Exhibit (g)(2)
CUSTODY AGREEMENT
THIS AGREEMENT is made and entered into this 14th day of March, 2006, by
and between OHIO NATIONAL FUND, INC., a Maryland corporation, DOW TARGET
VARIABLE FUND, LLC, an Ohio limited liability company (collectively referred to
as the "Corporation"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association organized and existing under the laws of the United States of
America with its principal place of business at Cincinnati, Ohio (the
"Custodian").
WHEREAS, the OHIO NATIONAL FUND, INC., a Maryland corporation (the
"Corporation") is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company, and is
authorized to issue shares of beneficial interest in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Custodian is a bank having the qualifications prescribed in
Section 26(a)(1) of the 1940 Act;
WHEREAS, the Corporation desires to retain the Custodian to act as
custodian of the cash and securities of each series of the Corporation listed on
Exhibit C hereto (as amended from time to time) (each a "Fund" and collectively,
the "Funds"); and
WHEREAS, the Board of Directors of the Corporation has delegated to the
Custodian the responsibilities set forth in Rule 17f-5(c) under the 1940 Act and
the Custodian is willing to undertake the responsibilities and serve as the
foreign custody manager for the Company.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and other good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Whenever used in this Agreement, the following words and phrases shall have
the meanings set forth below unless the context otherwise requires:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and
Written Instructions on behalf of the Fund and named in Exhibit A
hereto or in such resolutions of the Board of Directors, certified by
an Officer, as may be received by the Custodian from time to time.
1.2 "Board of Directors" shall mean the directors from time to time
serving under the Corporation's declaration of trust, as amended from
time to time.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of
31 CFR
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Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc., and any other day for which the
Corporation computes the net asset value of Shares of the Fund.
1.5 "Eligible Foreign Custodian" has the meaning set forth in Rule
17f-5(a)(1), including a majority-owned or indirect subsidiary of a
U.S. Bank (as defined in Rule 17f-5), a bank holding company meeting
the requirements of an Eligible Foreign Custodian (as set forth in
Rule 17f-5 or by other appropriate action of the SEC), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 0000 Xxx)
meeting the requirements of a custodian under Section 17(f) of the
1940 Act; the term does not include any Eligible Securities
Depository.
1.6 "Eligible Securities Depository" shall mean a system for the central
handling of securities as that term is defined in Rule 17f-4 and 17f-7
under the 0000 Xxx.
1.7 "Foreign Securities" means any of the [Corporation's/Fund's]
investments (including foreign currencies) for which the primary
market is outside the United States and such cash and cash equivalents
as are reasonably necessary to effect the [Corporation /Fund's]
transactions in such investments.
1.8 "Fund Custody Account" shall mean any of the accounts in the name of
the Corporation, which is provided for in Section 3.2 below.
1.9 "IRS" shall mean the Internal Revenue Service.
1.10 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.11 "Officer" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Corporation.
1.12 "Oral Instructions" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i)
reasonably believed by the Custodian to have been given by any two
Authorized Persons, (ii) recorded and kept among the records of the
Custodian made in the ordinary course of business, and (iii) orally
confirmed by the Custodian. The Corporation shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction,
it shall in no way affect the validity of the transaction or the
authorization thereof by the Corporation. If Oral Instructions vary
from the Written Instructions that purport to confirm them, the
Custodian shall notify the Corporation of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.13 "Proper Instructions" shall mean Oral Instructions or Written
Instructions.
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1.14 "SEC" shall mean the Securities and Exchange Commission.
1.15 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to
receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or any similar
property or assets that the Custodian or its agents have the
facilities to clear and service.
1.16 "Securities Depository" shall mean The Depository Trust Company and
any other clearing agency registered with the SEC under Section 17A of
the Securities Exchange Act of 1934, as amended (the "1934 Act"),
which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery
of the Securities.
1.17 "Shares" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Corporation on account of the Fund.
1.18 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
bank," as that term is defined in Rule 17f-5 under the 1940 Act, and
(ii) any "Eligible Foreign Custodian" having a contract with the
Custodian which the Custodian has determined will provide reasonable
care of assets of the Fund based on the standards specified in Section
3.3 below. Such contract shall be in writing and shall include
provisions that provide: (i) for indemnification or insurance
arrangements (or any combination of the foregoing) such that the Fund
will be adequately protected against the risk of loss of assets held
in accordance with such contract; (ii) that the Foreign Securities
will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of the Sub-Custodian or its creditors
except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of
the Sub-Custodian arising under bankruptcy, insolvency, or similar
laws; (iii) that beneficial ownership for the Foreign Securities will
be freely transferable without the payment of money or value other
than for safe custody or administration; (iv) that adequate records
will be maintained identifying the assets as belonging to the Fund or
as being held by a third party for the benefit of the Fund; (v) that
the Fund's independent public accountants will be given access to
those records or confirmation of the contents of those records; and
(vi) that the Fund will receive periodic reports with respect to the
safekeeping of the Fund's assets, including, but not limited to,
notification of any transfer to or from a Fund's account or a third
party account containing assets held for the benefit of the Fund. Such
contract may contain, in lieu of any or all of the provisions
specified in (i)-(vi) above, such other provisions that the Custodian
determines will provide, in their entirety, the same or a greater
level of care and protection for Fund assets as the specified
provisions.
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1.19 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by any two Authorized Persons,
(ii) communications by telex or any other such system from one or more
persons reasonably believed by the Custodian to be Authorized Persons,
or (iii) communications between electro-mechanical or electronic
devices provided that the use of such devices and the procedures for
the use thereof shall have been approved by resolutions of the Board
of Directors, a copy of which, certified by an Officer, shall have
been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Corporation hereby appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of
the Fund at any time during the period of this Agreement, on the terms
and conditions set forth in this Agreement, and the Custodian hereby
accepts such appointment and agrees to perform the services and duties
set forth in this Agreement. The Corporation hereby delegates to the
Custodian, subject to Rule 17f-5(b), the responsibilities with respect
to the Fund's Foreign Securities, and the Custodian hereby accepts
such delegation as foreign custody manager with respect to the Fund.
The services and duties of the Custodian shall be confined to those
matters expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Custodian hereunder.
2.2 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by the Corporation:
(a) A copy of the Corporation's declaration of trust, certified by
the Secretary;
(b) A copy of the Corporation's bylaws, certified by the Secretary;
(c) A copy of the resolution of the Board of Directors of the
Corporation appointing the Custodian, certified by the Secretary;
(d) A copy of the current prospectus of the Fund (the "Prospectus");
(e) A certification of the Chairman or the President and the
Secretary of the Corporation setting forth the names and
signatures of the current Officers of the Corporation and other
Authorized Persons; and
(f) An executed authorization required by the Shareholder
Communications Act of 1985, attached hereto as Exhibit E.
2.3 Notice of Appointment of Transfer Agent. The Corporation agrees to
notify the Custodian in writing of the appointment, termination or
change in appointment of any transfer agent of the Fund.
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ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities
maintained in a Securities Depository, Eligible Securities Depository
or Book-Entry System) shall be physically segregated from other
Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other series of
the Corporation, if applicable) and shall be identified as subject to
this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the
Corporation coupled with the name of the Fund, subject only to draft
or order of the Custodian, in which the Custodian shall enter and
carry all Securities, cash and other assets of such Fund which are
delivered to it.
3.3 Appointment of Agents.
(a) In its discretion, the Custodian may appoint one or more
Sub-Custodians to establish and maintain arrangements with (i)
Eligible Securities Depositories or (ii) Eligible Foreign
Custodians who are members of the Sub-Custodian's network to hold
Securities and cash of the Fund and to carry out such other
provisions of this Agreement as it may determine; provided,
however, that the appointment of any such agents and maintenance
of any Securities and cash of the Fund shall be at the
Custodian's expense and shall not relieve the Custodian of any of
its obligations or liabilities under this Agreement. The
Custodian shall be liable for the actions of any Sub-Custodians
(regardless of whether assets are maintained in the custody of a
Sub-Custodian, a member of its network or an Eligible Securities
Depository) appointed by it as if such actions had been done by
the Custodian.
(b) If, after the initial appointment of Sub-Custodians by the Board
of Directors in connection with this Agreement, the Custodian
wishes to appoint other Sub-Custodians to hold property of the
Fund, it will so notify the Corporation and make the necessary
determinations as to any such new Sub-Custodian's eligibility
under Rule 17f-5 under the 1940 Act.
(c) In performing its delegated responsibilities as foreign custody
manager to place or maintain the Fund's assets with a
Sub-Custodian, the Custodian will determine that the Fund's
assets will be subject to reasonable care, based on the standards
applicable to custodians in the country in which the Fund's
assets will be held by that Sub-Custodian, after considering all
factors relevant to safekeeping of such assets, including,
without limitation the factors specified in Rule 17f-5(c)(1).
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(d) The agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(c)(2) under the 1940 Act.
(e) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Directors of the
withdrawal or placement of the Securities and cash of the Fund
with a Sub-Custodian and of any material changes in the Fund's
arrangements. Such reports shall include an analysis of the
custody risks associated with maintaining assets with any
Eligible Securities Depositories. The Custodian shall promptly
take such steps as may be required to withdraw assets of the Fund
from any Sub-Custodian arrangement that has ceased to meet the
requirements of Rule 17f-5 or Rule 17f-7 under the 1940 Act, as
applicable.
(f) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Corporation that it agrees to
exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of property of the
Fund. The Custodian further warrants that the Fund's assets will
be subject to reasonable care if maintained with a Sub-Custodian,
after considering all factors relevant to the safekeeping of such
assets, including, without limitation: (i) the Sub-Custodian's
practices, procedures, and internal controls for certificated
securities (if applicable), its method of keeping custodial
records, and its security and data protection practices; (ii)
whether the Sub-Custodian has the requisite financial strength to
provide reasonable care for Fund assets; (iii) the
Sub-Custodian's general reputation and standing and, in the case
of a Securities Depository, the Securities Depository's operating
history and number of participants; and (iv) whether the Fund
will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of
any offices of the Sub-Custodian in the United States or the
Sub-Custodian's consent to service of process in the United
States.
(g) The Custodian shall establish a system or ensure that its
Sub-Custodian has established a system to monitor on a continuing
basis (i) the appropriateness of maintaining the Fund's assets
with a Sub-Custodian or Eligible Foreign Custodians who are
members of a Sub-Custodian's network; (ii) the performance of the
contract governing the Fund's arrangements with such
Sub-Custodian or Eligible Foreign Custodian's members of a
Sub-Custodian's network; and (iii) the custody risks of
maintaining assets with an Eligible Securities Depository. The
Custodian must promptly notify the Fund or its investment adviser
of any material change in these risks.
(h) The Custodian shall use reasonable commercial efforts to collect
all income and other payments with respect to Foreign Securities
to which the Fund shall be entitled and shall credit such income,
as collected, to the Corporation. In the event that extraordinary
measures are required to collect such income, the Corporation and
Custodian shall consult as to the
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measurers and as to the compensation and expenses of the
Custodian relating to such measures.
3.4 Delivery of Assets to Custodian. The Corporation shall deliver, or
cause to be delivered, to the Custodian all of the Fund's Securities,
cash and other investment assets, including (i) all payments of
income, payments of principal and capital distributions received by
the Fund with respect to such Securities, cash or other assets owned
by the Fund at any time during the period of this Agreement, and (ii)
all cash received by the Fund for the issuance of Shares. The
Custodian shall not be responsible for such Securities, cash or other
assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities
Depository or in a Book-Entry System, subject to the following
provisions:
(a) The Custodian, on an on-going basis, shall deposit in a
Securities Depository or Book-Entry System all Securities
eligible for deposit therein and shall make use of such
Securities Depository or Book-Entry System to the extent possible
and practical in connection with its performance hereunder,
including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and
deliveries and returns of collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the
Fund maintained in a Book-Entry System or Securities Depository
shall, by book-entry, identify such Securities as belonging to
the Fund.
(d) If Securities purchased by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian shall
pay for such Securities upon (i) receipt of advice from the
Book-Entry System or Securities Depository that such Securities
have been transferred to the Depository Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Fund. If
Securities sold by the Fund are held in a Book-Entry System or
Securities Depository, the Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that payment for such Securities has
been transferred to the Depository Account, and (ii) the making
of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Fund.
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(e) The Custodian shall provide the Corporation with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Fund are kept)
on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) Notwithstanding anything to the contrary in this Agreement, the
Custodian shall be liable to the Corporation for any loss or
damage to the Fund resulting from (i) the use of a Book-Entry
System or Securities Depository by reason of any negligence or
willful misconduct on the part of the Custodian or any
Sub-Custodian, or (ii) failure of the Custodian or any
Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Corporation shall be subrogated to the rights of
the Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person from any loss
or damage to the Fund arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Fund has not been made whole for any such loss or damage.
(g) With respect to its responsibilities under this Section 3.5 and
pursuant to Rule 17f-4 under the 1940 Act, the Custodian hereby
warrants to the Corporation that it agrees to (i) exercise due
care in accordance with reasonable commercial standards in
discharging its duty as a securities intermediary to obtain and
thereafter maintain such assets, (ii) provide, promptly upon
request by the Corporation, such reports as are available
concerning the Custodian's internal accounting controls and
financial strength, and (iii) require any Sub-Custodian to
exercise due care in accordance with reasonable commercial
standards in discharging its duty as a securities intermediary to
obtain and thereafter maintain assets corresponding to the
security entitlements of its entitlement holders.
3.6 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund
Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any Sub-Custodian) of such Securities
registered as provided in Section 3.9 below or in proper form for
transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3.5 above;
(ii) in the case of options on Securities, against delivery to
the Custodian (or any Sub-Custodian) of such receipts as are
required by the customs prevailing among dealers in such options;
(iii) in the case of futures contracts and options on futures
contracts, against delivery to the Custodian (or any
Sub-Custodian) of evidence of title thereto
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in favor of the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Corporation and a bank which
is a member of the Federal Reserve System or between the
Corporation and a primary dealer in U.S. Government securities,
against delivery of the purchased Securities either in
certificate form or through an entry crediting the Custodian's
account at a Book-Entry System or Securities Depository with such
Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including, but not limited to, the following payments for the
account of the Fund: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian,
director and legal fees; and other operating expenses of the
Fund; in all cases, whether or not such expenses are to be in
whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Corporation, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD, relating
to compliance with rules of the Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement
among the Corporation, the Custodian 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;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
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3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver, or cause
the Sub-Custodian to release and deliver, Securities from the Fund
Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian, or any nominee
or nominees of any of the foregoing, or (ii) for exchange for a
different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that,
in any such case, the new Securities are to be delivered to the
Custodian;
(e) To the broker selling the Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the
Corporation shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Corporation, but only
against receipt by the Custodian of the amounts borrowed;
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(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Corporation;
(l) For delivery in accordance with the provisions of any agreement
among the Corporation, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD, relating
to compliance with the rules of the Options Clearing Corporation
and of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Corporation, the Custodian 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;
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made; or
(o) To brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom;
provided that in any such case the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Corporation, the Custodian shall with respect to all Securities
held for the Fund:
(a) Subject to Section 9.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by
law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 9.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
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(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the IRS and the
Corporation at such time, in such manner and containing such
information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar Securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and other assets of
the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
Fund that are issued or issuable only in bearer form shall be held by
the Custodian in that form, provided that any such Securities shall be
held in a Book-Entry System if eligible therefor. All other Securities
held for the Fund may be registered in the name of the Fund, the
Custodian, a Sub-Custodian or any nominee thereof, or in the name of a
Book-Entry System, Securities Depository or any nominee of either
thereof. The records of the Custodian with respect to foreign
securities of the Fund that are maintained with a Sub-Custodian in an
account that is identified as belonging to the Custodian for the
benefit of its customers shall identify those securities as belonging
to the Fund. The Corporation shall furnish to the Custodian
appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of any of the
nominees referred to above or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of the
Fund.
3.10 Records.
(a) The Custodian shall maintain complete and accurate records with
respect to Securities, cash or other property held for the Fund,
including (i) journals or other records of original entry
containing an itemized daily record in detail of all receipts and
deliveries of Securities and all receipts and disbursements of
cash; (ii) ledgers (or other records) reflecting (A) Securities
in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned
(together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest
received, and (E) dividends receivable and interest receivable;
(iii) canceled checks and bank records related thereto; and (iv)
all records relating to its activities and obligations under this
Agreement. The Custodian shall keep such other books and records
of the Fund as the Corporation shall reasonably request, or as
may be required by the 1940 Act, including, but not limited to,
Section 31 of the 1940 Act and Rule 31a-2 promulgated thereunder.
12
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Corporation and in
compliance with the rules and regulations of the SEC, (ii) be the
property of the Corporation and at all times during the regular
business hours of the Custodian be made available upon request
for inspection by duly authorized officers, employees or agents
of the Corporation and employees or agents of the SEC, and (iii)
if required to be maintained by Rule 31a-1 under the 1940 Act, be
preserved for the periods prescribed in Rules 31a-1 and 31a-2
under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Corporation
with a daily activity statement and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At
least monthly, the Custodian shall furnish the Corporation with a
detailed statement of the Securities and moneys held by the Custodian
and the Sub-Custodians for the Fund under this Agreement.
3.12 Other Reports by Custodian. As the Corporation may reasonably request
from time to time, the Custodian shall provide the Corporation with
reports on the internal accounting controls and procedures for
safeguarding Securities which are employed by the Custodian or any
Sub-Custodian.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the
Fund to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are
to be voted, and shall promptly deliver to the Corporation such
proxies, all proxy soliciting materials and all notices relating to
such Securities. With respect to the foreign Securities, the Custodian
will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder rights, subject to the laws, regulations
and practical constraints that may exist in the country where such
securities are issued. The Corporation acknowledges that local
conditions, including lack of regulation, onerous procedural
obligations, lack of notice and other factors may have the effect of
severely limiting the ability of the Corporation to exercise
shareholder rights.
3.14 Information on Corporate Actions. The Custodian shall promptly deliver
to the Corporation all information received by the Custodian and
pertaining to Securities being held by the Fund with respect to
optional tender or exchange offers, calls for redemption or purchase,
or expiration of rights as described in the Standards of Service Guide
attached as Exhibit B. If the Corporation desires to take action with
respect to any tender offer, exchange offer or other similar
transaction, the Corporation shall notify the Custodian at least five
Business Days prior to the date on which the Custodian is to take such
action. The Corporation will provide or cause to be provided to the
Custodian all relevant information for any Security which has unique
put/option provisions at least five Business Days prior to the
beginning date of the tender period.
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ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities for
the Fund, Written Instructions shall be delivered to the Custodian,
specifying (i) the name of the issuer or writer of such Securities,
and the title or other description thereof, (ii) the number of shares,
principal amount (and accrued interest, if any) or other units
purchased, (iii) the date of purchase and settlement, (iv) the
purchase price per unit, (v) the total amount payable upon such
purchase, and (vi) the name of the person to whom such amount is
payable. The Custodian shall upon receipt of such Securities purchased
by the Fund pay out of the moneys held for the account of the Fund the
total amount specified in such Written Instructions to the person
named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for the Fund,
if in the Fund Custody Account there is insufficient cash available to
the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities for
the Fund is made by the Custodian in advance of receipt of the
Securities purchased and in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to
the Fund for such payment.
4.3 Sale of Securities. Promptly upon each sale of Securities by the Fund,
Written Instructions shall be delivered to the Custodian, specifying
(i) the name of the issuer or writer of such Securities, and the title
or other description thereof, (ii) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (iii) the
date of sale and settlement, (iv) the sale price per unit, (v) the
total amount payable upon such sale, and (vi) the person to whom such
Securities are to be delivered. Upon receipt of the total amount
payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in
such 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
customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to
deliver Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to deliver such
Securities prior to actual receipt of final payment therefor. In any
such case, the Fund shall bear the risk that final payment for such
Securities may not be made or that such Securities may be returned or
otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for
the foregoing.
4.5 Payment for Securities Sold. In its sole discretion and from time to
time, the Custodian may credit the Fund Custody Account, prior to
actual receipt of final
14
payment thereof, with (i) proceeds from the sale of Securities which
it has been instructed to deliver against payment, (ii) proceeds from
the redemption of Securities or other assets of the Fund, and (iii)
income from cash, Securities or other assets of the Fund. Any such
credit shall be conditional upon actual receipt by Custodian of final
payment and may be reversed if final payment is not actually received
in full. The Custodian may, in its sole discretion and from time to
time, permit the Fund to use funds so credited to the Fund Custody
Account in anticipation of actual receipt of final payment. Any such
funds shall be repayable immediately upon demand made by the Custodian
at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Corporation to
facilitate the settlement of a Fund's transactions in the Fund Custody
Account. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares
of the Fund, the Custodian shall wire each amount specified in such
Proper Instructions to or through such bank or broker-dealer as the
Corporation may designate.
5.2 No Duty Regarding Paying Banks. Once the Custodian has wired amounts
to a bank or broker-dealer pursuant to Section 5.1 above, the
Custodian shall not be under any obligation to effect any further
payment or distribution by such bank or broker-dealer.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall 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 a Depository Account:
(a) in accordance with the provisions of any agreement among the
Corporation, the Custodian and a broker-dealer registered under
the 1934 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;
15
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Fund;
(c) which constitute collateral for loans of Securities made by the
Fund;
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions; and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for the Fund only. All Proper Instructions relating
to a segregated account shall specify the Fund.
ARTICLE VII
COMPENSATION OF CUSTODIAN
The Custodian shall be compensated for providing the services set forth in
this Agreement in accordance with the fee schedule set forth on Exhibit D hereto
(as amended from time to time). The Custodian shall also be compensated for such
out-of-pocket expenses (e.g., telecommunication charges, postage and delivery
charges, and reproduction charges) as are reasonably incurred by the Custodian
in performing its duties hereunder. The Corporation shall pay all such fees and
reimbursable expenses within 30 calendar days following receipt of the billing
notice, except for any fee or expense subject to a good faith dispute. The
Corporation shall notify the Custodian in writing within 30 calendar days
following receipt of each invoice if the Corporation is disputing any amounts in
good faith. The Corporation shall pay such disputed amounts within 10 calendar
days of the day on which the parties agree to the amount to be paid. With the
exception of any fee or expense the Corporation is disputing in good faith as
set forth above, unpaid invoices shall accrue a finance charge of 1 1/2% per
month after the due date. Notwithstanding anything to the contrary, amounts owed
by the Corporation to the Custodian shall only be paid out of the assets and
property of the particular Fund involved.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of the Corporation. The Corporation
hereby represents and warrants to the Custodian, which representations
and warranties shall be deemed to be continuing throughout the term of
this Agreement, that:
16
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement and to
perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered
by the Corporation in accordance with all requisite action and
constitutes a valid and legally binding obligation of the
Corporation, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of
creditors and secured parties; and
(c) It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state and
federal, and has obtained all regulatory approvals necessary to
carry on its business as now conducted; there is no statute,
rule, regulation, order or judgment binding on it and no
provision of its charter, bylaws or any contract binding it or
affecting its property which would prohibit its execution or
performance of this Agreement.
8.2 Representations and Warranties of the Custodian. The Custodian hereby
represents and warrants to the Corporation, which representations and
warranties shall be deemed to be continuing throughout the term of
this Agreement, that:
(a) It is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to carry on its
business as now conducted, to enter into this Agreement and to
perform its obligations hereunder;
(b) It is a U.S. Bank as defined in section (a)(7) of Rule 17f-5.
(c) This Agreement has been duly authorized, executed and delivered
by the Custodian in accordance with all requisite action and
constitutes a valid and legally binding obligation of the
Custodian, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of
creditors and secured parties; and
(d) It is conducting its business in compliance in all material
respects with all applicable laws and regulations, both state and
federal, and has obtained all regulatory approvals necessary to
carry on its business as now conducted; there is no statute,
rule, regulation, order or judgment binding on it and no
provision of its charter, bylaws or any contract binding it or
affecting its property which would prohibit its execution or
performance of this Agreement.
ARTICLE IX
CONCERNING THE CUSTODIAN
17
9.1 Standard of Care. The Custodian shall exercise reasonable care in the
performance of its duties under this Agreement. The Custodian shall
not be liable for any error of judgment or mistake of law or for any
loss suffered by the Corporation in connection with its duties under
this Agreement, except a loss arising out of or relating to the
Custodian's (or a Sub-Custodian's) refusal or failure to comply with
the terms of this Agreement (or any sub-custody agreement) or from its
(or a Sub-Custodian's) bad faith, negligence or willful misconduct in
the performance of its duties under this Agreement (or any sub-custody
agreement). The Custodian shall be entitled to rely on and may act
upon advice of counsel on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Corporation of any action
taken or omitted by the Custodian pursuant to advice of counsel.
9.2 Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Fund or
any money represented by a check, draft or other instrument for the
payment of money, until the Custodian or its agents actually receive
such cash or collect on such instrument.
9.3 No Responsibility for Title, etc. 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 or delivered by it pursuant to this
Agreement.
9.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for the Fund
if such Securities are in default or payment is not made after due
demand or presentation.
9.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine.
The Custodian shall be entitled to rely upon any Oral Instructions and
any Written Instructions actually received by it pursuant to this
Agreement.
9.6 Cooperation. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Corporation to
keep the books of account of the Fund and/or compute the value of the
assets of the Fund. The Custodian shall take all such reasonable
actions as the Corporation may from time to time request to enable the
Corporation to obtain, from year to year, favorable opinions from the
Corporation 's independent accountants with respect to the Custodian's
activities hereunder in connection with (i) the preparation of the
Corporation 's reports on Form N-1A and Form N-SAR and any other
reports required by the SEC, and (ii) the fulfillment by the
Corporation of any other requirements of the SEC.
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ARTICLE X
INDEMNIFICATION
10.1 Indemnification by Corporation. The Corporation shall indemnify and
hold harmless the Custodian, any Sub-Custodian and any nominee thereof
(each, an "Indemnified Party" and collectively, the "Indemnified
Parties") from and against any and all claims, demands, losses,
expenses and liabilities of any and every nature (including reasonable
attorneys' fees) that an Indemnified Party may sustain or incur or
that may be asserted against an Indemnified Party by any person
arising directly or indirectly (i) from the fact that Securities are
registered in the name of any such nominee, (ii) from any action taken
or omitted to be taken by the Custodian or such Sub-Custodian (a) at
the request or direction of or in reliance on the advice of the
Corporation, or (b) upon Proper Instructions, or (iii) from the
performance of its obligations under this Agreement or any sub-custody
agreement, provided that neither the Custodian nor any such
Sub-Custodian shall be indemnified and held harmless from and against
any such claim, demand, loss, expense or liability arising out of or
relating to its refusal or failure to comply with the terms of this
Agreement (or any sub-custody agreement), or from its bad faith,
negligence or willful misconduct in the performance of its duties
under this Agreement (or any sub-custody agreement). This indemnity
shall be a continuing obligation of the Corporation, its successors
and assigns, notwithstanding the termination of this Agreement. As
used in this paragraph, the terms "Custodian" and "Sub-Custodian"
shall include their respective directors, officers and employees.
10.2 Indemnification by Custodian. The Custodian shall indemnify and hold
harmless the Corporation from and against any and all claims, demands,
losses, expenses, and liabilities of any and every nature (including
reasonable attorneys' fees) that the Corporation may sustain or incur
or that may be asserted against the Corporation by any person arising
directly or indirectly out of any action taken or omitted to be taken
by an Indemnified Party as a result of the Indemnified Party's refusal
or failure to comply with the terms of this Agreement (or any
sub-custody agreement), or from its bad faith, negligence or willful
misconduct in the performance of its duties under this Agreement (or
any sub-custody agreement). This indemnity shall be a continuing
obligation of the Custodian, its successors and assigns,
notwithstanding the termination of this Agreement. As used in this
paragraph, the term "Corporation" shall include the Corporation's
directors, officers and employees.
10.3 Security. If the Custodian advances cash or Securities to the Fund for
any purpose, either at the Corporation 's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or
its nominee incurs, in connection with its performance under this
Agreement, any claim, demand, loss, expense or liability (including
reasonable attorneys' fees) (except such as may arise from its or its
nominee's bad faith, negligence or willful misconduct), then, in any
such event, any property at any time held for the account of the Fund
shall be security therefor, and should the Fund fail promptly to repay
or indemnify the Custodian,
19
the Custodian shall be entitled to utilize available cash of such Fund
and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
10.4 Miscellaneous.
(a) Neither party to this Agreement shall be liable to the other
party for consequential, special or punitive damages under any
provision of this Agreement.
(b) The indemnity provisions of this Article shall indefinitely
survive the termination and/or assignment of this Agreement.
(c) In order that the indemnification provisions contained in this
Article shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised of
all pertinent facts concerning the situation in question, and it
is further understood that the indemnitee will use all reasonable
care to notify the indemnitor promptly concerning any situation
that presents or appears likely to present the probability of a
claim for indemnification. The indemnitor shall have the option
to defend the indemnitee against any claim that may be the
subject of this indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
section. The indemnitee shall in no case confess any claim or
make any compromise in any case in which the indemnitor will be
asked to indemnify the indemnitee except with the indemnitor's
prior written consent.
ARTICLE XI
FORCE MAJEURE
Neither the Custodian nor the Corporation shall be liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; acts of terrorism; sabotage; strikes;
epidemics; riots; power failures; computer failure and any such circumstances
beyond its reasonable control as may cause interruption, loss or malfunction of
utility, transportation, computer (hardware or software) or telephone
communication service; accidents; labor disputes; acts of civil or military
authority; governmental actions; or inability to obtain labor, material,
equipment or transportation; provided, however, that in the event of a failure
or delay, the Custodian (i) shall not discriminate against the Fund in favor of
any other customer of the Custodian in making computer time and personnel
available to input or process the transactions contemplated by this Agreement,
and (ii) shall use its best efforts to ameliorate the effects of any such
failure or delay.
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ARTICLE XII
PROPRIETARY AND CONFIDENTIAL INFORMATION
The Custodian agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the
Corporation, all records and other information relative to the Corporation and
prior, present, or potential shareholders of the Corporation (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
(i) after prior notification to and approval in writing by the Corporation,
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, (ii) when requested to divulge such information by duly
constituted authorities, or (iii) when so requested by the Corporation. Records
and other information which have become known to the public through no wrongful
act of the Custodian or any of its employees, agents or representatives, and
information that was already in the possession of the Custodian prior to receipt
thereof from the Corporation or its agent, shall not be subject to this
paragraph.
Further, the Custodian will adhere to the privacy policies adopted by the
Corporation pursuant to Title V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be
modified from time to time. In this regard, the Custodian shall have in place
and maintain physical, electronic and procedural safeguards reasonably designed
to protect the security, confidentiality and integrity of, and to prevent
unauthorized access to or use of, records and information relating to the
Corporation and its shareholders.
ARTICLE XIII
EFFECTIVE PERIOD; TERMINATION
13.1 Effective Period. This Agreement shall become effective as of the date
first written above and will continue in effect for a period of one
year. Thereafter, if not terminated, this Agreement shall continue in
effect automatically as to each Fund for successive one-year periods.
13.2 Termination. Subsequent to the initial one-year term, this Agreement
may be terminated by either party upon giving 90 days prior written
notice to the other party or such shorter period as is mutually agreed
upon by the parties. Notwithstanding the foregoing, this Agreement may
be terminated by any party upon the breach of the other party of any
material term of this Agreement if such breach is not cured within 15
days of notice of such breach to the breaching party. In addition, the
Corporation may, at any time, immediately terminate this Agreement in
the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
13.3 Appointment of Successor Custodian. If a successor custodian shall
have been appointed by the Board of Directors, the Custodian shall,
upon receipt of a notice of acceptance by the successor custodian, on
such specified date of termination (i) deliver directly to the
successor custodian all Securities (other than Securities held
21
in a Book-Entry System or Securities Depository) and cash then owned
by the Fund and held by the Custodian as custodian, and (ii) transfer
any Securities held in a Book-Entry System or Securities Depository to
an account of or for the benefit of the Fund at the successor
custodian, provided that the Corporation shall have paid to the
Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. In addition, the
Custodian shall, at the expense of the Corporation, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by the Custodian under this Agreement in a
form reasonably acceptable to the Corporation (if such form differs
from the form in which the Custodian has maintained the same, the
Corporation shall pay any expenses associated with transferring the
data to such form), and will cooperate in the transfer of such duties
and responsibilities, including provision for assistance from the
Custodian's personnel in the establishment of books, records, and
other data by such successor. Upon such delivery and transfer, the
Custodian shall be relieved of all obligations under this Agreement.
13.4 Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Corporation on or before the date of termination
of this Agreement, then the Custodian shall have the right to deliver
to a bank or trust company of its own selection, which bank or trust
company (i) is a "bank" as defined in the 1940 Act, and (ii) has
aggregate capital, surplus and undivided profits as shown on its most
recent published report of not less than $25 million, all Securities,
cash and other property held by Custodian under this Agreement and to
transfer to an account of or for the Fund at such bank or trust
company all Securities of the Fund held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or
trust company shall be the successor custodian under this Agreement
and the Custodian shall be relieved of all obligations under this
Agreement. In addition, under these circumstances, all books, records
and other data of the Corporation shall be returned to the
Corporation.
ARTICLE XIV
MISCELLANEOUS
14.1 Compliance with Laws. The Corporation has and retains primary
responsibility for all compliance matters relating to the Fund,
including but not limited to compliance with the 1940 Act, the
Internal Revenue Code of 1986, the Xxxxxxxx-Xxxxx Act of 2002, the USA
Patriot Act of 2002 and the policies and limitations of the Fund
relating to its portfolio investments as set forth in its Prospectus
and statement of additional information. The Custodian's services
hereunder shall not relieve the Corporation of its responsibilities
for assuring such compliance or the Board of Directors's oversight
responsibility with respect thereto.
14.2 Amendment. This Agreement may not be amended or modified in any manner
except by written agreement executed by the Custodian and the
Corporation, and authorized or approved by the Board of Directors.
22
14.3 Assignment. This Agreement shall extend to and be binding upon the
parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the
Corporation without the written consent of the Custodian, or by the
Custodian without the written consent of the Corporation accompanied
by the authorization or approval of the Board of Directors.
14.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, without regard to
conflicts of law principles. To the extent that the applicable laws of
the State of Ohio, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control, and
nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or order of the SEC thereunder.
14.5 No Agency Relationship. Nothing herein contained shall be deemed to
authorize or empower either party to act as agent for the other party
to this Agreement, or to conduct business in the name, or for the
account, of the other party to this Agreement.
14.6 Services Not Exclusive. Nothing in this Agreement shall limit or
restrict the Custodian from providing services to other parties that
are similar or identical to some or all of the services provided
hereunder.
14.7 Invalidity. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. In such case,
the parties shall in good faith modify or substitute such provision
consistent with the original intent of the parties.
14.8 Notices. Any notice required or permitted to be given by either party
to the other shall be in writing and shall be deemed to have been
given on the date delivered personally or by courier service, or three
days after sent by registered or certified mail, postage prepaid,
return receipt requested, or on the date sent and confirmed received
by facsimile transmission to the other party's address set forth
below:
Notice to the Custodian shall be sent to:
U.S. Bank National Association
000 Xxxxxx Xxxxxx, X.X. XX-XX-X0XX
Xxxxxxxxxx, Xxxx 00000
Attention: Mutual Fund Custody Services
Facsimile: (000) 000-0000
and notice to the Corporation shall be sent to:
23
Ohio National Fund, Inc. or
Dow Target Variable Fund, LLC
Xxx Xxxxxxxxx Xxx
Xxxxxxxxxx XX 00000
14.9 Multiple Originals. This Agreement may be executed on two or more
counterparts, each of which when so executed shall be deemed an
original, but such counterparts shall together constitute but one and
the same instrument.
14.10 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate
as a waiver thereof. The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein are cumulative and not exclusive of any
remedies provided at law or in equity.
14.11 References to Custodian. The Corporation shall not circulate any
printed matter which contains any reference to Custodian without the
prior written approval of Custodian, excepting printed matter
contained in the prospectus or statement of additional information for
the Fund and such other printed matter as merely identifies Custodian
as custodian for the Fund. The Corporation shall submit printed matter
requiring approval to Custodian in draft form, allowing sufficient
time for review by Custodian and its counsel prior to any deadline for
printing.
24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
OHIO NATIONAL FUND, INC. U.S. BANCORP FUND SERVICES, LLC
By: By:
--------------------------------- ------------------------------------
Name: Name:
------------------------------- ----------------------------------
Title: Title:
------------------------------ ---------------------------------
DOW TARGET VARIABLE FUND, LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
25
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
Authorized Persons Specimen Signatures
------------------ -------------------
President:
----------------------------------------
Secretary:
----------------------------------------
Treasurer:
----------------------------------------
Vice President:
----------------------------------------
Other:
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
26
EXHIBIT B
U.S. BANK INSTITUTIONAL CUSTODY SERVICES
STANDARDS OF SERVICE GUIDE
U.S. Bank, N.A. ("USBank") is committed to providing superior quality
service to all customers and their agents at all times. We have compiled this
guide as a tool for our clients to determine our standards for the processing of
security settlements, payment collection, and capital change transactions.
Deadlines recited in this guide represent the times required for USBank to
guarantee processing. Failure to meet these deadlines will result in settlement
at our client's risk. In all cases, USBank will make every effort to complete
all processing on a timely basis.
USBank is a direct participant of the Depository Trust Company, a direct
member of the Federal Reserve Bank of Cleveland, and utilizes the Bank of New
York as its agent for ineligible and foreign securities.
For corporate reorganizations, USBank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, Capital Changes
Daily (CCH) and the Wall Street Journal.
For bond calls and mandatory puts, USBank utilizes SEI's Bond Source, Xxxxx
Information Systems, Standard & Poor's Corporation, XCITEK, and DTC Important
Notices. USBank will not notify clients of optional put opportunities.
Any securities delivered free to USBank or its agents must be received
three (3) business days prior to any payment or settlement in order for the
USBank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is
subject to change. Should any changes be made USBank will provide you
with an updated copy of its Standards of Service Guide.
27
USBANK SECURITY SETTLEMENT STANDARDS
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
---------------- ----------------------- ---------------------
DTC 1:30 P.M. on Settlement Date DTC Participant #0000
Xxxxx Xxxx XX 00000
Institutional #________________
For Account #____________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of Cleveland
for Firstar Bank, N.A. ABA# 000000000
CINTI/1050
For Account #_____________
Federal Reserve Book Entry (Repurchase 1:00 P.M. on Settlement Date Federal Reserve Bank of Cleveland
Agreement Collateral Only) for Firstar Bank, N.A. ABA# 000000000
CINTI/1040
For Account #_____________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BYORK
(GNMA Book Entry) Firstar Bank / 117612
Physical Securities 9:30 A.M. EST on Settlement Date Bank of New York
(for Deliveries, by 4:00 P.M. on One Wall Street- 3rd Floor - Window A
Settlement Date minus 1) Xxx Xxxx, XX 00000
For account of Firstar Bank / Cust #117612
Attn: Xxxxxx Xxxxxx
CEDEL/EURO-CLEAR 11:00 A.M. on Settlement Date Cedel a/c 55021
minus 2 FFC: a/c 387000
Firstar Bank/Global Omnibus
Euroclear a/c 97816
FFC: a/c 387000
Firstar Bank/Global Omnibus
Cash Wire Transfer 3:00 P.M. Firstar Bank, X.X. Xxxxx/Trust ABA# 000000000
Credit Account #112950027
Account of Firstar Trust Services
Further Credit to ___________
Account # _______________
* All times listed are Eastern Standard Time.
28
USBANK PAYMENT STANDARDS
SECURITY TYPE INCOME PRINCIPAL
------------- ------ ---------
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date Payable Date
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will be made
on the immediately following business day.
30
USBANK CORPORATE REORGANIZATION STANDARDS
DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TYPE OF ACTION NOTIFICATION TO CLIENT TO USBANK POSTING
-------------- ---------------------- -------------------------------- -----------
Rights, Warrants, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
and Optional Mergers expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Option to Retain expiration or receipt of notice
Class Actions 10 business days prior to expiration date 5 business days prior to expiration Upon receipt
Voluntary Tenders, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Exchanges, expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities received None Upon receipt
Liquidations, Bankruptcies, Stock
Splits, Mandatory Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
NOTE: Fractional shares/par amounts resulting from any of the above will be
sold.
31
EXHIBIT C
FUND NAMES
Separate Series of Ohio National Fund, Inc.
Name of Series
EQUITY PORTFOLIO
MONEY MARKET PORTFOLIO
BOND PORTFOLIO
OMNI PORTFOLIO
INTERNATIONAL PORTFOLIO
INTERNATIONAL SMALL COMPANY PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
DISCOVERY PORTFOLIO
AGGRESSIVE GROWTH PORTFOLIO
SMALL CAP GROWTH PORTFOLIO
MID CAP OPPORTUNITY PORTFOLIO
CAPITAL GROWTH PORTFOLIO
S&P 500 INDEX PORTFOLIO
HIGH INCOME BOND PORTFOLIO
BLUE CHIP PORTFOLIO
NASDAQ-100 INDEX PORTFOLIO
BRISTOL PORTFOLIO
BRYTON GROWTH PORTFOLIO
U.S. EQUITY PORTFOLIO
BALANCED PORTFOLIO
COVERED CALL PORTFOLIO
TARGET VIP PORTFOLIO - NEW FUND
TARGET EQUITY/INCOME PORTFOLIO - NEW FUND
1ST QUARTER DOW 5
2ND QUARTER DOW 5
3RD QUARTER DOW 5
4TH QUARTER DOW 5
1ST QUARTER DOW 10
2ND QUARTER DOW 10
3RD QUARTER DOW 10
4TH QUARTER DOW 10
32
EXHIBIT D
FEE SCHEDULE
OHIO NATIONAL & DOW PORTFOLIOS
DOMESTIC CUSTODY FEE SCHEDULE
EFFECTIVE MAY 1, 2005
FUND COMPLEX FEE SCHEDULE (DOMESTIC ASSETS ONLY)
..75 basis point on first $500 million in assets
..50 basis point on next $500 million
..25 basis point on assets over $1 billion
PORTFOLIO TRANSACTION FEES
$5.00 per book entry security (DTC or Federal Reserve System)*
*The first 10,000 transactions per year are free (allocated at 833 per month)
- A transaction is a purchase/sale of a security, free receipt, free delivery,
maturity, tender or exchange
- No charge for the initial conversion free receipt
- Overdrafts - charged to the account at prime interest rate plus 2.
- Plus out-of-pocket expenses, and extraordinary expenses based upon complexity,
including items such as shipping fees or transfer fees
Fees are billed monthly
Subject to CPI increase, Milwaukee MSA.
33
In Addition to the Domestic Custody Fees, the following Global Custody Fees
Apply. The Ohio National Funds are currently set up to trade in and are being
billed for trades in the countries shown in bold below.
GLOBAL CUSTODY SERVICES
TRANSACTION FEE SCHEDULE FOR THE OHIO NATIONAL FUNDS
TRANSACTION
COUNTRY INSTRUMENT FEE
----------------- -------------- --- -----------
Argentina All $ 40
Australia All $ 30
Austria Equities/Bonds $ 35
Austria Depo Receipt $ 35
Austria non ATS ALL $ 90
Bahrain All $140
Bangladesh All $150
Belgium All $ 45
Benin All $155
Bermuda All $ 60
Bolivia All $150
Botswana All $ 50
Brazil All $ 00
Xxxxxxxx All $ 80
Burkina Faso All $155
CANADA ALL $ 00
Xxxxx All $ 60
China-Shanghai All $ 65
China-Shenzhen All $ 65
Columbia All $100
Costa Rica All $ 00
Xxxxxxx All $ 65
Cyprus All $ 00
Xxxxx Xxxxxxxx All $ 00
Xxxxxxx All $ 50
EASDAQ All $ 00
Xxxxxxx All $ 65
Egypt All $100
Estonia All $ 25
Euromarkets All $ 10
FINLAND ALL $ 85
FRANCE ALL $ 60
GERMANY ALL $ 40
Ghana All $ 50
Greece All $105
Guinea Bissau All $155
Hong Kong All $ 60
Hungary All $135
Iceland All $ 80
India All $250
Indonesia All $100
Ireland All $ 30
Israel All $ 45
ITALY ALL $ 60
Ivory Coast All $155
Jamaica All $ 00
XXXXX ALL $ 60
Jordan All $125
Kazakhstan Equities $150
Kazakhstan Bonds $160
Kenya All $ 00
Xxxxxx Equities/Bonds $ 00
Xxxxxx Gov't Bonds $ 75
Lebanon All $ 90
Lithuania All $ 50
LUXEMBOURG ALL $ 30
MALAYSIA ALL $ 60
Mali All $155
Malta All $ 75
Mauritius All $100
MEXICO ALL $ 60
Morocco All $100
Namibia All $ 00
XXXXXXXXXXX ALL $ 55
NEW ZEALAND ALL $ 60
Niger All $155
Nigeria All $ 50
Norway All $ 45
Oman All $140
Pakistan All $100
Palestinian All $140
Panama All $ 00
Xxxx All $105
Philippines All $ 75
Poland All $ 50
Portugal All $ 85
Qatar All $140
Romania All $100
Russia Equities/Bonds $200
Russia MINFIN $ 50
Senegal All $155
Singapore All $ 00
Xxxxxx Xxxxxxxx All $110
Slovenia All $110
South Africa All $ 00
Xxxxx Xxxxx All $ 20
SPAIN ALL $ 00
Xxx Xxxxx All $ 60
Swaziland All $ 50
SWEDEN ALL $ 60
SWITZERLAND ALL $ 70
Taiwan All $125
Thailand All $ 45
Togo All $155
Trinidad & Tobago All $ 65
Tunisia All $ 00
Xxxxxx All $ 00
XXXXXX XXXXXXX ALL $ 30
Ukraine All $ 45
Uruguay All $ 65
Venezuela All $125
Zambia All $ 50
Zimbabwe All $ 50
* Any non-Eurobond assets held in CEDEL and Euroclear will be charged at the
local market price quote. All fees quoted are payable monthly
34
EXHIBIT E
SHAREHOLDER COMMUNICATIONS ACT AUTHORIZATION
OHIO NATIONAL FUND, INC.
The Shareholder Communications Act of 1985 requires banks and trust companies to
make an effort to permit direct communication between a company which issues
securities and the shareholder who votes those securities.
Unless you specifically require us to NOT release your name and address to
requesting companies, we are required by law to disclose your name and address.
Your "yes" or "no" to disclosure will apply to all securities U.S. Bank holds
for you now and in the future, unless you change your mind and notify us in
writing.
______ YES U.S. Bank is authorized to provide the Corporation's
name, address and security position to requesting
companies whose stock is owned by the Corporation.
______ NO U.S. Bank is NOT authorized to provide the
Corporation's name, address and security position to
requesting companies whose stock is owned by the
Corporation.
OHIO NATIONAL FUND, INC.
By:
---------------------------------
Title:
------------------------------
Date:
-------------------------------
35
