EXHIBIT (g)
Custodian Agreement
October 1, 2003
Exhibit 99.(g)
CUSTODY AGREEMENT
AGREEMENT, dated as of October 1, 2003 between The Xxxxx Funds (the
"Company"), a Delaware Statutory Trust organized under the laws of the State of
Delaware with its principal place of business at One Pacific Place, 0000 Xxxxx
000xx Xxxxxx, Xxxxx, XX 00000-0000 and Xxxxx Fargo Bank Minnesota, N.A. (the
"Custodian"), a banking association organized under the laws of the United
States of America with its principal place of business at Xxxxx Fargo Center,
Sixth and Marquette, Xxxxxxxxxxx, Xxxxxxxxx 00000.
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company;
and
WHEREAS, the Company desires to appoint the Custodian as custodian of the
securities and cash of each of the investment portfolios (each a "Fund" and
collectively the "Funds") listed in Appendix A and the Custodian is willing to
act in such capacity upon the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the parties do hereby agree as follows:
SECTION 1. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings specified, insofar as the context will allow.
(a) 1940 Act: The term 1940 Act shall mean the Investment Company Act of
1940, as amended from time to time.
(b) Board: The term Board shall mean the Board of Directors of the
Company.
(c) Book-Entry Account: The term Book-Entry Account shall mean an
account maintained by a Federal Reserve Bank in which Book-Entry Securities are
held.
(d) Book-Entry Securities: The term Book-Entry Securities shall mean
securities issued by the United States Treasury and United States Federal
agencies and instrumentalities that are maintained in the book-entry system
maintained by a Federal Reserve Bank.
(e) Certificate: The term Certificate shall mean any notice,
instruction, or other instrument in writing, authorized or required by this
Agreement to be given to the Custodian, which is actually received by the
Custodian and signed on behalf of a Fund by any two Officers of the Company.
(f) Clearing Member: The Term Clearing Member shall mean a registered
broker-dealer that is a member of a national securities exchange qualified to
act as a custodian for an investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
(g) Depository: The term Depository shall mean The Depository Trust
Company ("DTC"), Participants Trust Company ("PTC"), and any other clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, its successor(s) and its nominee(s),
provided the Custodian has received a certified copy of a resolution of the
Board of Directors
specifically approving deposits in DTC, PTC or such other clearing agency. The
term "Depository" shall further mean and include any person authorized to act as
a depository pursuant to Section 17, Rule 17f-4 or Rule 17f-5 under the 1940
Act, its successor(s) and its nominee(s), specifically identified in a certified
copy of a resolution of the Board of Directors approving deposits therein by the
Custodian.
(h) Custodian: The term Custodian shall mean the Custodian in its
capacity as custodian under this Agreement.
(i) Foreign Securities: The term Foreign Securities shall mean "Foreign
Securities" as that term is defined in Rule 17f-5 under the 1940 Act.
(j) Foreign Custodian: The term Foreign Custodian shall mean "Eligible
Foreign Custodian" as that term is defined in Rule 17f-5 under the 1940 Act.
(k) Fund Business Day: The term Fund Business Day shall mean a day that
is a business day for a Fund as defined in the Fund's prospectus.
(l) Funds: The term Funds shall mean the Funds listed in Appendix A or
any Fund that the Company shall subsequently establish, provided that the
Custodian may decline to act as custodian for any Fund subsequently established.
(m) Officers: The term Officers shall be deemed to include the
President, Vice President, the Secretary, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Directors of the Company to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate attached hereto or such other Certificate as may be received by the
Custodian from time to time.
(n) Oral Instructions: The term Oral Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in person or by telephone, vocal telegram or
other electronic means, by a person or persons reasonably believed in good faith
by the Custodian to be a person or persons authorized by a resolution of the
Board to give Oral Instructions on behalf of the Company or a Fund. Each Oral
Instruction shall specify whether it is applicable to the entire Company or a
specific Fund of the Company.
(o) Securities: The term Securities shall mean bonds, debentures, notes,
stocks, shares, evidences of indebtedness, and other securities and investments
from time to time owned by the Company.
(p) Securities Depository: The term Securities Depository shall mean a
system, domestic or foreign, for the central handling of securities in which all
securities of any particular class or series of any issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the securities and shall include any system
for the issuance of Book-Entry Securities.
(q) Share Certificates: The term Share Certificates shall mean the
certificates for the Shares.
(r) Shareholders: The term Shareholders shall mean the registered owners
from time to time of the Shares, as reflected on the share registry records of
the Company.
(s) Shares: The term Shares shall mean the shares of common stock of a
Fund, each of which, in the case of a Fund having Series, is allocated to a
particular Series.
(t) Sub-Custodian: The term Sub-Custodian shall mean any person selected
by the Custodian under Section 22 hereof and in accordance with the requirements
of the 1940 Act to custody any or all of the Securities and cash of the Company,
and shall include Foreign Sub-Custodians.
(u) Company: The term Company shall mean The Xxxxx Funds.
(v) Written Instructions: The term Written Instructions shall mean an
authorization, instruction, approval, item or set of data, or information of any
kind transmitted to the Custodian in original writing containing original
signatures, or a copy of such document transmitted by telecopy, including
transmission of such signature, or other mechanical or documentary means, at the
request of a person or persons reasonably believed in good faith by the
Custodian to be a person or persons authorized by a resolution of the Board to
give Written Instructions on behalf of the Company or a Fund. Each Written
Instruction shall specify whether it is applicable to the entire Company or a
specific Fund of the Company.
SECTION 2. APPOINTMENT
The Company hereby appoints the Custodian as custodian of the Securities
and cash of each Fund from time to time on deposit hereunder. The Securities and
cash of each Fund shall be and remain the sole property of the Fund and the
Custodian shall have only custody thereof. The Custodian shall hold, earmark and
physically segregate for the appropriate Fund account of the Company all
non-cash property, including all Securities that are not maintained pursuant to
Section 6 in a Securities Depository or Book-Entry Account. The Custodian will
collect on a timely basis all of the dividends and interest of the Securities
held by the Custodian.
The Custodian shall open and maintain a separate bank or trust account or
accounts in the name of the Company and each Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold in such account or accounts, subject to the provisions hereof, all cash
received by it from or for the account of the Company or a Fund. Notwithstanding
the foregoing, a separate bank account may be established by the Company to be
used as a xxxxx cash account in accordance with Rule 17f-3 under the 1940 Act
and the Custodian shall have not duty or liability with regard to such account.
Upon receipt of Written Instructions, funds held by the Custodian for a
Fund may be deposited by the Custodian to its credit in the banking department
of the Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED, however, that every such bank
or trust company shall be qualified to act as a custodian under the 1940 Act and
that each such bank or trust company shall be approved as a depository for such
funds by the vote of a majority of the Board of Directors of the Company. Such
funds shall be deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity.
SECTION 3. DELIVERY OF BOARD RESOLUTIONS
The Company shall, as necessary, file with the Custodian a certified copy
of the operative resolution of the Board authorizing execution of Written
Instructions and the number of signatories required and setting forth authentic
signatures of all signatories authorized to sign on behalf of the Company or any
Fund thereof. Such resolution shall constitute conclusive evidence of the
authority of all 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 the Custodian receives a certified copy of a replacement
resolution adding or deleting a person or persons authorized to give written
Instructions.
The Company shall, as necessary, file with the Custodian a certified copy
of the operative resolution of the Board authorizing the transmittal of Oral
Instructions and specifying the person or persons authorized to give Oral
Instructions on behalf of the Company or any Fund. Such resolution shall
constitute conclusive evidence of the authority of the person or persons
designated therein to act and shall be considered in full force and effect, with
the Custodian fully protected in acting in reliance therein, until the Custodian
actually receives a certified copy of a replacement resolution adding or
deleting a person or persons authorized to give Oral Instructions. If the
officer certifying the resolution is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Company.
SECTION 4. INSTRUCTIONS
For all purposes under this Agreement, the Custodian is authorized to act
upon receipt of the first of any Written or Oral Instruction it receives. If the
first Instruction is an Oral Instruction, the Company shall deliver or have
delivered to the Custodian a confirmatory Written Instruction; and if the
Custodian receives an Instruction, whether Written or Oral, with respect to a
Securities transaction, the Company shall cause the broker or dealer to send a
written confirmation of the transaction to the Custodian. The Custodian shall be
entitled to rely on the first Instruction received and, for any act or omission
undertaken in compliance therewith, shall be free of liability and fully
indemnified and held harmless by the Company. The sole obligation of the
Custodian with respect to any confirmatory Written Instruction or broker or
dealer written confirmation shall be to make reasonable efforts to detect any
discrepancy between the original Instruction and such confirmation and to report
such discrepancy to the Company. The Company shall be responsible, at the
Company's expense, for taking any action, including any reprocessing, necessary
to correct any discrepancy or error, and to the extent such action requires the
Custodian to act, the Company shall give the Custodian specific Written
Instructions as to the action required.
SECTION 5. DEPOSIT OF COMPANY ASSETS
The Company will initially transfer and deposit or cause to be transferred
and deposited with the Custodian all of the Securities, other property and cash
owned by each Fund at the time this Agreement becomes effective, provided that
the Custodian shall have the right, in its sole discretion, to refuse to accept
any securities or other property that are not in proper form for deposit or any
reason. Such transfer and deposit shall be evidenced by appropriate schedules
duly executed by the Company on behalf of the Funds. The Company may deposit
with the Custodian additional Securities of the Funds and dividends or interest
collected on such Securities as the same are acquired from time to time.
The Company will cause to be deposited with the Custodian from time to time
(i) the net proceeds of Securities sold, (ii) the applicable net asset value of
Shares sold, whether representing initial issue or any other securities and
(iii) cash as may be acquired. Deposits with respect to sales of Shares shall be
accompanied by Written or Oral Instructions stating the amount to be deposited
with the Custodian and registration instructions. The Custodian will provide
timely notification to each applicable Fund of any receipt by it of payments for
Shares of the Funds.
SECTION 6. DEPOSIT OF COMPANY ASSETS WITH THIRD PARTIES
The Company hereby authorizes the Custodian to deposit assets of the Funds
as follows:
(a) With the another bank licensed and regularly examined by the United
States or any state thereof as the Company shall permit by Written or Oral
Instructions.
(b) In the Custodian or Sub-Custodian's account(s) with any Securities
Depository as the Company shall permit by Written or Oral Instruction.
(c) Book-Entry Securities belonging to a Fund in a Book-Entry Account
maintained for the Custodian.
So long as any deposit referred to in (b) or (c) above is maintained for a
Fund, the Custodian shall: (i) deposit the Securities in an account that
includes only assets held by the Custodian for customers; (ii) send the Company
a confirmation (i.e., an advice of notice of transaction) of any transfers of
the Company or a Fund to or from the account; (iii) with respect to Securities
of a Fund transferred to the account, identify as belonging to the Fund a
quantity of securities in a fungible bulk of securities that are registered in
the name of the Custodian or its nominee, or credited to the Custodian's account
on the books of a Securities Depository or the Custodian's agent; (iv) promptly
send to the Company all reports it receives from the appropriate Federal Reserve
Bank or Securities Depository on its respective system of internal accounting
control; and (v) send to the Company such reports of the systems of internal
accounting control of the Custodian and its agents through which Securities are
deposited as are available and as the Company may reasonably request from time
to time.
Anything to the contrary in this Agreement notwithstanding, the Custodian
shall be liable to the Company (for the account of each Fund) for any loss or
damage to the applicable Fund(s) resulting from the negligence (including
failure to act), fault or willful misconduct of the Custodian, its agents or
employees in selecting or using a Securities Depository or Book-Entry Account.
The Custodian shall not waive any rights it may have against a Securities
Depository or Federal Reserve Bank. The Company on behalf of the affected Fund
may elect to be subrogated to the rights of the Custodian against the Securities
Depository or Federal Reserve Bank or any other person with respect to any claim
that the Custodian may have as a consequence of any such loss or damage, if and
to the extent that the Company or the affected Fund has not been made whole for
any such loss or damage.
SECTION 7. REGISTRATION OF SECURITIES
The Securities held by the Custodian, unless payable to bearer or
maintained in a Securities Depository or Book-Entry Account pursuant to Section
6, shall be registered in the name of the Custodian or in the name of its
nominee for the account of the applicable Fund, or if directed by Written
Instructions, in the name of the Fund or its nominee. Any such nominee of the
Custodian shall be under the Custodian's exclusive control and shall be
identified to the Company. In the event that any Securities are registered in
the name of the Fund or its nominee, the Company on behalf of the Fund will
endorse, or cause to be endorsed, to the Custodian dividend and interest checks,
or will issue appropriate orders to the issuers of the Securities to pay
dividends and interest to the Custodian. Securities, excepting bearer
securities, delivered from time to time to the Custodian shall, in all cases, be
in due form for transfer, or registered as above provided.
SECTION 8. DISBURSEMENTS OF CASH
The Custodian is hereby authorized and directed to disburse cash to or from
a Fund from time to time as follows:
(a) For the purchase of Securities by the Fund, upon receipt by the
Custodian of (i) Written or Oral Instructions specifying the Securities and
stating the purchase price and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid and (ii)
either the Securities so purchased, in due form for transfer or already
registered as provided in Section 7, or
notification by a Securities Depository or a Federal Reserve Bank that the
Securities have been credited to the Custodian's account with the Securities
Depository or Federal Reserve Bank.
(b) For transferring funds, including xxxx-to-the-market payments, in
connection with a repurchase agreement covering Securities that have been
received by the Custodian as provided in subsection (a) above, upon receipt by
the Custodian of (i) Written or Oral Instruction specifying the Securities, the
purchase price and the party to whom the purchase price is to be paid and (ii) a
copy of the written agreement to repurchase the Securities from the Fund.
(c) For transferring funds to a duly-designated redemption paying agent
to redeem or repurchase Shares, upon receipt of (i) either Share Certificates in
due form for transfer, or proper processing of Shares for which no Share
Certificates are outstanding and (ii) Written or Oral Instructions stating the
applicable redemption price.
(d) For exercising warrants and rights received upon the Securities,
upon timely receipt of Written or Oral Instructions authorizing the exercise of
such warrants and rights and stating the consideration to be paid.
(e) For repaying, in whole or in part, any loan of a Fund, or returning
cash collateral for Securities loaned by a Fund, upon receipt of Written or Oral
Instructions directing payment and stating the Securities, if any, to be
received against payment.
(f) For paying over to a duly-designated dividend disbursing agent such
amounts as may be stated in Written or Oral Instructions as the Fund deems
appropriate to include in dividends or distributions declared on the Shares.
(g) For paying or reimbursing the Fund for other corporate expenditures,
upon receipt of Written or Oral Instructions stating that such expenditures are
or were authorized by resolution of the Board and specifying the amount of
payment, the purposes for which such payment is to be made, and the person or
persons to whom payment is to be made.
(h) For transferring funds to any Sub-Custodian, upon receipt of Written
or Oral Instructions and upon agreement by the Custodian.
(i) To advance or pay out accrued interest on bonds purchased, dividends
on stocks sold and similar items.
(j) To pay proper compensation and expenses of the Custodian.
(k) To pay, or provide the Fund with money to pay, taxes, upon receipt
of appropriate Written or Oral Instructions.
(l) To transfer funds to a separate checking account maintained by the
Company on behalf of a Fund.
(m) To pay interest, management or supervisory fees, administration,
dividend and transfer agency fees and costs, compensation of personnel and
operating expenses, including but not limited to fees for legal, accounting and
auditing services.
Before making any payments or disbursements, however, the Custodian shall
receive, and may conclusively rely upon, Written or Oral Instructions requesting
such payment or disbursement and stating
that it is for one or more or the purposes enumerated above. Notwithstanding the
foregoing, the Custodian may disburse cash for other corporate purposes;
provided, however, that such disbursement may be made only upon receipt of
Written or Oral Instructions stating that such disbursement was authorized by
resolution of the Board.
SECTION 9. DELIVERY OF SECURITIES
The Custodian is hereby authorized and directed to deliver Securities of
the Funds from time to time as follows:
(a) For completing sales of Securities sold by a Fund, upon receipt of
(i) Written or Oral Instructions specifying the Securities sold, the amount to
be received and the broker, investment banker or other party to or upon whose
order the Securities are to be delivered and (ii) the net proceeds of sale;
provided, however, that the Custodian may accept payment in connection with the
sale of Book-Entry Securities and Securities on deposit with a Securities
Depository by means of a credit in the appropriate amount to the account
described in Section 6(b) or (c) above.
(b) For exchanging Securities for other Securities (and cash, if
applicable), upon timely receipt of (i) Written or Oral Instructions stating the
Securities to be exchanged, cash to be received and the manner in which the
exchange is to be made and (ii) the other Securities (and cash, if applicable)
as specified in the Written or Oral Instructions.
(c) For exchanging or converting Securities pursuant to their terms or
pursuant to any plan of conversion, consolidation, recapitalization,
reorganization, re-adjustment or otherwise, upon timely receipt of (i) Written
or Oral Instructions authorizing such exchange or conversion and stating the
manner in which such exchange or conversion is to be made and (ii) the
Securities, certificates of deposit, interim receipts, and/or cash to be
received as specified in the Written or Oral Instructions.
(d) For presenting for payment Securities that have matured or have been
called for redemption;
(e) For delivering Securities upon redemption of Shares in kind, upon
receipt of (i) Share Certificates in due form for transfer, or proper processing
of Shares for which no Share Certificates are outstanding and (ii) appropriate
Written or Oral Instructions.
(f) For depositing with the lender Securities to be held as collateral
for a loan to a Fund or depositing with a borrower Securities to be loaned by a
Fund, (i) upon receipt of Written or Oral Instructions directing delivery to the
lender or borrower and suitable collateral, if Securities are loaned or (ii)
pursuant to the terms of a separate securities lending agreement.
(g) For complying with a repurchase agreement, upon receipt of Written
or Oral Instructions stating (i) the securities to be delivered and the payment
to be received and (ii) payment.
(h) For depositing with a depository agent in connection with a tender
or other similar offer to purchase Securities of a Fund, upon receipt of Written
or Oral Instructions.
(i) For depositing Securities with the issuer thereof, or its agents,
for the purpose of transferring such Securities into the name of a Fund, the
Custodian or any nominee of either in accordance with Section 7, upon receipt of
appropriate Written or Oral Instructions.
(j) For other proper corporate purposes; provided, that the Custodian
shall receive Written or Oral Instructions requesting such delivery.
(k) Notwithstanding the foregoing, the Custodian may, without Written or
Oral Instructions, surrender and exchange Securities for other Securities in
connection with any reorganization, recapitalization, or similar transaction in
which the owner of the Securities is not given an option; provided, however,
that the Custodian has no responsibility to effect any such exchange unless it
has received actual notice of the event permitting or requiring such exchange.
To facilitate any such exchange, the Custodian is authorized to surrender
against payment maturing obligations and obligations called for redemption and
to effectuate the exchange in accordance with customary practices and procedures
established in the market for exchanges.
SECTION 10. BORROWINGS
The Fund will cause any person from which it borrows money using Securities
as collateral to deliver to the Custodian a notice of undertaking in the form
currently employed by the lender setting forth the amount that the lender will
loan to the Company against delivery of a stated amount of collateral. The Fund
shall promptly deliver to the Custodian Written or Oral Instructions for each
loan, stating (i) the name of the lender, (ii) the amount and terms of the loan,
which terms may be specified by incorporating by reference an attached
promissory note or loan agreement duly endorsed by the Company on behalf of the
Fund, (iii) the time and date, if known, on which the loan will be consummated
(the "borrowing date"), (iv) the date on which the loan becomes due and payable,
(v) the total amount payable to the Fund on the borrowing date, (vi) the market
value of Securities to be delivered as collateral for such loan and (vii) the
name of the issuer, the title and the number of shares or principal amount of
the Securities to be delivered as collateral. The Custodian shall deliver on the
borrowing date such specified collateral and the executed promissory note, if
any, and receive from the lender the total amount of the loan proceeds;
provided, however, that no delivery of Securities shall occur if the amount of
loan proceeds does not conform to the amount set forth in the Written or Oral
Instructions, or if such Instructions do not contain the requirements of (vii)
above. The Custodian may, at the option of the lender, keep such collateral in
its possession; provided such collateral is subject to all rights given the
lender by any promissory note or loan agreement executed by the Company on
behalf of a Fund.
The Custodian shall deliver, from time to time, any Securities required as
additional collateral for any transaction described in this Section, upon
receipt of Written or Oral Instructions. The Fund shall cause all Securities
released from collateral status to be returned directly to the Custodian.
SECTION 11. INDEBTEDNESS TO CUSTODIAN
The Fund hereby agrees that the Custodian shall have a continuing lien and
security interest, to the extent of any such overdraft or indebtedness, in any
property then held by the Custodian or its agents for the benefit of the Fund,
or in which the Fund may have an interest.
SECTION 12. SECURITIES LOANS
The Custodian may from time to time lend securities of a Fund in accordance
with and pursuant to a separate securities lending agreement.
SECTION 13. OPTIONS, FUTURES CONTRACTS AND SEGREGATED ACCOUNTS
The Custodian's responsibilities regarding options, futures contracts and
segregated accounts will
be governed by the following sub-paragraphs:
(a) Options.
(i) Upon receipt of Written or Oral Instructions relating to the
purchase of an option or sale of a covered call option, the Custodian shall: (A)
receive and retain confirmations or other documents, if any, evidencing the
purchase or writing of the option; (B) if the transaction involves the sale of a
covered call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities Depository) subject to the
covered call option written on behalf of the Funds; and (C) pay, release and/or
transfer such securities, cash or other assets in accordance with any notices or
other communications evidencing the expiration, termination or exercise of such
options which are furnished to the Custodian by the Options Clearing Corporation
(the "OCC"), the Securities or Options Exchanges on which such options were
traded, or such other organization as may be responsible for handling such
option transactions.
(ii) Upon receipt of Written or Oral Instructions relating to the
sale of a naked option (including stock index and commodity options), the
Custodian, the Fund and the broker-dealer shall enter into an agreement to
comply with the rules of the OCC or of any registered national securities
exchange or similar organizations(s). Pursuant to that agreement and any Written
or Oral Instructions, the Custodian shall: (A) receive and retain confirmations
or other documents, if any, evidencing the writing of the option; (B) deposit
and maintain in a segregated account Securities (either physically or by
book-entry in a Securities Depository) cash and/or other assets; and (C) pay,
release and/or transfer such Securities, cash or other assets in accordance with
any such agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the Securities or Options Exchanges on which such options
were traded, or such other organization as may be responsible for handling such
option transactions. The Custodian shall not be responsible for determining the
quality and quantity of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the performance
of other terms of any option contract.
(b) Futures Contracts. Upon receipt of Written or Oral
Instructions, the Custodian shall enter into a futures margin procedural
agreement among the Fund, the Custodian and the designated futures commission
merchant (a "Procedural Agreement"). Under the Procedural Agreement the
Custodian shall: (A) receive and retain confirmations, if any, evidencing the
purchase or sale of a futures contract or an option on a futures contract by a
Fund; (B) deposit and maintain in a segregated account cash, Securities and/or
other assets designated as initial, maintenance or variation "margin" deposits
intended to secure the Funds' performance of their obligations under any futures
contracts purchased or sold, or any options on futures contracts written by the
Funds, in accordance with the provisions of any Procedural Agreement designed to
comply with the provisions of the Commodity Futures Trading Commission and/or
any commodity exchange or contract market (such as the Chicago Board of Trade),
or any similar organization(s), regarding such margin deposits; and (C) release
assets from and/or transfer assets into such margin accounts only in accordance
with any such Procedural Agreements. The Custodian shall not be responsible for
determining the type and amount of assets held in the segregated account or paid
to the broker-dealer in compliance with applicable margin maintenance
requirements and the performance of any futures contract or option on a futures
contract in accordance with its terms.
(c) Segregated Accounts. Upon receipt of Written or Oral
Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of each Fund, into which
account or accounts may be transferred assets of each Fund, including Securities
maintained by the Custodian in a Securities Depository, said account or accounts
to be maintained (i) for the purpose of compliance by the Fund with the
procedures required by SEC 1940 Act Release Number 10666 or any
subsequent release or releases relating to the maintenance of segregated
accounts by registered investment companies or (ii) for such other purposes as
may be set forth, from time to time in Written or Oral Instructions. The
Custodian shall not be responsible for the determination of the type or amount
of assets to be held in any segregated account referred to in this paragraph.
SECTION 14. EXERCISE OF POWERS WITH RESPECT TO SECURITIES
The Custodian assumes no duty, obligation or responsibility whatsoever to
exercise any voting or consent powers with respect to the Securities held by it
from time to time hereunder. The Fund or such persons as it may designate shall
have the right to vote, consent or otherwise act with respect to such
Securities. The Custodian will exercise its best efforts (as defined in Section
17) to furnish to the Fund in a timely manner all proxies or other appropriate
authorizations with respect to Securities registered in the name of the
Custodian or its nominee, so that the Fund or its designee may vote, consent or
otherwise act.
SECTION 16. COMPENSATION
(a) Each Fund agrees to pay to the Custodian compensation for its
services as set forth in Appendix A hereto, or as shall be set forth in written
amendments to Appendix A approved by the Fund and the Custodian from time to
time.
(b) The Fund shall pay all fees and expenses of any Sub-Custodian
approved by the Fund.
SECTION 17. CORPORATE ACTIVITY
The Custodian will promptly forward to the Fund in a timely manner all
notices of shareholder meetings, proxy statements, annual reports, conversion
notices, call notices, or other notices or written materials of any kind
(excluding share certificates and dividend, principal and interest payments)
sent to the Custodian as registered owner of Securities.
Upon receipt of warrants or rights issued in connection with the assets of
a Fund, the Custodian shall enter into its ledgers appropriate notations
indicating such receipt and shall notify the Fund of such receipt. However, the
Custodian shall have no obligation to take any other action with respect to such
warrants or rights, except as directed in Written or Oral Instructions.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Company to keep
the books of account of each Fund and/or compute the net asset value per share
of the outstanding shares of each Fund or, upon Written Instructions, shall
itself keep such books of account and/or compute such net asset values per
share. Upon Written Instructions, the Custodian shall also calculate daily the
net income of each Fund as described in the Fund's currently effective
prospectus and shall advise the Company and the Company's transfer agent daily
of the total amounts of such net income and, upon Written Instructions, shall
advise the Company's transfer agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Fund shall be made at the time or times
described from time to time in the applicable Fund's currently effective
prospectus.
The Custodian shall take all reasonable actions, as agreed to by the
Company and the Custodian, to assist the Company in obtaining from year to year
favorable opinions from the Company's independent auditors with respect to the
Custodian's activities hereunder in connection with the preparation of the
Company's Forms N-1A, Forms N-SAR or other reports to the Securities and
Exchange Commission with respect to any other requirements of such Commission.
The Custodian shall provide the Company, at such times as the Company may
reasonably require, with reports by independent accountants on the accounting
system, internal accounting controls and procedures for safeguarding Securities,
futures contracts and options on futures contracts, including Securities
deposited and/or maintained in a Securities System, relating to the services
provided by the Custodian hereunder; such reports shall be of sufficient scope,
and in sufficient detail, as may reasonably be required by the Company to
provide reasonable assurance that any material inadequacies would be disclosed
by such examination and, if there are no such inadequacies, the reports shall so
state.
SECTION 18. RECORDS
The Custodian acknowledges and agrees that all books and records maintained
for the Company or a Fund in any capacity under this Agreement are the property
of the Company and may be inspected by the Company or any authorized regulatory
agency at any reasonable time. Upon request all such books and records will be
surrendered promptly to the Company. The Custodian agrees to make available upon
request and to preserve for the periods prescribed in Rule 31a-2 of the 1940 Act
any records related to services provided under this Agreement and required to be
maintained by Rule 31a-1 under the 1940 Act.
SECTION 19. LIABILITY
The Custodian assumes only the usual duties and obligations normally
performed by custodians of open-end investment companies. The Custodian
specifically assumes no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the Funds, whether or
not on deposit hereunder. The Custodian assumes no duty, obligation or
responsibility whatsoever with respect to Securities not deposited with the
Custodian.
The Custodian may rely upon the advice of counsel, who may be counsel for
the Company or for the Custodian, and upon statements of accountants, brokers or
other persons believed by the Custodian in good faith to be expert in the
matters upon which they are consulted. The Custodian shall not be liable for any
action taken in good faith reliance upon such advice or statements. The
Custodian shall not be liable for action taken in good faith in accordance with
any Written or Oral Instructions, request or advice of the Company or its
officers, or information furnished by the Company or its officers. The Custodian
shall not be liable for any non-negligent action taken in good faith and
reasonably believed by it to be within the powers conferred upon it by this
Agreement.
No liability of any kind, other than to the Company or affected Fund, shall
attach to the Custodian by reason of its custody of the Securities and cash held
by the Custodian hereunder or otherwise as a result of its custodianship. In the
event that any claim shall be made against the Custodian, it shall have the
right to pay the claim and reimburse itself from the assets of the affected
Fund; provided, however, that no such reimbursement shall occur unless the
affected Fund is notified of the claim and is afforded an opportunity to contest
or defend the claim, if it so elects. Each Fund agrees to indemnify and hold the
Custodian harmless for any loss, claim, damage or expense arising out of the
custodian relationship under this Agreement; provided such loss, claim, damage
or expense is not the direct result of the Custodian's negligence or willful
misconduct.
SECTION 20. TAXES
The Custodian shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed upon the Securities held by
it hereunder, or upon the income therefrom. Upon Written or Oral Instruction,
the Custodian may pay any such tax, assessment or charge and reimburse itself
out of the monies of the Fund or the Securities held hereunder. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with the receipt of
income or other payments with respect to the Securities of each Fund held by it
and in connection with transfers of such Securities.
SECTION 21. FOREIGN SECURITIES
The Custodian shall be authorized to provide services as an eligible
foreign custodian and act as a foreign custody manager, as those terms are
defined in Rule 17f-5 under the 1940 Act, as amended. The Custodian shall not be
responsible for acting as a foreign custody manager unless and until the
Custodian accepts such delegation of responsibility pursuant to a separate
[Delegation Agreement] [Foreign Custody Manager Agreement] [Xxxxx Fargo to
provide, if applicable.], approved by the Board of Directors, that describes the
Custodian's duties as a foreign custody manager and identifies the Funds for
which the Custodian will so act.
SECTION 22. SUB-CUSTODIANS
(a) The Custodian may from time to time request appointment of one or
more Sub-Custodians. Upon receipt of Written or Oral Instructions authorizing
the use of such a Sub-Custodian, the Custodian shall appoint one or more
Sub-Custodians of Securities and cash owned by the Company from time to time.
(b) The Custodian shall have no liability to the Company by reason of
any act or omission of any Sub-Custodian approved by the Company, and the
Company shall indemnify the Custodian and hold it harmless from and against any
and all actions, suits, claims, losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising directly or indirectly out of or in
connection with the performance of any Sub-Custodian approved by the Company.
The Custodian assigns to the Company any and all claims for any losses, costs,
expenses, or damages that may be incurred by the Company by reason of the
negligence, gross negligence or misconduct of any Sub-Custodian approved by the
Company, or by reason of the failure of a Sub-Custodian approved by the Company
to perform in accordance with any applicable agreement, including instructions
of the Custodian. The Custodian shall be under no obligation to prosecute or to
defend any action, suit or claim arising out of, or in connection with, the
performance of any Sub-Custodian approved by the Company, if, in the opinion of
the Custodian's counsel, such action will involve expense or liability to the
Custodian. The Company shall, upon request, furnish the Custodian with
satisfactory indemnity against such expense or liability, and upon request of
the Custodian, the Company shall assume the entire defense of any action, suit,
or claim subject to the foregoing indemnity.
With respect to each Sub-Custodian not approved by the Company, the
Custodian shall be liable to the Company for any loss which shall occur as a
result of the failure of the Sub-Custodian to exercise reasonable care with
respect to the safekeeping of assets to the same extent that the Custodian would
be liable to the Company if the Custodian were holding such assets in its own
premises. The Custodian shall be liable to the Company under this paragraph only
to the extent of the Company's direct damages, to be determined based on the
market value of the assets which are subject to loss and without reference to
any special conditions or circumstances.
SECTION 23. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement may be executed in more than one counterpart, each of
which shall be deemed to be an original, and shall become effective on the date
hereof. This Agreement shall remain in effect until terminated as hereinafter
provided.
(b) This Agreement may be terminated by either party upon written notice
to the other. The termination shall become effective at the time specified in
the notice but no earlier than sixty (60) days after the date of the notice.
Upon notice of termination, the Company shall use its best efforts to obtain a
successor custodian. If a successor custodian is not appointed within ninety
(90) days after the date of the notice of termination, the Board shall, by
resolution, designate the Company as its own custodian. Each successor custodian
shall be a person qualified to serve under the 1940 Act. Promptly following
receipt of written notice from the Company of the appointment of a successor
custodian and receipt of Written or Oral Instructions, the Custodian shall
deliver all Securities and cash it then holds directly to the successor
custodian and shall, upon request of the Company and the successor custodian and
upon payment of the Custodian's reasonable charges and disbursements, (i)
execute and deliver to the successor custodian an instrument approved by the
successor custodian's counsel transferring to the successor custodian all the
rights, duties and obligations of the Custodian, (ii) transfer to the successor
custodian the originals or copies of all books and records maintained by the
Custodian hereunder and (iii) cooperate with, and provide reasonable assistance
to, the successor custodian in the establishment of the books and records
necessary to carry out the successor custodian's responsibilities hereunder.
Upon delivery of the Securities and other assets of the Company and compliance
with the other requirements of this Section 21, the Custodian shall have no
further duty or liability hereunder. Every successor custodian appointed
hereunder shall execute and deliver an appropriate written acceptance of its
appointment and shall thereupon become vested with the rights, duties and
obligations of the predecessor custodian.
SECTION 24. REQUIRED PERFORMANCE ON FUND BUSINESS DAYS
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
day other than a Fund Business Day. Functions or duties normally scheduled to be
performed on any day which is not a Fund Business Day shall be performed on, and
as of, the next Fund Business Day unless otherwise required by law.
SECTION 25. MISCELLANEOUS
(a) This Agreement shall extend to and bind 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. Notwithstanding
the foregoing, either party may assign this Agreement without the consent of the
other party so long as the assignee is an affiliate, parent or subsidiary of the
assigning party and the assignee of the Custodian is qualified to serve as
custodian under the 1940 Act.
(b) In connection with the operation of this Agreement, the Custodian
and the Company may from time to time agree on such provisions interpretive of
or in addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED, however, that no such interpretive or additional
provisions shall contravene any applicable federal or state regulations or any
provisions of the Articles of Organization or By-Laws of the Company. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota.
(d) The captions inserted herein are for convenience of reference and
shall not affect, in any way, the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed all as of the day and year first above written.
THE XXXXX FUNDS
By: /s/ Xxxx X. Xxxxxxxx
--------------------------
XXXXX FARGO BANK MINNESOTA, N.A.
By: /s/ Xxxx X. Xxxx
--------------------------
APPENDIX A
XXXXX FARGO MASTER TRUST & CUSTODY SERVICES
XXXXXXX X. XXXXX & COMPANY
ANNUAL PRICING
UNIT PRICE
----------
Domestic Administration 0.000020
Accounts 500.00
Domestic Depository Settlements 10.00
Money Transactions 10.00
Future/Options Settlements 15.00
Physical Settlements 25.00
Mutual Fund Settlements 15.00
On-Line Access Included
Performance Measurement 1,000.00
