CUSTODY AGREEMENT
Agreement
made as of the 31st day
of July, 2001 between Mosaic Equity Trust, Mosaic Income Trust, Mosaic
Government Money Market Trust, Mosaic Focus Fund Trust and Mosaic Tax-Free Trust
(the "Trusts"), business trusts organized under the laws of Massachusetts and
having their office in Madison, Wisconsin, acting for and on behalf of all
mutual fund portfolios as are currently authorized and issued by the Trusts or
may be authorized and issued by any of the Trusts subsequent to the date of this
Agreement (the "Funds"), which are operated and maintained by their respective
Trusts for the benefit of the holders of shares of the Funds, and Firstar Bank,
N.A. (the "Custodian"), a national banking association having its principal
office and place of business at Firstar Bank Center, 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxx 00000, which Agreement provides for the furnishing of custodian
services to the Funds.
WITNESSETH:
That for
and in consideration of the mutual promises hereinafter set forth the Trusts, on
behalf of the Funds, and the Custodian agree as follows:
ARTICLE
I
DEFINITIONS
Whenever
used in this Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
1.
"Authorized Person" shall be deemed to include the Chairman, President,
Secretary, Treasurer, and the Executive Vice President, or any other person,
whether or not any such person is an officer or employee of the Trusts, duly
authorized by the Board of Trustees of the Trusts to give Oral Instructions and
Written Instructions on behalf of the Funds and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be received by the
Custodian from time to time, subject in each case to any limitations on the
authority of such person as set forth in Appendix A or any such Certificate.
Authorized Persons shall also include the President, Executive Vice President,
Secretary and such other officers employed by Madison Mosaic, L.L.C. (the
"Adviser") as are designated in writing by the Adviser pursuant to the terms of
the services agreements between the Trusts and the Adviser regarding day-to-day
management of the Funds.
2.
"Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system
for United States and federal agency securities, its successor or successors and
its nominee or nominees, provided the Custodian has received a certified copy of
a resolution of Board of Trustees of the Trusts specifically approving deposits
in the Book-Entry System.
3. "Certificate" shall mean any notice,
instruction, or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian that is signed on behalf of the
Funds by an Officer of the Trusts and is actually received by the
Custodian.
Agreement,
the Custodian had acquired U.S. Bancorp and that such name, or a variant
thereof, may be used by the Custodian in the future. In the event the
Custodian's name changes in this or some other manner, references to the
Custodian in this Agreement shall refer to the changed name
1
and will
not require any revision to this Agreement.
5.
"Depository" shall mean The Depository Trust Company ("DTC"), a clearing agency
registered with the Securities and Exchange Commission, its successor or
successors and its nominee or nominees. The term "Depository" shall further mean
and include any other person or clearing agency authorized to act as a
depository under the Investment Company Act of 1940, its successor or successors
and its nominee or nominees, provided that the Custodian has received a
certified copy of a resolution of the Board of Trustees of the Trusts
specifically approving such other person or clearing agency as a
depository.
6.
"Dividend and Transfer Agent" shall mean the dividend and transfer agent active,
from time to time, in such capacity pursuant to a written agreement with the
Funds, changes in which the Trusts shall immediately report to the Custodian in
writing.
7.
"Foreign Equity Securities" include equity securities with issuers whose
principal activities are outside of the United States and includes common
stocks, convertible debt securities, preferred stocks, warrants, and American
Depositories Receipts.
8. "Money
Market Security" shall be deemed to include, without limitation, debt
obligations issued or guaranteed as to principal and/or interest by the
government of the United States or agencies or instrumentalities thereof,
commercial paper, obligations (including certificates of deposit, bankers'
acceptances, repurchase and reverse repurchase agreements with respect to the
same) and bank time deposits of domestic banks that are members of Federal
Deposit Insurance Trust, and short-term corporate obligations where the purchase
and sale of such securities normally require settlement in federal funds or
their equivalent on the same day as such purchase or sale.
9. "Officers" shall be deemed to
include the Chairman, the President, the Secretary, the Treasurer, and
Executive Vice President of the Trusts listed in the Certificate annexed hereto
as Appendix A or such other Certificate as may be received by the Custodian from
time to time.
10. "Oral
Instructions" shall mean oral instructions actually received by the Custodian
from an Authorized Person (or from a person which the Custodian reasonably
believes in good faith to be an Authorized Person) and confirmed by Written
Instructions from Authorized Persons in such manner so that such Written
Instructions are received by the Custodian on the next business
day.
11.
"Prospectus" or "Prospectuses" shall mean the Funds' currently effective
prospectuses and statements of additional information, as filed with and
declared effective by the Securities and Exchange Commission.
12.
"Security or Securities" shall mean Foreign Equity Securities, Money Market
Securities, common or preferred stocks, options, bonds, debentures, corporate
debt securities, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or evidencing or representing any
other rights or interest therein, or any property or assets.
13.
"Written Instructions" shall mean communication actually received by the
Custodian from one Authorized Person or from one person which the Custodian
reasonably believes in good faith to be an Authorized Person in writing, telex
or any other data transmission system whereby the receiver of such communication
is able to verify by codes or otherwise with a reasonable degree of certainty
the authenticity of the senders of such communication.
2
ARTICLE
II
APPOINTMENT
OF CUSTODIAN
1. The
Trusts, acting for and on behalf of their respective Funds, hereby constitute
and appoint the Custodian as custodian of Securities and monies owned by the
Funds during the period of this Agreement ("Fund Assets").
2. The
Custodian hereby accepts appointment as such Custodian and agrees to perform the
duties thereof as hereinafter set forth.
ARTICLE
III
DOCUMENTS
TO BE FURNISHED BY THE TRUST
Each
Trust has furnished to the Custodian the following documents:
1. A copy
of its Declaration of Trust (the "Declaration of Trust") certified by its
Secretary.
2. A copy
of its By-Laws certified by its Secretary.
3. Copies
of the most recent Prospectuses of the Trust.
4. A
Certificate of the President and Secretary setting forth the names and
signatures of the present Officers of the Trust.
ARTICLE
IV
CUSTODY
OF CASH AND SECURITIES
1. Each
Trust will deliver or cause to be delivered to the Custodian Fund Assets,
including cash received for the issuance of its shares. The Custodian will not
be responsible for such Fund Assets until actually received by it. Upon such
receipt, the Custodian shall hold in safekeeping and physically segregate at all
times from the property of any other persons, firms or corporations all Fund
Assets received by it from or for the accounts of the Funds. The Custodian will
be entitled to reverse any credits made on the Funds' behalf where such credits
have been previously made and monies are not finally collected within 90 days of
the making of such credits. The Custodian is hereby authorized by the Trusts,
acting on behalf of the Funds, to actually deposit and Fund Assets in the
Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trusts for the Fund Assets so
deposited. Funds Assets deposited in the Book-Entry System or the Depository
will be represented in accounts which include only assets held by the Custodian
for customers, including but not limited to accounts in which the Custodian acts
in fiduciary or representative capacity.
2. The
Custodian shall credit to a separate account or accounts in the name of
each
respective
Fund all monies received by it for the account of such Fund, and shall disburse
the same only:
(a) In
payment for Securities purchased for the account of such Fund, as provided in
Article V;
3
(b) In
payment of dividends or distributions, as provided in Article VI
hereof,
(c) In
payment of original issue or other taxes, as provided in Article VII
hereof,
(d) In
payment for shares of such Fund redeemed by it, as provided in Article VII
hereof,
(e)
Pursuant to Certificates (i) directing payment and setting forth the name and
address of the person to whom the payment is to be made, the amount of such
payment and the purpose for which payment is to be made (the Custodian not being
required to questions such direction) or (ii) if reserve requirements are
established for a Fund by law or by valid regulation, directing the Custodian to
deposit a specified amount of collected funds in the form of U. S. dollars at a
specified Federal Reserve Bank and state the purpose of such deposit;
or
(f) In reimbursement of the expenses
and liabilities of the Custodian, as provided in paragraph 10 of Article
IX hereof.
3. Promptly after the close of business
on each day the Funds are open and valuing their portfolios, the
Custodian shall furnish the respective Trusts with a detailed statement of
monies held for the Funds under this Agreement and with confirmations and a
summary of all transfers to or from the account of the Funds during said day.
Where Securities are transferred to the account of the Funds without physical
delivery, the Custodian shall also identify as belonging to the Funds a quantity
of Securities in a fungible bulk of Securities registered in the name of the
Custodian (or its nominee) or shown on the Custodian's account on the books of
the Book-Entry System or the Depository. At least monthly and from time to time,
the Custodian shall furnish the Trusts with a detailed statement of the
Securities held for the Funds under this Agreement.
4. All
Securities held for the Funds, which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be held by
the Custodian in that form; all other Securities held for the Funds, may be
registered in the name of the Funds, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. Each Trust agrees to
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 its registered nominee or in the name of the Book-Entry
System or the Depository, any Securities which it may hold for the account of
the Funds and which may from time to time be registered in the name of the
Funds. The Custodian shall hold all such Securities which are not held in the
Book-Entry System by the Depository or a Sub-Custodian in a separate account or
accounts in the name of the Funds segregated at all times from those of any
other fund maintained and operated by the Trust and from those of any other
person or persons.
5. Unless
otherwise instructed to the contrary by a Certificate, the Custodian shall with
respect to all Securities held for the Funds in accordance with this
Agreement:
(a)
Collect all income due or payable to the Funds with respect to each Fund's
Assets;
(b)
Present for payment and collect the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c)
Surrender Securities in temporary form for definitive
Securities;
4
(d)
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, including any foreign taxing authority, now or hereafter in effect;
and
(e) Hold
directly, or through the Book-Entry System or the Depository with respect to
Securities therein deposited, for the account of the Funds all rights and
similar securities issued with respect to any Securities held by the Custodian
hereunder.
6. Upon
receipt of Written Instructions and not otherwise, the Custodian directly or
through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons
as may be designated in such Written Instructions proxies, consents,
authorizations, and any other instruments whereby the authority of the Funds as
owner of any Securities may be exercised;
(b)
Deliver any Securities held for the Funds in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
(c)
Deliver any Securities held for the account of the Funds to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
7. The
Custodian shall promptly deliver to each respective Trust all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Funds. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
8. The
Custodian shall promptly deliver to the Trusts all material and notices received
by the Custodian and pertaining to Securities held by the-Funds with respect to
tender or exchange offers, calls for redemption or purchase, expiration of
rights, name changes, stock splits and stock dividends, or any other activity
involving ownership rights in such Securities.
9. The
Custodian shall conduct such periodic physical inspection of Securities held by
it under this Agreement as it deems advisable to verify the accuracy of its
inventory. The Custodian shall promptly report to the Trusts any, discrepancies
or shortages revealed by such inspections and shall make every effort promptly
to remedy such discrepancies or shortages.
ARTICLE
V
PURCHASE
AND SALE OF INVESTMENTS OF THE FUNDS
1.
Promptly after each purchase of Securities by the Funds, the respective Trust
shall deliver to
5
the
Custodian (i) with respect to each purchase of Securities which are not Money
Market Securities, a Certificate or Written Instructions, and (ii) with respect
to each purchase of Money Market Securities, Written Instructions, a Certificate
or Oral Instructions, specifying with respect to each such purchase: (a) the
name of the issuer and the title of the Securities, (b) the principal amount
purchased and accrued interest, if nay, (c) the date of purchase and settlement,
(d) the purchase price per unit, (e) the total amount payable upon such purchase
and (f) the name of the person from whom or the broker through whom the purchase
was made. The Custodian shall upon receipt of Securities purchased by or for the
Funds, pay out of the monies held for the account of the Funds the total amount
payable to the person from whom or the broker through whom the purchase was
made, provided that the same conforms to the total amount payable as set forth
in such Certificate, Written Instructions or Oral Instructions.
2.
Promptly after each sale of Securities by the respective Trust for the account
of the Funds, such Trust shall deliver to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, a Certificate or
Written Instructions, and (ii) with respect to each sale of Money Market
Securities, Written Instructions, a Certificate or Oral Instructions, specifying with
respect to each such sale: (a) the name of the issuer and the title of
the Security, (b) the principal amount sold, and accrued interest, if any, (c)
the date of sale, (d) the sale price per unit, (e) the total amount payable to
the Funds upon such sale and (f) the name of the broker through whom
or the person to whom the sale was made. The Custodian shall deliver the
Securities upon receipt of the total amount payable to the Funds upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Certificate, Written Instructions or Oral 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.
3.
Promptly after the time as of which a Trust, on behalf of a Fund, either
-
(a)
writes an option on Securities or writes a covered put option in respect of a
Security, or
(b)
notifies the Custodian that its obligations in respect of any put or call
option, as described in such Trust's Prospectus, require that the Fund deposit
Securities or additional Securities with the Custodian, specifying the type and
value of Securities required to be so deposited, or
(c)
notifies the Custodian that its obligations in respect of any other Security, as
described in each Fund's respective Prospectus, require that the Fund deposit
Securities or additional Securities with the Custodian, specifying the type and
value of Securities required to be so deposited, the Custodian will cause to be
segregated or identified as deposited, pursuant to the Fund's obligations as set forth
in such Prospectus, Securities of such kinds and having such aggregate
values as are required to meet the Fund's obligations in respect
thereof.
The Trust
will provide to the Custodian, as of the end of each trading day, the market
value of each Fund's option liability, if any, and the market value of its
portfolio of common stocks.
4. On
contractual settlement date, the account of each respective Fund will be charged
for all purchases settling on
that day, regardless of whether or not delivery is made. On contractual
settlement date, sale proceeds will likewise be credited to the account of such
Fund irrespective of delivery.
6
In the
case of "sale fails", the Custodian may, request the assistance of the Trusts in
making delivery of the failed Security.
ARTICLE
VI
PAYMENT
OF DIVIDENDS OR DISTRIBUTIONS
1. Each
Trust shall furnish to the Custodian Written Instructions to release or
otherwise apply cash insofar as available for the payment of dividends or other
distributions to Fund shareholders entitled to payment as determined by the
Dividend and Transfer Agent of the Funds. The Custodian may rely on any such
Written Instructions so received, and shall be indemnified by the Trust
providing such instructions for such reliance.
2. Upon
the payment date specified in such Written Instructions, the Custodian shall
arrange for such payments to be made by the Dividend and Transfer Agent out of
monies held for the accounts of the Funds.
ARTICLE
VII
SALE AND
REDEMPTION OF SHARES OF THE FUNDS
1. The
Custodian shall receive and credit to the account of each Fund such payments for
shares of such Fund issued or sold from time to time as are received from the
distributor for the Fund's shares, from the Dividend and Transfer Agent of the
Fund, or from the Trust.
2. Upon
receipt of Written Instructions, the Custodian shall arrange for payment of
redemption proceeds to be made by the Dividend and Transfer Agent out of the
monies held for the account of the respective Funds in the total amount
specified in the Written Instructions.
3.
Notwithstanding the above provisions regarding the redemption of any shares of
the Funds, whenever shares of the Funds are redeemed pursuant to any check
redemption privilege which may from time to time be offered by the Funds, the
Custodian, unless otherwise subsequently instructed by Written Instructions
setting forth that the redemption is in good form for redemption in accordance
with the check redemption procedure, or pursuant to preauthorized Written
Instructions or procedures established with regard thereto, honor the check
presented as part of such check redemption privilege out of the money held in
the account of the Funds for such purposes.
ARTICLE
VIII
INDEBTEDNESS
In
connection with any borrowings, each Trust, on behalf of its respective Funds,
will cause to be delivered to the Custodian by a bank or broker (including the
Custodian, if the borrowing is from the Custodian), requiring Securities as
collateral for such borrowings, a notice or undertaking in the form currently
employed by any such bank or broker will loan to the Funds against delivery of a
stated amount of collateral. Each Trust shall promptly deliver to the Custodian
a Certificate specifying with respect to each such borrowing: (a) the name of
the bank or broker, (b) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly endorsed
by the Trust, acting on
7
behalf of
a Fund, or other loan particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to deliver any
Securities. The Custodian may require such reasonable conditions with respect to
such collateral and its dealings with third-party lenders as it may deem
appropriate.
ARTICLE
IX
CONCERNING
THE CUSTODIAN
1. Except
as otherwise provided herein, the Custodian shall not be liable for any loss or
damage, including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own negligence
or willful misconduct. Each Trust, on behalf of its Funds and only from
applicable Fund Assets (or insurance purchased by a Trust with respect to its
liabilities on behalf of its Funds hereunder), shall defend, indemnify and hold
harmless the Custodian, its officers, employees and agents, with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to each Trust's duties with respect to its
Funds hereunder or any other action or inaction of the respective Trust or its
Trustees, Officers, employees or agents as to the Funds, except such as may
arise from the negligent action, omission or willful misconduct of the
Custodian, its officers, employees or agents. The Custodian shall defend,
indemnify and hold harmless each Trust and its Trustees, Officers, employees or
agents with respect to any loss, claim, liability or cost (including reasonable
attorneys' fees) arising or alleged to arise from or relating to agreement, (c)
the date and time, if known, on which the loan is to be entered into, (d) the
date on which the loan becomes due and payable, (e) the total amount payable to
the Fund on the borrowing date, (f) the market value of Securities
collateralizing the loan, including the name of the issuer, the title and the
number of shares or the principal amount of any particular Securities and (g) a
statement that such loan is in conformance with the Investment Company Act of
1940 and the Fund's then current Prospectus. The Custodian shall deliver on the borrowing date
specified in a Certificate the specified collateral and the executed promissory
note, if any, against delivery by the lending bank or broker of the total
amount payable as set forth in the Certificate. The Custodian may, at the option
of the lending bank or broker, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending bank or
broker, by virtue of any promissory note or loan agreement. The Custodian shall
deliver in the manner directed by the Trust from time to time such Securities as
additional collateral as may be specified in a Certificate to collateralize
further any transaction described in the paragraph. Such Trust shall cause all
Securities released from collateral status to be returned directly to the
Custodian and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that a Trust fails to specify
in a Certificate the name of the issuer, the title and number of shares or the
principal amount of any the Custodian's duties with respect to the Funds
hereunder or any other action or inaction of the Custodian or its Trustees,
Officers, employees, agents, nominees or Sub-Custodians as to the Funds, except
such as may arise from the negligent action, omission or willful misconduct of
the Trust, its Trustees, Officers, employees or agents. The Custodian may, with
respect to questions of law apply for and obtain the advice and opinion of
counsel to the Trusts at the expense of the Funds, or of its own counsel at its
own expense, and shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with the advice or
8
opinion
of counsel to the Trusts, and shall be similarly protected with respect to
anything done or omitted by it in good faith in conformity with the
advice or opinion of its counsel, unless counsel to the Funds shall, within a
reasonable time after being notified of legal advice received by the Custodian,
have a differing interpretation of such question of law. The Custodian shall be
liable to the Trusts for any proximate loss or damage resulting from the use of
the Book-Entry System or any Depository arising by reason of any negligence,
misfeasance or misconduct on the part of the Custodian or any of its employees,
agents, nominees or Sub-Custodians but not for any special, incidental,
consequential, or punitive damages; provided, however, that nothing contained
herein shall preclude recovery by a Trust, on behalf of its Funds, of principal
and of interest to the date of recovery on, Securities incorrectly omitted from
or included in a Fund's accounts or penalties imposed on the Trusts, in
connection with the Funds, therefrom or for any failures to deliver
Securities.
In any
case in which one party hereto may be asked to indemnify the other or hold the
other harmless, the party from whom indemnification is sought (the "Indemnifying
Party") shall be advised of all pertinent facts concerning the situation in
question, and the party claiming a right to indemnification (the "Indemnified
Party") will use a reasonable care to identify and notify the Indemnifying Party
promptly concerning any situation which presents or appears to present a claim
for indemnification against the Indemnifying Party. The Indemnifying Party shall
have the option to defend the Indemnified Party against any claim which may be
the subject of the indemnification, and in the event the Indemnifying Party so
elects, such defense shall be conducted by counsel chosen by the Indemnifying
Party and satisfactory to the Indemnified Party and the Indemnifying Party will
so notify the Indemnified Party and thereupon such Indemnifying Party shall take
over the complete defense of the claim and the Indemnifying Party shall sustain
no further legal or other expenses in such situation for which indemnification
has been sought under this paragraph, except the expenses of any additional
counsel retained by the Indemnified Party. In no case shall any party claiming
the right to indemnification confess any claim or make any compromise in any
case in which the other party has been asked to indemnify such party (unless
such confession or compromise is made with such other party's prior written
consent).
The
Custodian acknowledges the limitation of liability provisions of Article XI of
each Trust's Declaration of Trust and agrees that the obligations and
liabilities of each Trust under this Agreement shall be limited by and to the
extent of the Trust and its assets and that the Custodian shall not be entitled
to seek satisfaction of any such obligation or liability from the Trusts'
shareholders, Trustees, Officers, employees or agents.
The
Custodian acknowledges the limitation of liability provisions of Article XI of
each Trust's Declaration of Trust and agrees that the obligations and
liabilities of each Trust under this Agreement shall be limited by and to the
extent of the Trust and its assets and that the Custodian shall not be entitled
to seek satisfaction of any such obligation or liability from the Trusts'
shareholders, Trustees, Officers, employees or agents.
The obligations of the parties hereto
under this paragraph shall survive the termination of this
Agreement.
9
(a) The
validity of the issue of any Securities purchased by or for the account of the
Funds, the legality of the purchase thereof, or the propriety of the amount paid
therefor;
(b) The
legality of the sale of any Securities by or for the account of the Funds, or
the propriety of the amount for which the same are sold;
(c) The
legality of the issue or sale of any shares of the Funds, or the sufficiency of
the amount to be received therefor;
(d) The
legality of the redemption of any shares of the Funds, or the propriety of the
amount to be paid therefor;
(e) The
legality of the declaration or payment of any dividend by the Trust in respect
of shares of the Funds;
(f) The
legality of any borrowing by the Trust, on behalf of the Funds, using Securities
as collateral;
(g) The
sufficiency of any deposit made pursuant to a Certificate described in clause
(ii) of paragraph 2 (e) of Article IV hereof.
3. The
Custodian shall not be liable for any money or collected funds in U. S. dollars
deposited in a Federal Reserve Bank other than the Custodian in accordance with
a Certificate described in clause (ii) of paragraph 2 (e) of Article IV hereof,
nor be liable for or considered to be the Custodian of any money, whether or not
represented by any check, draft, or other instrument for the payment of money,
received by it on behalf of the Funds until the Custodian actually receives and
collects such money directly or by the final crediting of the account
representing the Funds' interest at the Book-Entry System or
Depository.
4. The
Custodian shall not be under any duty or obligation to take action to effect
collection of any amount due to the Funds from the Dividend and Transfer Agent
of the Funds nor to take any action to effect payment or distribution by the
Dividend and Transfer Agent of the Funds of any amount paid by the Custodian to
the Dividend and Transfer Agent of the Funds in accordance with this
Agreement.
5. Income
due or payable to the Funds with respect to Funds Assets will be credited to the
account of the Funds as follows:
(a)
Dividends will be credited on the first business day following payable date
irrespective of collection.
(b) Interest on fixed rate municipal
bonds and debt securities issued or guaranteed as to principal and/or interest
by the government of the United States or agencies or instrumentalities thereof (excluding securities issued by the
Government National Mortgage Association) will be credited on payable date
irrespective of collection.
(c)
Interest on fixed rate corporate debt securities will be credited on the first
business day following payable date irrespective of collection.
(d)
Interest on variable and floating rate debt securities and debt securities
issued by the Government National Mortgage Association will be credited upon the
Custodian's receipt of
10
funds.
(e)
Proceeds from options will be credited upon the Custodian's receipt of
funds.
6.
Notwithstanding paragraph 5 of this Article IX, the Custodian shall not be under
any duty or obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (i) it shall be
directed to take such action by a Certificate and (ii) it shall be assured to
its satisfaction or reimbursement of its costs and expenses in connection with
any such action or, at the Custodian's option, prepayment.
7. The
Custodian may appoint one or more financial or banking institutions, as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including, but
not limited to, banking institutions located in foreign countries, or Securities
and monies at any time owned by the Funds, upon terms and conditions approved in
a Certificate. Current Depository(s) and Sub-Custodians(s) are noted in Appendix
B. The Custodian shall not be relieved of any obligation or liability under this
Agreement in connection with the appointment or activities of such Depositories
or Sub-Custodians.
8. The
Custodian shall not be under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the account of the Funds
are such as properly may be held by the Funds under the provisions of the
Declarations of Trust and the Trusts' By-Laws.
9. The
Custodian shall treat all records and other information relating to the Trusts,
the Funds and the Funds' Assets as confidential and shall not disclose any such
records or information to any other person unless (a) the respective Trust shall
have consented thereto in writing or (b) such disclosure is compelled by
law.
10. The
Custodian shall be entitled to receive and the Trusts agree to pay to the
Custodian such compensation as shall be determined pursuant to Appendix C
attached hereto, or as shall be determined pursuant to amendments to such
Appendix approved by the Custodian and the Trust, on behalf of the Funds. The
Custodian shall be entitled to charge against any money held by it for the
account of the Funds the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to reimbursement under
the provisions of this Agreement as determined by agreement of the Custodian and
the applicable Trust or by the final order of any court or arbitrator having
jurisdiction and as to which all rights of appeal shall have expired. The
expenses which the Custodian may charge against the accounts of the Funds
include, but are not limited to, the expenses of Sub-Custodians
incurred in settling transactions involving the purchase and sale of Securities
of the Funds.
Notwithstanding
the above, to the extent such compensation and expenses of the Custodian are
paid to the Custodian by the Adviser pursuant to the services agreements between
the Trusts and the Adviser, no charges shall be made against the accounts of the
Funds by the Custodian.
11. The
Custodian shall be entitled to rely upon any Certificate. The Custodian shall be
entitled to rely upon any Oral Instructions and any Written Instructions
actually received by the Custodian pursuant to Article IV or V hereof. Each
Trust agrees to forward to the Custodian
11
Written
Instructions from Authorized Persons confirming Oral Instructions in such manner
so that such Written Instructions are received by the Custodian, whether by hand
delivery, telex or otherwise, on the first business day following the day on
which such Oral Instructions are given to the Custodian. Each Trust agrees that
the fact that such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. Each Trust agrees that the
Custodian shall incur no liability to the Funds in acting upon Oral Instructions
given to the Custodian hereunder concerning such transactions.
12. The
Custodian will (a) set up and maintain proper books of account and complete
records of all transactions in the accounts maintained by the Custodian
hereunder in such manner as will meet the obligations of the Funds under the
Investment Company Act of 1940, with particular attention to Section 31 thereof
and Rules 31 a-1 and 31 a-2 thereunder, and (b) preserve for the
periods prescribed by applicable Federal statute or regulation all
records required to be so preserved. The books and records of the custodian
shall be open to inspection and audit at reasonable times and with prior notice
by officers and auditors employed by the Trusts.
13. The
Custodian and its Sub-Custodians shall promptly send to the Trusts, for the
account of the Funds, any report
received on the systems of internal accounting control of the Book-Entry
System or the Depository and with such reports on their own systems of internal
accounting control as the Trusts may reasonably request from time to
time.
14. The
Custodian performs only the services of a custodian and shall have no
responsibility for the management, investment or reinvestment of the Securities
from time to time owned by the Funds. The Custodian is not a selling agent for
shares of the Funds and performance of its duties as a custodial agent shall not
be deemed to be a recommendation to the Custodian's depositors or others of
shares of the Funds as an investment.
ARTICLE
X
TERMINATION
1. The
Custodian or any of the Trusts may terminate this Agreement for any reason by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. If such notice is given by any Trust, on
behalf of any of its Funds, it shall state in writing that the Trust is electing
to terminate this Agreement and shall designate a successor custodian or
custodians, each of which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits. In the event such
notice is given by the Custodian, the Trusts shall, on or before the termination
date, deliver to the Custodian a copy of a resolution of their Board of
Trustees, certified by the Secretary or Assistant Secretary, designating a
successor custodian or custodians to act on behalf of the Funds. In the absence
of such designation by the Trusts, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus, and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian, provided that it
has received a notice of acceptance by the successor custodian, shall deliver,
on that date, directly to the successor custodian all Securities and monies then
owned by the Funds and held by it as Custodian. Upon termination of the
Agreement, the Trusts shall pay to the Custodian on behalf of the Funds such
compensation as may be due as of the date of such termination. The
Trusts
12
agree on
behalf of the Funds that the Custodian shall be reimbursed for its reasonable
costs in connection with the termination of this Agreement.
2. If a
successor custodian is not designated by the Trusts, on behalf of the Funds, or
by the Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, each Trust shall upon the delivery by the
Custodian to each Trust of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Trust) and monies then owned
by its Funds, other than monies deposited with a Federal Reserve Bank pursuant
to a Certificate described in clause (ii) of paragraph 2 (e) of Article IV, be
deemed to be the custodian for its Funds, and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System which
cannot be delivered to the Trust to hold such Securities hereunder in accordance
with this
Agreement.
ARTICLE
XI
MISCELLANEOUS
1.
Appendix A sets forth the names and the signatures of all Authorized Persons.
Each Trust agrees to furnish to the Custodian, on behalf of its Funds, a new
Appendix A in form similar to the attached Appendix A, if any present Authorized
Person ceases to be an Authorized
Person or if any other or additional Authorized Persons are elected or
appointed. Until such new Appendix A shall be received, the Custodian
shall be fully protected in acting under the provisions of this Agreement upon
Oral Instructions or signatures of the present Authorized Persons as set forth
in the last delivered Appendix A.
2. No
recourse under any obligation of this Agreement or for any claim based thereon
shall be had against any organizer, shareholder, Officer, Trustee, past, present
or future as such, of the Trusts or of any predecessor or successor, either
directly or through the Trusts or any such predecessor or successor, whether by
virtue of any constitution, statute or rule of law or equity, or by the
enforcement of any assessment or penalty or otherwise; it being expressly agreed and understood that this Agreement and the
obligations thereunder are enforceable solely against Fund Assets, and that no
such personal liability whatever shall attach to, or is or shall be incurred by,
the organizers, shareholders, Officers, Trustees of the Trusts or of any
predecessor or successor, or any of them as such, because of the obligations
contained in this Agreement or implied therefrom and that any and all such
liability is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this
Agreement.
3. The
obligations set forth in this Agreement as having been made by the Trusts have
been made by each Trust for and on behalf of its Funds, pursuant to the
authority vested in the Trusts under the laws of the Commonwealth of
Massachusetts, the Declarations of Trust and the By-Laws of the Trusts. This
Agreement has been executed by Officers of the Trusts as officers, and not
individually, and the obligations contained herein are not binding upon any of
the Trustees, Officers, Agents or holders of shares, personally, but bind only
the Trusts and then only to the extent of the respective Trust's Fund
Assets.
4. Such
provisions of the Prospectuses of the Funds and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and
13
address)
shall be reviewed with the Custodian by the Trust.
5. Any
notice or other instrument in writing, authorized or required by this Agreement
to be given to the Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at Firstar Bank Center,
000 Xxxxxx Xxxxxx, X.X. 0000, Xxxxxxxxxx, Xxxx 00000, attention Mutual Funds
Custody Department, or at such other place as the Custodian may from time to
time designate in writing.
6. Any
notice or other instrument in writing, authorized or required by this Agreement
to be given to any Trust shall be sufficiently given if addressed to the Trust
and mailed or delivered to it at its Compliance Office at Mosaic Funds, 0000 X.
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, or at such other
place as the Trusts may from time to time designate in writing.
7. This
Agreement with the exception of Appendices A & B may not be amended or
modified in any manner except by a written agreement executed by all parties
provided that no amendment shall be in contravention of or inconsistent with any
federal or state law or regulation or the Declarations of Trust or By-Laws of
the Trusts.
8. This
Agreement shall extend to and shall be binding upon the parties hereto, and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Trusts or by the Custodian, and not attempted
assignment by the Trusts or the Custodian shall be effective without the written
consent of the other party hereto.
9. This
Agreement shall be construed in accordance with the laws of the State of
Ohio.
10. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute only
one instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their respective Officers, thereunto duly authorized as of the day and year
first above written.
ATTEST:
Mosaic
Equity Trust
Mosaic
Income Trust
Mosaic
Government Money Market Trust
Mosaic
Tax-Free Trust
Mosaic
Focus Fund Trust
(signature)
By: W.
Xxxxxxx Xxxxx, Secretary and General Counsel
Firstar
Bank, N.A.
(signature)
By: Xxxx X.
Xxxxxxx, Vice President
14
APPENDIX
A
AUTHORIZED
PERSONS SPECIMEN SIGNATURES
Fund
Officers:
Xxxxx
Xxxxxxxx
Xxxxx X.
Xxxxxxx
Xxxxxxxxx
X. Xxxxx
X.
Xxxxxxx Xxxxx
Xxx X.
Xxxxxxxx
Adviser
Employees:
Xxxx
Xxxxx*
Xxxxxxx
Xxxxxx*
See
Signature Cards for additional adviser employees authorized to sign checks on
fund accounts.
* Denotes
authority restricted to securities trades.
Dated:
APPENDIX
B
The
following Depository(s) and Sub-Custodian(s) are employed currently by Firstar
Bank, N.A. for securities processing and control:
The
Depository Trust Company (New York)
0 Xxxxxxx
Xxxxxx
Xxx Xxxx,
XX 00000
The
Federal Reserve Bank
Cincinnati
and Cleveland Branches
Bankers
Trust Company
00 Xxxx
Xxxxxx
Xxx Xxxx,
XX 00000
(For
Foreign Securities and certain non-DTC eligible Securities)
SCHEDULE
C
Firstar
Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I.
Portfolio Transaction Fees:
For each
repurchase agreement transaction $7.00
For each
portfolio transaction processed through DTC or Federal Reserve
$10.00
For each
portfolio transaction processed through our New York custodian
$25.00
For each
GNMA/Amortized Security Purchase $40.00
For each
GNMA Prin/Int Paydown, GNMA Sales $8.00
For each
option/future contract written, exercised or expired $40.00
For each
Cedel/Euro clear transaction $100.00
For each
Disbursement (Fund expenses only) $5.00
A
transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II.
Monthly Market Value Fee
Based
upon Month-end at a rate of Million
.0002 (2
Basis
Points) on
First $50
.0001 (1
Basis
Point) on
Next $25
.00075
(3/4 Basis
Points) on
Next Balance
III.
Out-of-Pocket Expenses
The only
out-of-pocket expenses charged to your account will be shipping fees or
transfer
fees.
IV.
Earnings Credits
On a
monthly basis any earnings credits generated from uninvested custody balances
will
be
applied against any cash management service fees generated. Earnings credits are
based on the average yield on the 91 day U.S. Treasury Xxxx for the preceding
thirteen weeks less the 10% reserve.
