MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is effective as of the __th day of August, 1996 by and
between Emerging Growth Portfolio (the "Trust"), an open-end management
investment company organized as a New York trust on _________ __, 1996, and The
Chase Manhattan Bank (the "Custodian"), a New York State chartered bank.
W I T N E S S E T H
WHEREAS, the Trust is registered as an open-end, non-diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust desires to retain the Custodian to serve as the
Trust's custodian and the Custodian is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Trust hereby appoints the Custodian to act as custodian of its
portfolio securities, cash and other property and to act as agent to act as a
liaison with the fund accountants and perform certain recordkeeping functions
required of a duly registered investment company in compliance with applicable
provisions of federal, state and local laws, rules and regulations including, as
may be required:
(i) Provide information necessary for the Trust to file required
financial reports; maintaining and preserving required books,
accounts and records as the basis for such reports; and performing
certain
daily functions in connection with such accounts and records, and
(ii) Acting as liaison with independent auditors.
(b) The Custodian accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 25 of this Agreement. The Custodian agrees to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations thereunder.
2. Delivery of Documents. The Trust has furnished the Custodian with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Custodian as custodian of the portfolio securities, cash and
other property of the Trust;
(b) Schedule A identifying and containing the signatures of the
Trust's officers and/or other persons authorized to issue Oral Instructions and
to sign Written Instructions, as hereinafter defined, on behalf of the Trust;
(c) Schedule B setting forth the names and signatures of the present
officers of the Trust;
(d) The Trust's current Registration Statement on Form N-1A under the
1940 Act as filed with the Securities and Exchange Commission ("the SEC"),
relating to the Trust's shares of beneficial interest, no par value (the
"Shares");
(e) A copy of the notice filed with the Commodity Futures Trading
Commission ("CFTC") of eligibility to claim the exclusion from the definition of
"commodity pool operator"
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contained in Section 2(a)(1)(A) of the Commodity Exchange Act ("CEA") that is
provided in Rule 4.5 under the CEA, together with all supplements as are
required by the CFTC.
The Trust will furnish Custodian from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means any of the Trust's officers, and any other person,
whether or not any such person is an officer or employee of the Trust, duly
authorized by the Board of Trustees of the Trust to give Oral and Written
Instructions on behalf of the Trust and listed on Schedule A, which may be
amended from time to time.
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees and any book-entry system maintained by a clearing agency
registered with the SEC under Section 17A of the Securities Exchange Act of 1934
(the "1934 Act").
(c) "Oral Instructions". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by the Custodian from an
Authorized Person or from a person reasonably believed by the Custodian to be an
Authorized Person. The Trust agrees to deliver to the Custodian, at the
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time and in the manner specified in Paragraph 9 of this Agreement, Written
Instructions confirming Oral Instructions.
(d) "Officer's Certificate". The term "Officer's Certificate" as used
in this Agreement means instructions delivered by hand, mail, tested telegram,
cable, telex or facsimile sending device and received by the Custodian signed by
two officers of the Fund.
(e) "Property". The term "Property", as used in this Agreement, means:
(i) any and all securities and other property of the Trust which
the Trust may from time to time deposit, or cause to be
deposited, with the Custodian or which the Custodian may
from time to time hold for the Trust;
(ii) all income in respect of any other such securities or other
property;
(iii) all proceeds of the sales of any of such securities or other
property; and
(iv) all proceeds of the sale of securities issued by the Trust,
which are received by the Custodian from time to time from
or on behalf of the Trust.
(f) "Securities Depository". As used in this Agreement, the term
"Securities Depository" shall mean the Depository Trust Company or Participants
Trust Company, each a clearing agency registered with the SEC or, their
successor or successors and their nominee or nominees; and shall also mean any
other registered or industry recognized clearing agency, its successor or
successors specifically identified in a certified
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copy of a resolution of the Trust's Board of Trustees approving deposits by the
Custodian therein.
(g) "Written Instructions". As used in this Agreement, "Written
Instructions" means instructions delivered by hand, mail, tested telegram,
cable, telex, facsimile sending device, and received by the Custodian, signed by
two Authorized Persons.
4. Delivery and Registration of the Property. The Trust will deliver
or cause to be delivered to the Custodian all securities and all moneys owned by
it, including cash received for the issuance of its Shares, at any time during
the period of this Agreement, except for securities and monies to be delivered
to any subcustodian appointed pursuant to Paragraph 7 hereof. The Custodian will
not be responsible for such securities and such monies until actually received
by it. All securities delivered to the Custodian or to any such subcustodian
(other than in bearer form) shall be registered in the name of the Trust or in
the name of a nominee of the Trust or in the name of the Custodian or any
nominee of the Custodian (with or without indication of fiduciary status) or in
the name of any subcustodian or any nominee of such subcustodian appointed
pursuant to Paragraph 7 hereof or shall be properly endorsed and in form for
transfer satisfactory to the Custodian.
5. Domestic and Foreign Corporate Actions and Proxies. With respect to
all securities, however registered, it is understood that the voting and other
rights and powers shall be exercised by the Trust. The Custodian shall transmit
promptly to the Trust any proxy statement, proxy materials,
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notice of a call or conversation or similar communications received by it as
Custodian for the Trust as follows:
(i) With respect to domestic U.S. and Canadian securities (the latter
if held in DTC), the Custodian will send to the Trust or the proper authorized
person, such proxies (signed in blank, if issued in the name of the Custodian's
nominee or the nominee of a central depository) and communications with respect
to securities in the Trust's Account as call for voting or relate to legal
proceedings within a reasonable time after sufficient copies are received by the
Custodian for forwarding to its customers. In addition, the Custodian will
follow coupon payments, redemptions, exchanges or similar matters with respect
to securities in the Trust's Account and advise the Trust or the proper
authorized person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such securities, in each case, of which the
Custodian has received notice from the issuer of the securities, or as to which
notice is published in publications routinely utilized by the Custodian for this
purpose.
Where warrants, options, tenders or other securities have fixed
expiration dates, the Trust understands that in order for the Custodian to act,
the Custodian must receive the Trust's instructions at its offices in New York
City, addressed as the Custodian may from time to time request, by no later than
noon (NY City time) at least one business day prior to the last scheduled date
to act with respect thereto (or such earlier date
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or time as the Custodian may reasonably notify the Trust). Absent the
Custodian's timely receipt of such instructions, such instructions will expire
without liability to the Custodian. Corporate reports need not be forwarded to
the Trust.
(ii) With respect to securities held or settled through the Chase
global custody network, whenever the Custodian receives information which
requires discretionary action by the Trust (other than a proxy), such as
subscription rights, bonus 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 Trust 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 its
customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Custodian will endeavor to obtain
Instructions from the Trust, but if Instructions are not received in time for
the Custodian to take timely action, or actual notice of such Corporate Action
was received too late to seek Instructions, the Custodian is authorized to sell
such rights entitlement or fractional interest and to credit the proper Fund
account with the proceeds or take any other action it deems, in good faith, to
be appropriate in which case it shall be held harmless for any such action.
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The Custodian will deliver proxies to the Trust or its designated
agent pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
portfolio securities in the Custody Account 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 Instructions.
6. Receipt and Disbursement of Money.
(a) The Custodian shall open and maintain a custody account for the
Trust, subject only to draft or order by the Custodian acting pursuant to the
terms of this Agreement, and shall hold in such account, subject to the
provisions hereof, all cash received by it from or for the Trust. The Custodian
shall make payments of cash to, or for the account of, the Trust from such cash
only (i) for the purchase of securities for the Trust as provided in paragraph
15 hereof; (ii) upon receipt of an Officer's Certificate, for the payment of
dividends or other distributions of shares, or for the payment of interest,
taxes, administration, distribution or advisory fees or expenses which are to be
borne by the Trust under the terms of this Agreement, and, with respect to the
Trust, any Investment Advisory Agreement, Administration Agreement or
Distribution and Sub-administration Agreement; (iii) upon receipt of Written
Instructions for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Trust and held by or to be
delivered to the Custodian; (iv) to a
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subcustodian pursuant to Paragraph 7 hereof; or (v) for the redemption of Trust
Shares; or (vi) upon receipt of an Officer's Certificate for other corporate
purposes. No payment pursuant to (i) other than pursuant to Instruction and in
accordance with local market practice.
(b) the Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the Trust.
7. Receipt of Securities.
(a) Except as provided by Paragraph 8 hereof, the Custodian shall hold
and physically segregate in a separate account, identifiable from those of any
other person, all securities and non-cash property received by it for the Trust.
All such securities and non-cash property are to be held or disposed of by the
Custodian for the Trust pursuant to the terms of this Agreement. In the absence
of Written Instructions accompanied by a certified resolution authorizing the
specific transaction by the Trust's Board of Trustees, the Custodian shall have
no power or authority to withdraw, deliver, assign, hypothecate, pledge or
otherwise dispose of any such securities and investments, except in accordance
with the express terms provided for in this Agreement. In no case may any
trustee, officer, employee or agent of the Trust withdraw any securities except
as provided in this Agreement and pursuant to a duly adopted resolution of the
Board of Trustees. In connection with its duties under this Paragraph 7, the
Custodian may, at its own expense, except to the extent the Custodian is
instructed to
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engage a subcustodian it would not otherwise have engaged, enter into
subcustodian agreements with other banks or trust companies for the receipt of
certain securities and cash to be held by the Custodian for the account of the
Trust pursuant to this Agreement; provided that each such bank or trust company
has an aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than one million dollars ($1,000,000) for a
Custodian Subsidiary or affiliate, or of not less than twenty million dollars
($20,000,000) for a subcustodian that is not a Custodian Subsidiary or affiliate
and that in either case such bank or trust company agrees with the Custodian to
comply with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. The Custodian will provide the Trust with a copy of each
subcustodian agreement it executes relating to the Trust. The Custodian will be
liable for acts or omissions of any such subcustodian, except to the extent the
Custodian is instructed by the Trust to engage a subcustodian it would not
otherwise have engaged and the Trust is a party to the agreement with such
sub-custodian, under the standards of care provided for herein, of any bank or
trust company that it chooses pursuant to this Paragraph 7.
(b) Notwithstanding any other provisions of this Agreement, the
foreign securities of the Trust (as defined in Rule 17f-5(c)(1) under the 0000
Xxx) and the Trust's cash or cash equivalents, in amounts reasonably necessary
to effect the Trust's foreign securities transactions, may be held in the
custody of one or more banks or trust companies acting as
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subcustodians; and thereafter, pursuant to a written contract or contracts as
approved by Trust's Board of Trustees, may be transferred to an account
maintained by such subcustodian with an eligible foreign custodian, as defined
in Rule 17f-5(c)(2), provided that any such arrangement involving a foreign
custodian shall be in accordance with the provisions of Rule 17f-5 under the
1940 Act or any exemptive order issued to the Custodian under the 1940 Act.
(c) Promptly after the close of business on each day the Custodian
shall furnish the Trust with a summary of all transfers to or from the account
of the Trust during said day. Where securities are transferred to the account of
the Trust established at a Securities Depository or the Book Entry System
pursuant to Paragraph 8 herein, the Custodian shall also by book-entry or
otherwise identify as belonging to the Trust the quantity of securities in a
fungible bulk of securities registered in the name of the Custodian (or its
nominee) or shown in the Custodian's account on the books of a Securities
Depository or the Book-Entry System. At least monthly and from time to time, the
Custodian shall furnish the Trust with a detailed statement of the Property held
under this Agreement.
8. Use of Securities Depository or the Book-Entry System. The Trust
shall deliver to the Custodian a certified resolution of the Board of Trustees
of the Trust approving, authorizing and instructing the Custodian on a
continuous and ongoing basis until instructed to the contrary by Oral or Written
Instructions actually received by the Custodian (i) to
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deposit in a Securities Depository or the Book-Entry System all securities of
the Trust eligible for deposit therein and (ii) to utilize a Securities
Depository or the Book-Entry System to the extent possible in connection with
the performance of its duties hereunder, including without limitation
settlements of purchases and sales of securities by the Trust, and deliveries
and returns of securities loaned, subject to repurchase agreements or used as
collateral in connection with borrowings. Without limiting the generality of
such use, it is agreed that the following provisions shall apply thereto:
(a) Securities and any cash of the Trust deposited in a Securities
Depository or the Book-Entry System will at all times be segregated from any
assets and cash controlled by the Custodian in other than a fiduciary or
custodian capacity. The Custodian and its subcustodians, if any, will pay out
money only upon receipt of securities and will deliver securities only upon
receipt of money, unless the Trust has given the Custodian Written Instructions
to the contrary.
(b) All Books and records maintained by the Custodian that relate to
the Trust participation in a Securities Depository or the Book-Entry System will
at all times during the Custodian's regular business hours be open to the
inspection of the Trust's duly authorized employees or agents, the Trust's
independent auditors in accordance with applicable regulations, and the Trust
will be furnished with all information in respect of the services rendered to it
as it may require.
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(c) The Custodian will provide the Trust with copies of any report
obtained by the Custodian on the system of internal accounting control of the
Securities Depository or Book-Entry System promptly after receipt of such a
report by the Custodian. The Custodian will also provide the Trust with such
reports on its own system of internal control as the Trust may reasonably
request from time to time.
9. Instructions Consistent With the Charter, etc. Unless otherwise
provided in this Agreement, the Custodian shall act only upon Oral and Written
Instructions. The Custodian may assume that any Oral or Written Instructions
received hereunder are not in any way inconsistent with any provision of the
Charter, By-Laws, the Trust's Registration Statement, any rule or regulation of
any applicable regulatory body or governmental agency or any vote or resolution
of the Trust's Board of Trustees, or any committee thereof. The Custodian shall
be entitled to rely upon any Oral or Written Instructions actually received by
the Custodian pursuant to this Agreement. The Trust agrees to forward to the
Custodian Written Instructions confirming Oral Instructions in such manner that
the Written Instructions are received by the Custodian at the close of business
of the same day that such Oral Instructions are given to the Custodian. The
Trust agrees that the fact that such confirming Written Instructions are not
received by the Custodian shall in no way affect the validity of any of the
transactions authorized by the Trust by giving Oral Instructions nor shall
receipt of conflicting Written Instructions affect the validity
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of transactions undertaken based on Oral Instructions or the Custodian's
obligations or responsibilities with respect thereto if such actions have been
taken prior to the receipt of such Written Instructions. The Trust agrees that
the Custodian shall incur no liability in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Authorized Person, unless any
liability to the Trust results from the negligence or willful misconduct of the
Custodian. In accord with instructions from the Trust, as required by accepted
industry practice or as the Custodian may elect in effecting the execution of
Trust instructions, advances of cash or other Property made by the Custodian,
arising from the purchase, sale, redemption, transfer or other disposition of
Property of the Trust, or in connection with the disbursement of funds to any
party, or in payment of fees, expenses, claims or liabilities owed to the
Custodian by the Trust, or to any other party which has secured judgment in a
court of law against the Trust which creates an overdraft in the accounts or
overdelivery of Property shall be deemed a loan by the Custodian to the Trust,
payable on demand, bearing interest at such rate customarily charged by the
Custodian for similar loans.
10. Transactions Not Requiring Instructions. The Custodian is
authorized to take the following action without Written Instructions:
(a) Collection of Income and Other Payments. The Custodian shall:
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(i) collect and receive for the account of the Trust, all income
and other payments and distributions, including (without limitation)
stock dividends, rights, warrants and similar items, included or to be
included in the Property of the Trust, and promptly advise the Trust
of such receipt and shall credit such income, as collected, to the
Trust. With respect to non-foreign issuers, the Custodian shall credit
the account with interest, dividends or principal payments on the
payable date, in anticipation of receiving same from a payor, central
depository, broker or other agent employed by the Trust or the
Custodian (each advance made hereunder shall be subject to reversal in
the event that (i) payment to which it relates is not made within a
reasonable time after its due date and (2) the Custodian notifies the
Trust within 30 days of such due date that it anticipates a delay in
collection).
(ii) with respect to securities of foreign issue, effect
collection of dividends, interest and other income, and to notify the
Trust of any call for redemption, offer of exchange, right of
subscription, reorganization, or other proceedings affecting such
securities, or any default in payments due thereon. It is understood,
however, the Custodian shall be under no responsibility for any
failure or delay in effecting such collections or giving such notice
with respect to securities of foreign issue, regardless of whether or
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not the relevant information is published in any financial service
available to it unless such failure or delay is due to its negligence.
Collections of income in foreign currency are, to the extent possible,
to be converted into United States dollars unless otherwise instructed
in writing, and in effecting such conversion the Custodian may use
such methods or agencies as it may see fit, including the facilities
of its own foreign division at customary rates. All risk and expenses
incident to such collection and conversion is for the account of the
Trust and the Custodian shall have no responsibility for fluctuations
in exchange rates affecting any such conversion.
(iii) endorse and deposit for collection in the name of the Trust,
checks, drafts, or other orders for the payment of money on the same
day as received;
(iv) receive and hold for the account of the Trust all securities
received by the Trust as a result of a stock dividend, share split-up
or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or similar securities issued
with respect to any portfolio securities of the Trust held by the
Custodian hereunder;
(v) present for payment and collect the amount payable upon all
securities which may mature or be called, redeemed or retired, or
otherwise become payable on the date such securities become payable;
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(vi) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other
payments and the endorsement for collection of checks, drafts and
other negotiable instructions;
(vii) to exchange securities in temporary form for securities in
definitive form, to effect an exchange of the shares where the par
value of stock is changed, and to surrender securities at maturity or
when advised of earlier call for redemption, against payment therefor
in accordance with accepted local industry practice. When fractional
shares of stock of a declaring corporation are received as a stock
distribution, the Custodian is authorized to sell the fraction
received and credit the Trust's account. Unless specifically
instructed to the contrary in writing, the Custodian is authorized to
exchange securities in bearer form for securities in registered form.
If any Property registered in the name of a nominee of the Custodian
is called for partial redemption by the issuer of such Property, the
Custodian is authorized to allot the called portion to the respective
beneficial holders of the Property in such manner deemed to be fair
and equitable by the Custodian in its sole discretion.
(b) Miscellaneous Transactions. The Custodian is authorized to deliver
or cause to be delivered Property against
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payment or other consideration or written receipt therefor in the following
cases:
(i) for examination by a broker selling for the
account of the Trust in accordance with local industry
practice;
(ii) for the exchange of interim receipts or
temporary securities for definitive securities;
(iii) for transfer of securities into the name of
the Trust or the Custodian or a nominee of either, or
for exchange or securities for a different number of
bonds, certificates, or other evidence, representing the
same aggregate face amount or number of units bearing
the same interest rate, maturity date and call
provisions, if any; provided that, in any such case, the
new securities are to be delivered to the Custodian.
11. Transactions Requiring Instructions. Upon receipt of Oral or
Written Instructions and not otherwise, the Custodian, directly or through the
use of a Securities Depository or the Book-Entry System, shall:
(a) Execute and deliver to such persons as may be designated in such
Oral or Written Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as owner of any securities may be
exercised;
(b) Deliver any securities held for the Trust against receipt of other
securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger,
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consolidation or recapitalization of any corporation, or the exercise of any
conversion privilege;
(c) Deliver any securities held for the Trust to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, against receipt of such certificates or deposit,
interim receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Trust and
take such other steps as shall be stated in said instructions to be for the
purpose of effectuating any duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(e) Release securities belonging to the Trust to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Trust; provided, however, that securities shall be released only upon
payment to the Custodian of the monies borrowed, except that in cases where
additional collateral is required to secure a borrowing already made, subject to
proper prior authorization, further securities may be released for that purpose;
and pay such loan upon redelivery to it of the securities pledged or
hypothecated therefore and upon surrender of the note or notes evidencing the
loan;
(f) Deliver any securities held for the Trust upon the exercise of a
covered call option written by the Trust on such securities;
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(g) Release and deliver securities owned by the Trust in connection
with any repurchase agreement entered into on behalf of the Trust, but only on
receipt of payment therefor; and pay out moneys of the Trust in connection with
such repurchase agreements, but only upon the delivery of the securities;
(h) otherwise transfer, exchange or deliver securities in accordance
with Oral or Written Instructions.
12. Segregated Accounts. The Custodian shall upon receipt of Written
or Oral Instructions establish and maintain a segregated account or accounts on
its records for and on behalf of the Trust, into which account or accounts may
be transferred cash and/or securities, including securities in the Book-Entry
System (i) for the purposes of compliance by the Trust with the procedures
required by a securities or option exchange, providing such complies with the
Investment Company Act and Release No. 10666 or any subsequent release or
releases of the SEC relating to the maintenance of segregated accounts by
registered investment companies and (ii) for other proper corporate purposes,
but only, in the case of clause (ii), upon receipt of, Written Instructions.
13. Dividends and Distributions. The Trust shall furnish the Custodian
with appropriate evidence of action by the Trust's Board of Trustees declaring
and authorizing the payment of any dividends and distributions. The amounts of
Dividends and/or distributions will be calculated by the Custodian in accordance
with the procedures attached as Schedule C. Upon receipt by the Custodian of an
Officer's Certificate with respect
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to dividends and distributions declared by the Trust's Board of Trustees and
payable to investors who are entitled to receive cash for fractional shares and
those who have elected in the proper manner to receive their distributions on
dividends in cash, and in conformance with the procedures mutually agreed upon
by the Custodian, the Trust, and the Trust's Administrator or Transfer Agent,
the Custodian shall pay to the Trust's transfer agent, as agent for the
investors, an amount equal to the amount indicated in said Officer's Certificate
as payable by the Trust to such shareholders for distribution in cash by the
transfer agent to such shareholders. In lieu of paying the Trust's transfer
agent cash dividends and distributions, the Custodian may arrange for the direct
payment of cash dividends and distributions to shareholders by the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time by and among the Trust, the Custodian and the Trust's Administrator
and transfer agent.
(b) The Custodian may enter into separate custodial agreements with
various futures commission merchants ("FCMs") that the Trust uses (each an "FCM
Agreement"), pursuant to which the Trust's margin deposits in any transactions
involving futures contracts and options on futures contracts will be held by
Custodian in accounts (each an "FCM Account") subject to the disposition by the
FCM involved in such contracts in accordance with the customer contract between
FCM and the Trust ("FCM Contract"), SEC rules governing such segregated
accounts, CFTC rules and the rules of the applicable commodities exchange. Such
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FCM Agreements shall only be entered into upon receipt of Written Instructions
from the Trust. Transfers of initial margin shall be made into an FCM Account
only upon Written Instructions; transfers of premium and variation margin may be
made into an FCM Account pursuant to Oral Instructions. Transfers of funds from
an FCM Account to the FCM for which Custodian holds such an account may only
occur upon certification by the FCM to the Custodian that pursuant to the FCM
Agreement and the FCM Contract, all conditions precedent to its right to give
the Custodian such instruction have been satisfied.
14. Purchase of Securities. Promptly after each purchase of securities
by the Investment Adviser on behalf of the Trust, the Trust shall deliver to the
Custodian Oral or Written Instructions specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities, (b) the
number of shares or the principal amount purchased and accrued interest, if any,
(c) the dates of purchase and settlement, (d) the purchase price per unit, (e)
the total amount payable upon such purchase, (f) the name of the person from
whom or the broker through whom the purchase was made and (g) the CUSIP number
or other industry standard identification when available. The Custodian shall
upon receipt of securities purchased by or for the Trust pay out of the moneys
held for the account of such Trust the total amount payable to the person from
whom or the broker through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Oral or Written
Instructions.
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15. Notation Pursuant to Section 17f-2 of the 1940 Act. With respect
to each deposit or withdrawal of securities or when ordering the deposit or
withdrawal of securities from safekeeping, the Custodian shall sign a notation
in respect of each such deposit, withdrawal or order that shall show: (a) the
date and time of the deposit, withdrawal or order; (b) the title and amount of
the securities or other investments deposited, withdrawn or ordered to be
withdrawn, and the identification thereof by certificate numbers or otherwise;
(c) the manner of acquisition of the securities or similar investments deposited
or the purpose for which they have been withdrawn, or ordered to be withdrawn;
and (d) if withdrawn and delivered to another person, the name of such person.
The time of any deposit, withdrawal or order means the time of the formal
recording of such transactions on the books of the Custodian at the Custodian's
close of business. Such notation shall be transmitted promptly to an officer or
trustee of the Trust designated by the Board of Trustees who shall not otherwise
be authorized to have access to the Trust's securities. Such notation shall be
on serially numbered forms and shall be preserved for at least one year.
16. Sales of Securities. Promptly after each sale of securities by the
investment manager, the Trust shall deliver to the Custodian Oral or Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the
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Trust upon such sale, (f) the name of the broker through whom or the person to
whom the sale was made and (g) the CUSIP number or other industry standard
identification when available. The Custodian shall deliver the securities upon
receipt of the total amount payable to the Trust upon such sale, provided that
the same conforms to the total amount payable as set forth in such Oral or
Written Instructions. Subject to the foregoing, the 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 local customs prevailing among
dealers in securities.
17. Records. The books and records pertaining to the Trust shall be
prepared and maintained as required by the 1940 Act, as amended, and other
applicable securities laws and rules and regulations. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during the Custodian's normal business hours, and such books and records
shall be surrendered to the Trust promptly upon request. Upon reasonable request
of the Trust, copies of any such books and records shall be provided by the
Custodian to the Trust or the Trust's authorized representative at the Trust's
expense.
18. Reports.
(a) The Custodian shall furnish the Trust the following reports:
(1) such periodic and special reports as the Trust may reasonably
request;
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(2) a monthly statement summarizing all transactions and entries for
the account of the Trust;
(3) a monthly report of portfolio securities belonging to the Trust
showing the adjusted average cost of each issue and the market
value at the end of such month;
(4) a monthly report of the cash account of the Trust showing
disbursements;
(5) the reports to be furnished to the Trust pursuant to Rule 17f-4;
(6) the reports to be furnished to the Trust pursuant to Rule 17f-5;
and
(7) such other information as may be agreed upon from time to time
between the Trust and the Custodian.
(b) The Custodian with the direction and as interpreted by the Trust,
the Trust's accountants and/or other tax advisors will prepare and maintain as
complete, accurate, and current all accounts and records required to be
maintained by the Trust under the Internal Revenue Code of 1986, as amended,
under the rules and regulations of the 1940 Act and as agreed upon between the
parties and will preserve such records in the manner and for the periods
required by law.
(c) Unless the information necessary to perform the above functions is
furnished in writing or its electronic or digital equivalent to the Custodian in
a timely manner prior to the next calculation of the Trust's net asset value,
the Custodian shall incur no liability except as provided in
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Paragraph 9 herein and the Trust shall indemnify and hold the Custodian harmless
from and against any liability arising from any discrepancy between the
information received by the Custodian and used in such calculation and any
subsequent information received from the Trust.
(d) The Custodian shall assist the Trust's independent auditors, or
upon approval of the Trust or upon demand, any regulatory body, in any requested
review of the Trust's accounts and records maintained by the Custodian but shall
be reimbursed by the Trust for all expenses and employee time invested in any
such review outside of routine and normal periodic reviews.
(e) Upon receipt from the Trust of the necessary information, the
Custodian shall provide information for tax returns, questionnaires, or periodic
reports to shareholders and such other reports and information requests as the
Trust and the Custodian shall agree upon from time to time.
19. Cooperation with Accountants. The Custodian shall cooperate with
the Trust's independent certified public accountants and shall take all
reasonable action in the performance of its obligations under this Agreement and
under Rule 17f-2 to assure that the necessary information is made available to
such accountants for the expression of their unqualified opinion with respect
to, including without limitation, the three audits required each year, the
certificates with respect to such annual audits and the opinion included in the
Trust's semi-annual report on Form N-SAR, and will require each sub-custodian
appointed pursuant to paragraph 7 hereof to
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grant such access to the information to the Trust's independent certified public
accountant. The Custodian shall require any sub-custodian it appoints with
respect to the Trust to comply with the provisions of this Paragraph 19.
20. Confidentiality. The Custodian agrees on behalf of itself and its
employees to treat confidentially and as the proprietary information of the
Trust all records and other information relative to the Trust and its prior,
present or potential shareholders and relative to the managers and its prior,
present or potential customers, and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the
Custodian may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.
21. Equipment Failures. In the event of equipment failures beyond the
Custodian's control, the Custodian shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions but shall not have
liability with respect thereto. The Custodian shall make and maintain reasonable
provisions for back up emergency use of electronic data processing equipment to
the extent appropriate equipment is available.
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22. Right to Receive Advice.
(a) Advice of Trust. If the Custodian shall be in doubt as to any
action to be taken or omitted by it, it may request, and shall receive, from the
Trust clarification or advice, including Oral or Written Instructions.
(b) Advice of Counsel. If the Custodian shall be in doubt as to any
question of law involved in any action to be taken or omitted by the Custodian,
it may request advice from counsel of its own choosing (who may be counsel for
the Trust or the Custodian, at the option of the Custodian).
(c) Conflicting Advice. In case of conflict between directions, advice
or Oral or Written Instructions received by the Custodian pursuant to
subparagraph (a) of this paragraph and advice received by the Custodian pursuant
to subparagraph (b) of this paragraph, the Custodian shall be entitled to rely
on and follow the advice received pursuant to the latter provision alone.
(d) Protection of The Custodian. The Custodian shall be protected in
any action or inaction which it takes or omits to take in reliance on any
directions, advice or Oral or Written Instructions received pursuant to
subparagraphs (a) or (b) of this section which the Custodian, after receipt of
any such directions, advice or Oral or Written Instructions, in good faith
believes to be consistent with such directions, advice or Oral or Written
Instructions, as the case may be. Nothing in this paragraph shall be construed
as imposing upon the Custodian any obligation (i) to seek such directions,
advice or Oral or Written
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Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions when received, unless, under the terms or another
provision of this Agreement, the same is a condition to the Custodian's properly
taking or omitting to take such action. Nothing in this subparagraph shall
excuse the Custodian when an action or omission on the part of the Custodian
constitutes willful misfeasance, bad faith, negligence or reckless disregard by
the Custodian of its duties under this Agreement.
23. Compliance with Governmental Rules and Regulations. The Custodian
undertakes to comply with all applicable requirements of the 1933 Act, the 1934
Act, the 1940 Act and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties and obligations to be
performed by the Custodian hereunder. The Custodian acknowledges that it is
subject to Rule 17f-2 under the 1940 Act with respect to its duties to be
performed pursuant to this Agreement.
24. Compensation. As compensation for the services rendered by the
Custodian during the term of this Agreement, the Trust will pay to the
Custodian, in addition to reimbursement of its reasonable out-of-pocket
expenses, including reasonable counsel fees, monthly fees as outlined in
Schedule D, or as otherwise agreed upon from time to time in writing by the
Custodian and the Trust.
25. Indemnification. The Trust, as sole owner of the Property, agrees
to indemnify and hold harmless the Custodian and its nominees from all taxes,
charges, expenses, assessments,
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claims, and liabilities (including, without limitation, liabilities arising
under the 1933 Act, the Act of 1934, the 1940 Act, the CEA, and any state and
foreign securities and blue sky laws, all as or to be amended from time to time)
and expenses, including (without limitation) attorney's fees and disbursements,
arising directly or indirectly (a) from the fact that securities included in the
Property are registered in the name of any such nominee or (b) without limiting
the generality of the foregoing clause (a) from any action or thing which the
Custodian takes or does or omits to take or do (i) at the request or on the
direction of or in reliance on the advice of the Trust, or (ii) upon Oral or
Written Instructions, provided, that neither the Custodian nor any of its
nominees or subcustodian shall be indemnified against any liability to any Fund
of the Trust or to its shareholders (or any expenses incident to such liability)
arising out of (x) the Custodian's or such nominee's or subcustodian's own
willful misfeasance, bad faith, negligence or reckless disregard of its duties
under this Agreement or (y) the Custodian's own negligent failure to perform its
duties under this Agreement. In the event of any advance of cash for any purpose
made by the Custodian resulting from Oral or Written Instructions of the Trust,
or in the event that the Custodian or its nominee or subcustodian shall incur or
be assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's or subcustodian's own negligent action, negligent failure
to act, willful misconduct,
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or reckless disregard, the Trust shall promptly reimburse the Custodian for such
advance of cash or such taxes, charges, expenses, assessment claims or
liabilities.
26. Responsibility of The Custodian. The Custodian shall be under no
duty to take any action on behalf of the Trust except as specifically set forth
herein or as may be specifically agreed to by the Custodian in writing. In the
performance of its duties hereunder, the Custodian shall be obligated to
exercise reasonable care and diligence and to act in good faith to insure the
accuracy of all services performed under this Agreement. The Custodian shall be
responsible for its own negligent failure or that of any subcustodian it shall
appoint to perform its duties under this Agreement but to the extent that
duties, obligations and responsibilities are not expressly set forth in this
Agreement, the Custodian shall not be liable for any act or omission which does
not constitute willful misfeasance, bad faith, or negligence on the part of the
Custodian or reckless disregard of such duties, obligations and
responsibilities. Without limiting the generality of the foregoing or of any
other provision of this Agreement, the Custodian in connection with its duties
under this Agreement shall not be under any duty or obligation to inquire into
and shall not be liable for or in respect of (a) the validity or invalidity or
authority or lack thereof of any advice, direction, notice or other instrument
which conforms to the applicable requirements of this Agreement, if any, and
which the Custodian believes to be genuine, (b) the validity of the issue of any
securities purchased or sold by the
-31-
Trust, the legality of the purchase or sale thereof or the propriety of the
amount paid or received therefore, (c) the legality of the issue or sale of any
Shares, or the sufficiency of the amount to be received therefore, (d) delays or
errors or loss of data occurring by reason of circumstances beyond the
Custodian's control, including acts of civil or military authority, national
emergencies, strikes or work stoppages, fire, mechanical breakdown (except as
provided in Paragraph 22), flood or catastrophe, acts of God, insurrection, acts
of war or terrorism, riots, revolutions, nuclear fusion, fission or radiation,
or failure of the mail, transportation, communication or power supply. Without
limiting the foregoing, the Custodian shall not be liable for any loss which
results from: (1) the general risk of investing, or (2) investing or holding
Trust assets 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 assets.
27. Collection. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by the Custodian) shall be at the sole risk of the Trust.
In any case in which the Custodian does not receive any payment due the Trust
within a reasonable time after the Custodian has made proper demands for the
same, it shall so notify the Trust in writing, including
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copies of all demand letters, any written responses thereto, and memoranda of
all oral responses thereto, and to telephonic demands, and await instructions
from the Trust. The Custodian shall not be obliged to take legal action for
collection unless and until reasonably indemnified to its satisfaction. The
Custodian shall also notify the Trust as soon as reasonably practicable whenever
income due on securities is not collected in due course.
28. Duration and Termination. This Agreement shall be effective as of
the date hereof and shall continue until termination by the Trust or by the
Custodian on 90 days' written notice. Upon any termination of this Agreement,
pending appointment of a successor to the Custodian or a vote of the
shareholders of the Trust to dissolve or to function without a custodian of its
cash, securities or other property, the Custodian shall not deliver cash,
securities or other property of the Trust to the Trust, but may deliver them to
a bank or trust company of its own selection, having aggregate capital, surplus
and undivided profits, as shown by its last published report of not less than
twenty million dollars ($20,000,000) as a custodian for the Trust to be held
under terms similar to those of this Agreement, provided, however, that the
Custodian shall not be required to make any such delivery or payment until full
payment shall have been made by the Trust of all liabilities constituting a
charge on or against the properties then held by the Custodian or on or against
the Custodian and until full payment shall have been made to the Custodian of
all of its fee, compensation, costs
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and expenses, subject to the provisions of Paragraph 22 of this Agreement.
29. Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall be in
writing or by confirmed telegram, cable, telex, or facsimile sending device.
Notices shall be addressed (a) if to the Custodian, The Chase Manhattan Bank,
Institutional Custody & Escrow, One Chase Manhattan Plaza Floor 3B, New York,
New York 10081, Attention: Xxxx Xxxxxxx; (b) if to the Trust, at the address of
the Trust, Attention: Xxxxxx X. Xxxx, Assistant Secretary; or (c) if to neither
of the foregoing, at such other address as shall have been notified to the
sender of any such Notice or other communication. Notice shall be deemed to have
been given when actually received by the other party. All postage, cable,
telegram, telex and facsimile sending device charges arising from the sending of
a Notice hereunder shall be paid by the sender.
30. Further Actions. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
31. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
32. Miscellaneous. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to
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the subject matter hereof. The captions in this 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. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the day and year first
above written.
EMERGING GROWTH PORTFOLIO
By: _________________________ ATTEST: ______________________
Title Title
THE CHASE MANHATTAN BANK
By: _________________________ ATTEST: ______________________
Title Title
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SCHEDULE B
H. Xxxxxxx Xxxxxxxxxxx Chairman of the Board
Xxxxx X. Xxxxxxxxx Assistant Treasurer
Xxxxx X. Xxxxxx Assistant Secretary
Xxxxx Xxxxxxxxx Assistant Treasurer
Xxxxxx X. Xxxx Vice President and Assistant
Secretary
Xxxx X. Xxxx Assistant Treasurer
Xxxxxx X. Xxxxxxx Assistant Secretary
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