Exhibit 99(g)
CUSTODIAN AGREEMENT
Dated as of:
Between
VALUE LINE STRATEGIC ASSET MANAGEMENT TRUST
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
PAGE
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1. Bank Appointed Custodian .......................................... 1
2. Definitions ....................................................... 1
(a) Authorized Person ............................................ 1
(b) Security ..................................................... 2
(c) Portfolio Security ........................................... 2
(d) Officers' Certificate ........................................ 2
(e) Book-Entry System and Depository ............................. 2
3. A. Proper Instructions .......................................... 3
B. Bank's Communications with Fund .............................. 4
4. Separate Accounts ................................................. 5
5. Certification as to Authorized Persons ............................ 5
6. Custody of Cash and Securities .................................... 6
A. Cash ......................................................... 6
(a) Purchase of Securities .................................. 6
(b) Redemptions ............................................. 7
(c) Distributions and Expenses of Fund ...................... 7
(d) Payment in Respect of Securities ........................ 7
(e) Repayment of Cash ....................................... 7
(f) Other Authorized Payments ............................... 8
(g) Termination ............................................. 8
B. Securities ................................................... 8
(a) Book-Entry System ....................................... 10
(b) Use of Direct Paper System for Commercial Paper ......... 12
C. Options and Futures Transactions ............................. 14
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter .............................. 14
(b) Puts, Calls and Futures Traded on Commodities
Exchanges ............................................... 15
(c) Segregated Account ...................................... 16
D. Segregated Account for "when issued", "forward commitment"
and Reverse Repurchase Agreement Transactions ................ 17
7. Transfer of Securities ............................................ 18
8. Redemptions ....................................................... 20
9. Merger, Dissolution, etc. of Fund ................................. 20
10. Actions of Bank Without Prior Authorization ....................... 21
11. Maintenance of Records and Confidentiality ........................ 23
12. Concerning the Bank .............................................. 23
A. Performance of Duties ....................................... 23
B. Responsibility of Custodian ................................. 24
C. No Duty of Bank ............................................. 24
D. Fees and Expenses of Bank ................................... 25
E. Advances by Bank ............................................ 26
13. Termination ...................................................... 26
14. Notices .......................................................... 28
15. Amendments ....................................................... 29
16. Parties .......................................................... 29
17. Governing Law .................................................... 29
CUSTODIAN AGREEMENT
AGREEMENT made as of this 21 day of June, 1990 between VALUE LINE
STRATEGIC ASSET MANAGEMENT TRUST, a business trust established under the laws
of Massachusetts (the "Fund"), and STATE STREET BANK AND TRUST COMPANY
("Bank").
The Fund, an open-end management investment company, desires to place
and maintain its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1)
of the Investment Company Act of 1940 to act as custodian of the portfolio
securities and cash of the Fund, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. BANK APPOINTED CUSTODIAN. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described, and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. Whenever used herein, the terms listed below will have
the following meaning:
(a) AUTHORIZED PERSON. Authorized person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of the Board of Trustees.
(b) SECURITY. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933 as amended,
including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share, investment
contract, voting-trust certificate, certificate of deposit for a security,
fractional undivided interest in oil, gas, or other mineral rights, any put,
call, straddle, option, or privilege on any security, certificate of deposit,
or group or index of securities (including any interest therein or based on
the value thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to a foreign currency, or, in
general, any interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to, or
option contract to purchase or sell any of the foregoing and futures, forward
contracts and options thereon.
(c) PORTFOLIO SECURITY. Portfolio security will mean any security
owned by the Fund.
(d) OFFICERS' CERTIFICATE. Officers' Certificate will mean unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons on the Fund.
(e) BOOK-ENTRY SYSTEM AND DEPOSITORY. Book-Entry System shall mean
the Federal Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Banks, its successor or successors and its nominee or nominees.
Depository shall mean the Depository
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Trust Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934,
it successor or successors and its nominee or nominees. The term "Depository"
shall further mean and include any other person authorized to act as a
depository under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Fund's Trustees.
3A. PROPER INSTRUCTIONS. For purposes of this Agreement, "Proper
Instructions" shall mean (i) instructions regarding the purchase or sale of
securities for the portfolio of the Fund, and payments and deliveries in
connection therewith, given by an Authorized Person as designated in an
Officers' Certificate, such instructions to be given in such form and manner
as the Bank and the Fund shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialled by such one or more persons from time to time designated
in an Officers' Certificate as having been authorized by the Trustees of the
Fund. Oral instructions given by a person whom the Bank reasonably believes
to be authorized to give such instructions with respect to the transaction
involved will be considered Proper Instructions only if the Bank receives
written instructions (which may be sent by telecopier) confirming such oral
instructions, provided however that if the Bank is notified by an Authorized
Person of the Fund that the Fund is unable to promptly confirm such oral
instructions in writing, then the Bank may act upon receipt of a second oral
instructions confirming such prior oral instruction. The Bank shall compare
the original oral instruction with any confirmatory written or oral
instruction, as the case may be, and shall report any discrepancy to the
Fund immediately, and the Bank shall be responsible for any expense incurred
in taking any action, including any reprocessing, necessary to correct any
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such discrepancy or error in Proper Instructions given by the Fund, to the
extent such expense is caused by the unreasonable delay of the Bank in
reporting such discrepancy to the Fund. Except as provided in the preceeding
sentence, the Fund shall be responsible, at the Fund's expense, for taking
any action, including any reprocessing, necessary to correct any such
discrepancy or error in Proper Instructions given by the Fund, and to the
extent such action requires the Bank to act, the Fund shall give the Bank
specific Proper Instructions as to the action required. The Bank shall act
upon and comply with any subsequent Proper Instructions which modifies a
prior Proper Instruction. Upon receipt of an Officer's Certificate as to the
authorization by the Trustees of the Fund accompanied by a detailed
description of procedures approved by the Fund, Proper Instructions may
include communication effected directly between electro-mechanical or
electronic devices provide that the Trustees and the Bank are satisfied that
such procedures afford adequate safeguards for the Fund's assets.
3B. BANK'S COMMUNICATIONS WITH FUND. For purposes of this Agreement, all
communications from the Bank to the Fund shall be in writing (which may be
sent by means of a telecopier) and any such writing reasonably believed by
the Fund to be from a person authorized to make such communication on behalf
of the Bank may be relied upon the Fund. An oral communication from a person
whom the Fund reasonably believes to be authorized to make such communication
on behalf of the Bank with respect to the transaction may be relied upon by
the Fund only if the Fund receives a written communication (which may be sent
by telecopier) confirming such oral communication, provided however, that if
the Fund is notified by such authorized person that the Bank is unable to
promptly confirm such oral communication in writing, then the Fund may act in
reliance upon receipt of a second oral communication confirming such prior
oral communication. The Fund shall compare the original oral communication
with any confirmatory written or oral
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communication, as the case may be, and shall report any discrepancy to the
Bank immediately, and the Fund shall be responsible for any expense incurred
in taking any action, including any reprocessing, necessary to correct any
such discrepancy or error in communications given by the Bank, to the extent
such expense is caused by the unreasonable delay of the Fund in reporting
such discrepancy to the Bank. Except as provided in the preceding sentence,
the Bank shall be responsible, at the Bank's expense, for any action taken,
including any reprocessing, necessary to correct any such discrepancy or
error in communications given by the Bank, and to the extent such action
requires the Bank to act, the Fund shall give the Bank specific Proper
Instructions as to the action required. The Fund may act in reliance upon any
subsequent communication from the Bank which modifies a prior communication.
4. SEPARATE ACCOUNTS. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of the Fund into a Separate Account for
each such series or portfolio containing the assets of such series or
portfolio (and all investment earnings thereon), all as directed from time to
time by Proper Instructions.
5. CERTIFICATION AS TO AUTHORIZED PERSONS. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his
certification to the Bank, in such form as may be acceptable to the Bank, of
the names and signatures of the Authorized Persons, it being understood that
upon the occurrence of any change in the information set forth in the most
recent certification on file (including without limitation any person named
in the most recent certification who is no longer an Authorized Person as
designated therein), the Secretary or Assistant Secretary of the Fund will
sign a new or amended certification setting forth the change and the new,
additional or omitted names or signatures. The Bank will be entitled to rely
and act upon any Officers' Certificate given to
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it by the Fund which has been signed by Officers named in the most recent
certification.
6. CUSTODY OF CASH AND SECURITIES. As custodian for the Fund, the Bank
will keep safely all of the portfolio securities delivered to the Bank, and
will deposit to the account of the Fund all of the cash of the Fund delivered
to the Bank, as set forth below.
A. CASH. The Bank will open and maintain a separate account or
accounts in the name of the Fund or in the name of the Bank, as custodian of
the Fund, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. The Bank will hold in such account or accounts as
custodian, subject to the provisions hereof (including sections 6(C) and
6(D), all cash received by it, for the account of the Fund. Upon receipt by
the Bank of Proper Instructions (which may be continuing instructions) or in
the case of payments for redemptions and repurchases of outstanding shares of
beneficial interest of the Fund, notification from the Fund's transfer agent
as provided in Section 8, requesting such payment, designating the payee or
the account or accounts to which the Bank will release funds or deposit, and
stating that it is for a purpose permitted under the terms of this Section
6(A), specifying the applicable subsection, or describing such purpose with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
(a)-(g) below.
(a) PURCHASE OF SECURITIES: upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank
registered in the name of the Fund or in the name of, or properly endorsed
and in form for transfer to, the Bank, or a nominee of the Bank, or
receipt for the account of the Bank through use of (1) the
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Book-Entry System pursuant to Section 6(B)(a)(3) below, (2) a Depository
pursuant to 6(B)(b) below, or (3) Book Entry Paper pursuant to Section
6(B)(c) below, each such payment to be made at the purchase price shown
on a broker's confirmation (or transaction report in the case of Book
Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by
the Bank before payment is made;
(b) REDEMPTIONS: in such amount as may be necessary for the
repurchase or redemption of shares of beneficial interest of the Fund
offered for repurchase or redemption in accordance with Section 8 of this
Agreement;
(c) DISTRIBUTIONS AND EXPENSES OF FUND: for the payment on the
account of the Fund of dividends or other distributions to shareholders as
may from time to time be declared by the Trustees of the Fund, interest,
taxes, management or supervisory fees, distribution fees, fees of the Bank
for its services hereunder and reimbursement of the expenses and
liabilities of the Bank as provided hereunder, fees of any transfer agent,
fees for legal, accounting, and auditing services, or other operating
expenses of the Fund;
(d) PAYMENT IN RESPECT OF SECURITIES: for payments in connection
with the conversion, exchange or surrender of portfolio securities or
securities subscribed to by the Fund held by or to be delivered to the
Bank;
(e) REPAYMENT OF CASH: to repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Trust representing portfolio securities,
but only upon redelivery to the Bank of such borrowed certificates;
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(f) OTHER AUTHORIZED PAYMENTS: for other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Trustees signed by an
Authorized Person of the Fund (other than the Person certifying such
resolution) and certified by its Clerk or Assistant Clerk, naming the
person or persons to whom such payment is to be made, and either
describing the transaction for which payment is to be made and declaring
it to be an authorized transaction of the Fund, or specifying the amount
of the obligation for which payment is to be made, setting forth the
purpose for which such obligation was incurred and declaring such purpose
to be a proper corporate purpose; and
(g) TERMINATION: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 9 and Section 13 of this
Agreement.
The Bank is hereby authorized to endorse for collection and collect on
behalf of and in the name of the Fund all checks, drafts, or other negotiable
or transferrable instruments or other orders for the payment of money
received by it for the account of the Fund.
B. SECURITIES. Except as provided in subsections (a), (b) and (c) of
this Section 6(B), and in Sections 6(C) and 6(D), the Bank as custodian, will
receive and hold pursuant to the provisions hereof, in a separate account or
accounts and physically segregated at all times from those of other persons,
any and all portfolio securities which may now or hereafter be delivered to
it by or for the account of the Fund. All such portfolio securities will be
held or disposed of by the Bank for, and subject at all times to, the
instructions of the Fund pursuant to the terms of this Agreement. Subject to
the
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specific provisions in Subparagraphs (a), (b), and (c) relating to securities
that are not physically held by the Bank, the Bank will register all
portfolio securities (unless otherwise directed by Proper Instructions or an
Officers' Certificate), in the name of a registered nominee of the Bank as
defined in the Internal Revenue Code and any Regulations of the Treasury
Department issued thereunder, which nominee shall be exclusively assigned to
the Fund, and will execute and deliver all such certificates in connection
therewith as may be required by such laws or Regulations or under the laws of
any state. The Bank will ensure that the specific portfolio securities of the
Fund held by it hereunder will be at all times identifiable.
The Bank will use the same care with respect to the safekeeping of
portfolio securities and cash of the Fund held by it as it uses in respect of
its own similar property but it need not maintain any special insurance for
the benefit of the Fund.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or
to register in the name of its registered nominee, any securities which it
may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
Neither the Bank nor any nominee of the Bank will vote any of the
portfolio securities held hereunder by or for the account of the Fund, except
in accordance with Proper Instructions of an Officers' Certificate.
The Bank will execute and deliver, or cause to be executed and
delivered, to the Fund all notices, proxies and proxy soliciting materials
with respect to such securities, such proxies to be executed by the
registered holder of such securities (if registered otherwise than in the
name of the Fund), but without indicating the manner in which such proxies are
to be voted.
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(a) BOOK-ENTRY SYSTEM. Provided (i) the Bank has received a certified
copy of a resolution of the Trustees of the Fund specifically approving
deposits of the Fund assets in the Book-Entry System, indicating that, and
(ii) for each year following such approval, the Trustees of the Fund has
reviewed and approved the arrangement and has not delivered an Officer's
Certificate to the Bank indicating that it has withdrawn its approval:
1. The Bank may keep Securities of the Fund in the Book-Entry
System provided that such securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not
include any assets of the Bank (or such agent) other than assets held as
a fiduciary, custodian, or otherwise for customers.
2. The records of the Bank (and any such agent) with respect to the
Fund's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry securities belonging to the Fund
which are included with other securities deposited in the Account and
shall at all times during the regular business hours of the Bank (or
such agent) be open for inspection by duly authorized officers,
employees or agents of the Fund. Where securities are transferred to the
Fund's account, the bank shall also, by book entry or otherwise,
identify as belonging to the Fund a quantity of securities in fungible
bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal
Reserve Bank.
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3. The Bank (or its agent) shall pay for securities purchased for
the account of the Fund or shall pay cash collateral against the return
of securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the
Account, and (ii) the making of an entry on the records of the Bank (or
its agent) to reflect such payment and transfer for the account of the
Fund. The Bank (or its agent) shall transfer securities sold or loaned
for the account of the Fund upon
(a) receipt of advice from the Book-Entry System that payment
for Securities sold or payment of the initial cash collateral
against the delivery of securities loaned by the Fund has been
transferred to the Account, and
(b) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the
Fund. Copies of all advices from the Book-Entry System of transfers
of Securities for the account of the Fund shall identify the Fund,
be maintained for the Fund by the Bank and shall be provided to the
Fund at its request. The Bank shall send the Fund a confirmation,
as defined by Rule 17f-4 under the Investment Company Act of 1940,
of any transfers to or from the account of the Fund.
4. The Bank will promptly provide the Fund with any report obtained
by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding Securities
deposited in the Book-Entry System. The
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Bank will provide the Fund and cause any such agent to provide, at such
times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control
and procedures for safeguarding securities, including Securities
deposited in the Book-Entry System, relating to the services provided by
the Bank or such agent under the Agreement.
5. Anything to the contrary in the Agreement notwithstanding, the
Bank shall be liable to the Fund for any loss or damage to the Fund
resulting from use of the Book-Entry System by reason of any gross
negligence, wilful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless
disregard by the Bank or any such agent of its duty to enforce
effectively such rights as it may have against the Book-Entry System; at
the election of the Fund, it shall be entitled to be subrogated for the
Bank in any claim against the Book-Entry System or any other person
which the Bank or its agent may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole for
any loss or damage.
(b) USE OF DIRECT PAPER SYSTEM FOR COMMERCIAL PAPER. Provided (i) the
Bank has received a certified copy of a resolution of the Fund's Trustees
specifically approving participation in a system maintained by the Bank for
the holding of commercial paper in direct paper form ("Direct Paper") and
(ii) for each year following such approval the Trustees of the Fund have
received and approved the arrangements, upon receipt of Proper Instructions
and upon receipt of confirmation from an Issuer (as defined below) that the
Fund has purchased such Issuer's Direct Paper,
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the Bank shall issue and hold in direct paper form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
direct paper agreement (the "Issuers"). In maintaining its Direct Paper
System, the Bank agrees that:
1. the Bank will maintain all Direct Paper held by the Fund in an
account of the Bank that includes only assets held by it for customers;
2. the records of the Bank with respect to the Fund's purchase of
Direct Paper through the bank will identify, by book entry, Commercial
Paper belonging to the Fund which is included in the District Paper
System and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or
agents of the Fund.
3. (a) The Bank shall pay for Direct Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Direct Paper has been effected, and (ii) the
making of an entry on the records of the Bank to reflect such payment
and transfer for the account of the Fund.
(b) The Bank shall cancel such Direct Paper obligation upon the
maturity thereof upon contemporaneous (i) receipt of advice that payment
for such Direct Paper has been transferred to the Fund, and (ii) the
making of an entry on the records of the Bank to reflect such payment
for the account of the Fund.
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4. the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Direct Paper for the account of the
Fund on the next business day following the transaction;
5. the Bank will send to the Fund such reports on its system
of internal accounting control as the Fund may reasonably request
from time to time;
C. Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the
provisions of any agreement entered into upon receipt of Proper
Instructions between the Bank, any broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National
Association of Securities Dealers, Inc., and, if necessary, the
Fund relating to the compliance with the rules of the Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank shall be
under no duty or obligation to see that the Fund has deposited or
is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under any duty or
obligation to present such option to the broker for exercise unless
it receives Proper Instructions from the Fund. The Bank shall have no
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responsibility for the legality of any put or call purchased or
sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in
connection with an option or deposited to or withdrawn from a
Segregated Account as described in sub-paragraph c of this Section
6(C). The Bank specifically, but not by way of limitation, shall
not be under any duty or obligation to: (i) periodically check or
notify the Fund that the amount of such collateral held by a broker
or held in a Segregated Account as described in sub-paragraph (c)
of this Section 6(C) is sufficient to protect such broker of the
Fund against any loss; (ii) effect the return of any collateral
delivered to a broker; or (iii) advise the Fund that any option it
holds, has or is about to expire. Such duties or obligations shall
be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges.
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance
with the provisions of any agreement among the Fund, the Bank and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
Futures, puts and calls traded on commodities exchanges, any
Futures Commission Merchant
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account and the Segregated Account shall be limited as set forth in
sub-paragraph (a)(2) of this Section 6(C) as if such sub-paragraph
referred to Futures Commission Merchants rather than brokers, and
Futures and puts and calls thereon instead of options.
(c) Segregated Account.
The Bank shall upon receipt of Proper Instructions establish and
maintain a Segregated Account or Accounts for and on behalf of the Fund,
into which Account or Accounts may be transferred cash and/or securities
including securities maintained in an Account by the Bank pursuant to
Section 6(B) hereof, (i) in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered under
the Exchange Act and a member of the NASD or any Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange or the Commodity Futures Trading
Commission or any registered Contract Market, or of any similar
organization or organizations regarding escrow or other arrangements in
connection with transactions by the Fund, and (ii) for the purpose of
segregating cash or securities in connection with options purchased or
written by the Fund, or commodity futures purchased or written by the
Fund, and (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered
investment companies and (iv) for other proper corporate purposes, but
only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Trustees of the
Fund signed by an officer of the Fund and
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certified by the Clerk of an Assistant Clerk, setting forth the purpose
or purposes of such Segregated Account and declaring such purposes to be
proper corporate purposes.
D. Segregated Account for "when-issued", "forward commitment" and
reverse repurchase agreement transactions. Notwithstanding the provisions of
Section 6(A), 6(B) and 6(C) hereof, the Bank will maintain a segregated
account (the "Segregated Account") in the name of the Fund (i) for the
deposit of liquid assets, such as cash, U.S. Government securities or other
high grade debt obligations, having a market value (marked to the market on a
daily basis) at all times equal to not less than the aggregate purchase price
due on the settlement dates of all the Fund's then outstanding forward
commitment or "when-issued" agreements relating to the purchase of portfolio
securities and all the Fund's then outstanding commitments under reverse
repurchase agreements entered into with broker-dealer firms, and (ii) for the
deposit of any portfolio securities which the Fund has agreed to sell on a
forward commitment basis, all in accordance with Securities and Exchange
Commission Release No. IC-10666. No assets shall be deposited in the
Segregated Account except pursuant to Proper Instructions. Assets may be
withdrawn from the segregated account pursuant to Proper Instructions only
(a) for sale or delivery to meet the Fund's obligations under outstanding firm
commitment or when-issued agreements for the purchase of portfolio securities
and under reverse repurchase agreements, (b) for exchange for other liquid
assets of equal or greater value deposited in the Segregated Account, (c) to
the extent that the Fund's outstanding forward commitment or when-issued
agreements for the purchase of portfolio securities or reverse repurchase
agreements are sold to other parties or the Fund's obligations thereunder are
met from assets of the Fund other than those in the Segregated Account, or
(d) for delivery upon settlement of a forward commitment agreement for the
sale of portfolio securities.
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7. TRANSFER OF SECURITIES. The Bank will transfer, exchange, deliver or
release portfolio securities held by it hereunder, insofar as such securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it
is for a purpose permitted under the terms of this Section 7, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of portfolio securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment
therefor in full, each such payment to be in the amount of the sale
price shown in a broker's confirmation of sale of the portfolio
securities received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank before such
payment is made, provided however, that portfolio securities may be
delivered to the broker selling the same for examination in
accordance with "street delivery" custom;
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan or merger,
consolidation, reorganization share split-up, change in par-value,
recapitalization or readjustment or otherwise;
(c) upon conversion of portfolio securities pursuant to their
terms into other securities;
(d) upon exercise of subscription, purchase sale or other
similar rights represented by such portfolio securities;
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(e) for the purpose of redeeming in kind shares of beneficial
interest of the Fund upon authorization from the Fund;
(f) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(g) when such portfolio securities are called, redeemed or
retired or otherwise become payable;
(h) for the purpose of releasing certificates representing
portfolio securities of the Fund, against contemporaneous receipt by
the Bank of the fair market value of such security, as set forth in
Proper Instructions received by the Bank before such payment is made;
(i) for the purpose of tendering shares pursuant to a tender
offer therefore;
(j) for the purpose of delivering securities lent by the Fund
to a bank or broker-dealer, but only against receipt in accordance
with street delivery custom, except as otherwise provided in
Subsections 6(B)(a) and (b) hereof, of adequate collateral as agreed
upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such
securities entered into by the Fund;
(k) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer,
the Bank will also receive a certified copy of resolution of the
Trustees of the Fund, signed by an authorized officer of the Fund
(other than the officer certifying such resolution) and certified
by its Secretary or Assistant Secretary, specifying the portfolio
securities to be delivered, setting forth the transaction
-19-
in or purpose for which such delivery is to be made, declaring such
transaction to be an authorized transaction of the Fund or such purpose
to be a proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made; and
(l) upon termination of this Agreement as hereinafter set
forth pursuant to Section 9 and Section 13 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (d), (f), (g), (h), (i), and (j) securities or cash receivable in
exchange therefore shall be delivered to the Bank.
8. REDEMPTIONS. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding shares of beneficial interest, the Bank will rely on notification
by the Fund's transfer agent if receipt of a request for redemption and
certificates, if issued, in proper form for redemption before such payment
is made. Payment shall be made in accordance with the Declaration of Trust of
the Fund, from assets available for said purposes.
9. MERGER, DISSOLUTION, ETC. OF FUND. In the case of the following
transactions not in the ordinary course of business, namely, the merger of
the Fund into or the consolidation of the Fund with another investment
company, the sale by the Fund of all, or substantially all of its assets to
another investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the portfolio securities
held by it under this Agreement and disburse cash only upon the order of the
Fund set forth in an Officers' Certificate, accompanied by a certified copy
of a resolution of the Fund's Trustees authorizing any of the foregoing
-20-
transactions. Upon completion of such delivery and disbursement and the
payment of the fees, disbursements and expenses of the Bank due to the Bank
pursuant to Section 12E hereof, this Agreement will terminate.
10. ACTIONS OF BANK WITHOUT PRIOR AUTHORIZATION. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Fund or the transfer agent:
(a) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof, all
income, dividends, interest and other payments or distribution of cash
with respect to the portfolio securities held thereunder;
(b) Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation
and hold the cash received by it upon such payment for the account of the
Fund in the account or accounts referred to in Section 6 hereof;
(c) Receive and hold for the account of the Fund hereunder and
deposit in the account or accounts referred to in Section 6 hereof all
securities received as a distribution on portfolio securities as a result
of a stock dividend, share split-up, reorganization, recapitalization,
merger, consolidation, readjustment, distribution of rights and similar
securities issued with respect to any portfolio securities held by it
hereunder.
(d) Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or
by the laws
-21-
of any state, now or hereafter in effect, inserting the Fund's name on
such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection with portfolio securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, or
under the laws of any State;
(e) Present for payment all portfolio securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by
it upon payment for the account of the Fund in the account or accounts
referred to in Section 6 hereof; and
(f) Exchange interim receipts or temporary securities for
definitive securities.
The Bank will use all diligence to collect any funds which may to its
knowledge become collectible arising from such securities, including
dividends, interest and other income, and to transmit to the Fund notice
actually received by it of any call for redemption, offer of exchange, right
of subscription, reorganization or other proceedings affecting such
securities.
If portfolio securities upon which such income is payable are in default
or payment is refused after due demand or presentation, the Bank will notify
the Fund by telecopier of any default or refusal to pay no later than one
business day from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any portfolio security held by it which is more
than ten days overdue on the date of such report and which has not previously
been reported.
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11. MAINTENANCE OF RECORDS. The Bank will maintain records with
respect to transactions for which the Bank is responsible pursuant to the
terms and conditions of this Agreement and in compliance with the applicable
rules and regulations under the Investment Company Act of 1940 as amended,
and will furnish the Fund daily with a statement of condition of the Fund.
The Bank will furnish to the Fund at the end of every month, and at the close
of each quarter of the Fund's fiscal year, a list of the portfolio securities
and the aggregate amount of cash held by it for the Fund. The books and
records of the Bank pertaining to its actions under this Agreement and
reports by the Bank or its independent accountants concerning its accounting
system, procedures for safeguarding securities and internal accounting
controls will be open to inspection and audit at reasonable times by officers
of or auditors employed by the Fund and will be preserved by the Bank in the
manner and in accordance with the applicable rules and regulations under the
Investment Company Act of 1940.
The Bank agrees to treat all records and other information relative to
the Fund and its shareholders as confidential, except it may disclose such
information after prior notification to and approval in writing by the Fund,
which approval shall not be unreasonably withheld. Nothing in this Section 11
shall prevent the Bank from divulging information to bank or securities
regulatory authorities or where the Bank may be exposed to civil or criminal
contempt proceedings for failure to comply.
12. CONCERNING THE BANK.
A. PERFORMANCE OF DUTIES.
(1) The Bank and the Fund shall each exercise reasonable care
in the performance of their respective duties and functions under
this Agreement.
-23-
(2) In its dealings with the Fund, the Bank shall be entitled
to rely upon any Officers' Certificate, Proper Instructions,
resolution of the Trustees, telegram, facsimile communication,
written notice, or certificate.
B. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to
this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed
by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms
of a three-party futures or options agreement. The Custodian shall be
held harmless and be protected by the Fund and shall be held to the
exercise of reasonable care in carrying out the Proper Instructions of
the Fund. It shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Fund) or mutually acceptable to both
parties on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
C. NO DUTY OF BANK. The Bank will be under no duty or obligation
to inquire into and will not be liable for:
(a) the validity of the issue of any portfolio securities
purchased by or for the Fund, the legality of the purchases thereof
or the propriety of the price incurred therefor;
-24-
(b) the legality of any sale of any portfolio securities by or
for the Fund or the propriety of the amount for which the same are
sold;
(c) the legality of an issue or sale of any shares of common
stock of the Fund or the sufficiency of the amount to be received
therefor provided that it reflects the net asset value as provided
by the Fund;
(d) the legality of the repurchase of any shares of common
stock of the Fund or the propriety of the amount to be paid
therefor provided that it reflects the net asset value as provided
by the Fund;
(e) the legality of the declaration of any dividend by the Fund
or the legality of the distribution of any portfolio securities as
payment in kind of such dividend; or
(f) any property or moneys of the Fund unless and until
received by it, except as otherwise provided in Section 10 hereof,
and any such property or moneys delivered or paid by it pursuant to
the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any portfolio securities at any time delivered to or held by it for
the account of the Fund are such as may properly be held by the Fund under
the provisions of its Agreement and Declaration of Fund or By-Laws, any
federal or state statutes or any rule or regulation of any governmental
agency.
D. FEES AND EXPENSES OF BANK. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of
portfolio securities made hereunder, and for the Bank's normal
disbursements,
-25-
expenses and charges made or incurred by the Bank in the performance of
this Agreement (including any duties listed on any Schedule hereto, if
any). For the services rendered by the Bank hereunder, the Fund will pay
to the Bank such compensation or fees at such rate and at such times as
shall be agreed upon in writing by the parties from time to time. The
Bank will also be entitled to reimbursement by the Fund for normal
industry costs for securities transfers and services incurred in
conjunction with termination of this Agreement by the Fund.
E. ADVANCES BY BANK. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of Proper Instructions as required by this
Agreement for such payments by the Fund. Should such a payment or
payments, with advanced funds, result in an overdraft (due to
insufficiencies of the Fund's account with the Bank, or for any other
reason) any such related indebtedness shall be deemed a loan made by the
Bank to the Fund payable on demand and bearing interest at the current
rate charged by the Bank for such loans unless the Fund shall provide the
Bank with agreed-upon compensating balances. The Fund authorizes the
Bank, in its sole discretion, at any time to charge any overdraft or
indebtedness, together with interest due thereon, against any balance of
account standing to the credit of the Fund on the Bank's books.
13. TERMINATION.
(a) This Agreement may be terminated at any time without penalty
upon ninety days written notice delivered by either party to the other
by means of registered mail, and upon the expiration of such ninety days
this Agreement will terminate; provided, however, that the effective
date of such termination may be postponed to a date of delivery
-26-
of such notice (i) by the Bank in order to prepare for the transfer by
the Bank of all of the assets of the Fund held hereunder, and (ii) by the
Fund in order to give the Fund an opportunity to make suitable
arrangements for a successor custodian. At any time after the
termination of this Agreement, the Fund will, at its request, have access
to the records of the Bank relating to the performance of its duties as
custodian.
(b) In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion
the transfer of all cash and the delivery of all portfolio securities
duly endorsed and all records maintained under Section 11 to the
successor custodian when appointed by the Fund. The obligation of the
Bank to deliver and transfer over the assets of the Fund held by it
directly to such successor custodian will commence as soon as such
successor is appointed and will continue until completed as aforesaid.
If the Fund does not select a successor custodian within ninety days
from the date of delivery of notice of termination the Bank may, subject
to the provisions of subsection (c) of this Section 13, deliver the
portfolio securities and cash of the Fund held by the Bank to a bank or
trust company of its own selection which meets the requirements of
Section 17(f)(1) of the Investment Company Act of 1940 and has a
reported capital, surplus and undivided profits aggregating not less
than $2,000,000, to be held as the property of the Fund under terms
similar to those on which they were held by the Bank, whereupon such
bank or trust company so selected by the Bank will become the successor
custodian of such assets of the Fund with the same effect as though
selected by the Trustees of the Fund.
-27-
(c) Prior to the expiration of ninety days after notice of
termination has been given, the Fund may furnish the Bank with an order
of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has
been submitted to the shareholders of the Fund the question of whether
the Fund will be liquidated or will function without a custodian for
the assets of the Fund held by the Bank. In that event the Bank will
deliver the portfolio securities and cash of the Fund held by it,
subject as aforesaid, in accordance with one of such alternatives which
may be approved by the requisite vote of shareholders, upon receipt by
the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary.
14. NOTICES. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it
at its office at the address set forth below; namely:
(a) In the case of notice sent to the Fund to:
Value Line Strategic Asset Management Trust
c/o Value Line Inc.
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Treasurer
(b) In the case of notices sent to the Bank to:
State Street Bank and Trust Company
Mutual Fund Services
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
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or at such other place as such party may from time to time designate
in writing.
15. AMENDMENTS. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties, and in the case of the
Fund, such alteration or amendment will be authorized and approved by its
Trustees.
16. PARTIES. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Trustees; and provided
further that termination proceedings pursuant to Section 13 hereof will not
be deemed to be an an assignment within the meaning of this provision.
17. GOVERNING LAW. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
-29-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate and their respective corporate seals to be affixed
hereto as of the date first above written by their respective officers
thereunto duly authorized.
VALUE LINE STRATEGIC ASSET MANAGEMENT
TRUST
By: /s/ [Illegible]
--------------------------
ATTEST:
/s/ [Illegible]
-------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ [Illegible]
--------------------------
ATTEST:
/s/ [Illegible]
-------------------
-30-
Exhibit (g)
AMENDMENT TO CUSTODIAN CONTRACT
AMENDMENT made by and between STATE STREET BANK AND TRUST COMPANY (the
"Custodian") each Fund listed on Appendix A (the "Fund").
WHEREAS, the Custodian and each Fund and parties to a Custodian
Contract, as amended (each a "Custodian Contract") governing the terms and
conditions under which the Custodian maintains custody of the securities and
other assets of the Fund; and
WHEREAS, the Custodian and each Fund desires to amend the relevant
Custodian Contract;
NOW THEREFORE, the Custodian and each Fund hereby amend and revise in
its entirety the defined term "Authorized person" in Section 2(a) of the
Custodian Contract as follows:
"Authorized person" of a Fund shall mean any of the persons duly
authorized to give Proper Instructions or otherwise act with
respect to such Fund on behalf of the Board of Trustees/Directors
of such Fund by appropriate resolution of such Board of
Trustees/Directors, it being understood that the signatures of two
Authorized persons of a Fund shall be required for the release of
the assets of the Fund.
1
Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force
and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative as of
the 1st day of October, 1997.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Executive Vice President
Attest: /s/ Xxxxxx X. Xxxx
--------------------------
Xxxxxx X. Xxxx
Vice President
EACH FUND LISTED ON APPENDIX A
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chairman/President
Attest: Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Secretary
2
APPENDIX A
LIST OF FUNDS
Value Line Aggressive Income Trust
Value Line Asset Allocation Fund, Inc.,
Value Line Cash Fund, Inc., (The)
Value Line Centurion Fund, Inc.
Value Line Convertible Fund, Inc.
Value Line Fund, Inc. (The)
Value Line Income Fund, Inc., (The)
Value Line Leveraged Growth Investors, Inc.
Value Line New York Tax Exempt Trust
Value Line Small-Cap Growth Fund, Inc.
Value Line Special Situations Fund, Inc.
Value Line Strategic Asset Management Trust
Value Line Tax-Exempt Fund, Inc. (The)
Value Line U.S. Government Securities Fund, Inc.
Value Line U.S. Multi-National Company Fund, Inc.
3
