 days after the date the Fund
receives such notice. In the event such notice is given by the
Fund, it shall be accompanied by a certified resolution of the
Board of Directors, electing to terminate this Agreement with
respect to any Portfolio and designating a successor custodian
or custodians.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the
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Custodian a certified resolution of the Board of Directors,
designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may
designate a successor custodian, which shall be a person
qualified to so act under the 0000 Xxx. If the Fund fails to
designate a successor custodian with respect to any Portfolio,
the Fund shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys of such Portfolio, be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the
duty with respect to Securities held in the Book-Entry System
which cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b)
of this Section 17, this Agreement shall terminate to the
extent specified in such notice, and the Custodian shall upon
receipt of a notice of acceptance by the successor custodian
on that date deliver directly to the successor custodian all
Securities and moneys then held by the Custodian and
specifically allocated to the Portfolio or Portfolios
specified, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall
then be entitled with respect to such Portfolio or Portfolios.
18. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed by
two of the present officers of the Fund setting forth the
names of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new certification in similar form
in the event that any such present Authorized Person ceases to
be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until
such new certification is received by the Custodian, the
Custodian shall be fully protected in acting under the
provisions of this Agreement upon Instructions which Custodian
reasonably believes were given by an Authorized Person, as
identified in the last delivered certification. Unless such
certification specifically limits the authority of an
Authorized Person to specific matters or requires that the
approval of another Authorized Person is required, Custodian
shall be under no duty to inquire into the right of such
person, acting alone, to give any instructions whatsoever
under this Agreement.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its offices at its address stated on the
first page hereof or at such other place as the Custodian may
from time to time designate in writing.
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(c) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund, shall be
sufficiently given if addressed to the Fund and mailed or
delivered to it at its offices at its address shown on the
first page hereof or at such other place as the Fund may from
time to time designate in writing.
(d) Except as expressly provided herein, Agreement may not be
amended or modified in any manner except by a written
agreement executed by both parties with the same formality as
this Agreement.
(e) This Agreement shall extend 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 Fund without the written consent of the
Custodian, or by the Custodian without the written consent of
the Fund, and any attempted assignment without such written
consent shall be null and void.
(f) This Agreement shall be construed in accordance with the
laws of the State of Illinois.
(g) The captions of the Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(h) 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
SIT MUTUAL FUNDS TRUST
By: _______________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Vice President, Treasurer
The undersigned, _____________________, does hereby certify that he/she is the
duly elected, qualified and acting Secretary of _________________ CORPORATION
(the "Fund") and further certifies that the person whose signature appears above
is a duly elected, qualified and acting officer of the Fund with full power and
authority to execute this Custody Agreement on behalf of the Fund and to take
such other actions and execute such other documents as may be necessary to
effectuate this Agreement.
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_________________________
Secretary
_____________ CORPORATION
THE NORTHERN TRUST COMPANY
By: ________________________________
Name:
Title:
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SCHEDULE A
CERTIFICATION OF AUTHORIZED PERSONS
Pursuant to paragraphs 1(b) and 18(a) of the Agreement, the
undersigned officers of Sit Mutual Funds Trust hereby certify that the person(s)
whose name(s) and signature(s) appear below have been duly authorized by the
Board of Directors to give Instructions on behalf of the Fund.
NAME SIGNATURE
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
Certified as of the 15th day of December, 2003:
OFFICER: OFFICER:
------------------------------- --------------------------------
(Signature) (Signature)
------------------------------- --------------------------------
(Name) (Name)
------------------------------- --------------------------------
(Title) (Title)
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SCHEDULE B
SCHEDULE OF PORTFOLIOS
The separate and distinct investment portfolios of the Fund are listed below:
Sit Florida Tax-Free Income Fund (Series A)
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