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EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT, is made as of June 2, 1997, by and between MAGNA FUNDS, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Trust"), and THE FIFTH THIRD BANK, a banking company organized under the
laws of the State of Ohio (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Securities and cash of each of the
investment portfolios identified in Exhibit A hereto (such investment portfolios
and individually referred to herein as a "Fund" and collectively as the
"Funds"), be held and administered by the Custodian pursuant to this Agreement;
and
WHEREAS, the Trust is an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the Trust
and the Custodian hereby 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:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Trust and named in Exhibit B
hereto or in such resolutions of the Board of Trustees, certified by an
Officer, as may be received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time serving
under the Trust's Amended and Restated Declaration of Trust, dated
April 28, 1994, as from time to time amended.
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 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 Fund
computes the net asset value of the Fund.
1.5 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.6 "Officer" shall mean the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer, or any Assistant Treasurer of
the Trust.
1.7 "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 an Authorized Person,
(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 Trust shall cause all Oral Instructions to be confirmed
by Written Instructions. 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 Trust.
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If Oral Instructions vary from the Written Instructions which purport
to confirm them, the Custodian shall notify the Trust of such variance
but such Oral Instructions will govern unless the Custodian has not yet
acted.
1.8 "Custody Account" shall mean any account in the name of the Trust,
which is provided for in Section 3.2 below.
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1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written
Instructions when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Participants Trust Company or
The Depository Trust Company and (provided that Custodian shall have
received a copy of a resolution of the Board of Trustees, certified by
an Officer, specifically approving the use of such clearing agency as a
depository for the Trust) any other clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities
and Exchange Act of 1934 (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.
1.11 "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, shares or units of an investment company registered under
the 1940 Act money market instruments, guaranteed investment contracts
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 has the facilities to clear and to service.
1.12 "Shares" shall mean the units of beneficial interest issued by the
Trust.
1.13 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by one or more persons as the
Board of Trustees shall have from time to time authorized, or (ii)
communications by telex or any other such system from a person or
persons reasonably believed by the Custodian to be Authorized, or (iii)
communications transmitted electronically through the Institutional
Delivery System (IDS), or any other similar electronic instruction
system acceptable to Custodian and approved by resolutions of the Board
of Trustees, a copy of which, certified by an Officer, shall have been
delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the Custodian as
custodian of all Securities and cash owned by or in the possession of
the Funds at any time during the period of this Agreement, provided
that such Securities or cash at all times shall be and remain the
property of the Trust.
2.2 Acceptance. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth and
in accordance with the 1940 Act as amended. Except as specifically set
forth herein, the Custodian shall have no liability and assumes no
responsibility for any non-compliance by the Trust or a Fund of any
laws, rules or regulations.
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, except Securities maintained in a
Securities Depository or Book-Entry System, shall be physically
segregated from other Securities and non-cash property in the
possession of the Custodian and shall be identified as subject to this
Agreement.
3.2 Custody Account. The Custodian shall open and maintain in its trust
department a custody account in the name of each Fund, subject only to
draft or order of the Custodian, in which the Custodian shall enter and
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carry all Securities, cash and other assets of the Fund which are
delivered to it.
3.3 Appointment of Agents. In its discretion, the Custodian may appoint,
and at any time remove, any domestic bank or trust company, which has
been approved by the Board of Trustees and is qualified to act as a
custodian under the 1940 Act, as sub-custodian to hold Securities and
cash of the Funds and to carry out such other provisions of this
Agreement as it may determine, and may also open and maintain one or
more banking accounts with such a bank or trust company (any such
accounts to be in the name of the Custodian and subject only to its
draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or
liabilities under this Agreement.
3.4 Delivery of Assets to Custodian. The Fund shall deliver, or cause to be
delivered, to the Custodian all of the Fund's Securities, cash and
other assets, including (a) 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 (b) all cash received by the
Fund for the issuance, at any time during such period, 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 Funds in a Securities
Depository or in a Book-Entry System, subject to the following
provisions:
(a) Prior to a deposit of Securities of the Funds in any
Securities Depository or Book-Entry System, the Fund shall
deliver to the Custodian a resolution of the Board of
Trustees, certified by an Officer, authorizing and instructing
the Custodian on an on-going basis to deposit in such
Securities Depository or Book-Entry System all Securities
eligible for deposit therein and to 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. So long as such Securities
Depository or Book-Entry System shall continue to be employed
for the deposit of Securities of the Funds, the Trust shall
re-adopt such resolution and deliver a copy thereof, certified
by an Officer, to the Custodian as deemed necessary.
(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 and the Custodian's account on
the books of the Book-Entry System and Securities Depository
as the case may be, with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository
shall, by book-entry, or otherwise identify such Securities as
belonging to the Fund.
(d) If Securities purchases 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) Upon request, the Custodian shall provide the Fund with copies
of any report (obtained by the Custodian from a Book-Entry
System or Securities Depository in which Securities of the
Fund is kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such
Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to the Trust resulting (i) from the use of a Book-Entry
System or Securities Depository by reason of any negligence or
willful misconduct on the part of Custodian or any
sub-custodian appointed pursuant to Section 3.3 above or any
of its or their employees or agents, or (ii) from failure of
Custodian or any such sub-custodian to enforce effectively
such rights as it may have against a Book-Entry System or
Securities Depository. At its election, the Trust 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 for any loss or damage to the Funds arising
from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Trust has been made
whole for any such loss or damage.
3.6 Disbursement of Moneys from Custody Accounts. Upon receipt of Proper
Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance 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 appointed
pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below 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 shares or units of investment companies registered
under the 1940 Act against confirmation evidencing ownership
in favor of the Trust (iii) in the case of options on
Securities, against delivery to the Custodian (or such
sub-custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iv) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such sub-custodian) of evidence
of title thereto in favor of the Trust or any nominee referred
to in Section 3.9 below; and (v) in the case of repurchase or
reverse repurchase agreements entered into between the Trust
and a bank which is a member of the Federal Reserve System or
between the Trust 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 for the account of the Fund 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
Trust, including but not limited to the following payments for
the account of a Fund: interest; taxes; administration,
investment management, investment advisory, accounting,
auditing, transfer agent, custodian, trustee and legal fees;
and other operating expenses of a 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 Trust, the Custodian and
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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 Trust;
(g) For transfer in accordance with the provisions of any
agreement among the Trust, 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 Trust;
(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 purposes, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, 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.
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities
from a Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of a Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
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(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) In the case of a sale of shares or units of an investment
company delivery shall be effected through a sale of the
assets off the custodian's system, to reflect the transaction
within the investment company's book-entry system;
(d) To an Offeror's depository agent in connection with tender or
other similar offers for Securities of a Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(e) To the issuer thereof or its agent (i) for transfer into the
name of the Trust, the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above, or of 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;
(f) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(g) 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;
(h) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by a Fund;
(i) 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;
(j) For delivery in connection with any loans of Securities of a
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(k) For delivery as security in connection with any borrowings by
the Trust on behalf of a Fund requiring a pledge of assets by
such Fund, but only against receipt by the Custodian of the
amounts borrowed;
(l) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Trust or a Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, 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 Trust on behalf of a Fund;
(n) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of a Fund, 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
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contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by
the Trust on behalf of a Fund; or
(o) For any other proper corporate purposes, but only upon receipt
of Proper Instructions.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Trust, the Custodian shall with respect to all Securities held
for a Fund;
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(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Trust is entitled
either by law or pursuant to custom in the securities
business;
(b) Present for payment and, subject to Section 7.4 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 Trust, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(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
Internal Revenue Service ("IRS") and to the Trust at such
time, in such manner and containing such information as is
prescribed by the IRS;
(f) Hold for a 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 sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for a 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 for the account of the Trust on behalf of a
Fund, if eligible therefor. All other Securities held for a Fund may be
registered in the name of the Trust on behalf of such Fund, the
Custodian, or any sub-custodian appointed pursuant to Section 3.3
above, or in the name of any nominee of any of them, or in the name of
a Book-Entry System, Securities Depository or any nominee of either
thereof or in the case of shares or units of an investment company in
book-entry with the investment company and listed on the records of the
Custodian. Provided, however, that such Securities are held
specifically for the account of the Trust on behalf of a Fund. The
Trust 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 hereinabove referred to or
in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property
held for the Trust, 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 accrued; and (iii) canceled checks and bank records related
thereto. The Custodian shall keep such other books and records of the
Trust as the Trust shall reasonably request, or as may be required by
the 1940 Act, including, but not limited to Section 31 and Rule 31a-1
and Rule 31a-2 promulgated thereunder. Customer agrees to review
statements and reports promptly on receipt and inquiries regarding any
valuations or other reports must be submitted within one month of the
receipt of the Custodian's statement or report, and on expiration of
this period, statements and reports are considered agreed as correct.
Express or tacit approval of such statement or report implies
acceptance of the various entries listed therein and approval of any
reservations made by the Custodian. Thereafter, Customer assumes the
responsibility to correct any errors.
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(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with
rules and regulations of the Securities and Exchange Commission, (ii)
be the property of the Trust 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
Trust and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2
under the 0000 Xxx.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust with a
daily activity statement by Fund and a summary of all transfers to or
from the Custody Account on the day following such transfers. At least
monthly and from time to time, the Custodian shall furnish the Trust
with a detailed statement, by Fund, of the Securities and moneys held
for the Trust under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust with
such reports, as the Trust may reasonably request from time to time, on
the internal accounting controls and procedures for safeguarding
Securities, which are employed by the Custodian or any sub-custodian
appointed pursuant to Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies, if
any, relating to Securities which are not registered in the name of a
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 include all other proxy materials, if any,
promptly deliver to the Trust such proxies, all proxy soliciting
materials, which should include all other proxy materials, if any, and
all notices to such Securities.
3.14 Information on Corporate Actions. Custodian will promptly notify the
Trust of corporate actions, limited to those Securities registered in
nominee name and to those Securities held at a Depository or
sub-Custodian acting as agent for Custodian. Custodian will be
responsible only if the notice of such corporate actions is published
by the Financial Daily Card Service, X.X. Xxxxx Called Bond Service,
DTC, or received by first class mail from the agent. For market
announcements not yet received and distributed by Custodian's services,
Trust will inform its custody representative with appropriate
instructions. Custodian will, upon receipt of Trust's response within
the required deadline, effect such action for receipt or payment for
the Trust. For those responses received after the deadline, Custodian
will effect such action for receipt or payment, subject to the
limitations of the agent(s) effecting such actions. Custodian will
promptly notify Trust for put options only if the notice is received by
first class mail from the agent. The Trust will provide or cause to be
provided to Custodian all relevant information contained in the
prospectus for any security which has unique put/option provisions and
provide Custodian with specific tender instructions at least ten
business days prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities for
the Trust, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and
the title or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any) or other units
purchased, (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 to whom such amount is payable. The
Custodian shall upon receipt of such Securities purchased by a Fund pay
out of the moneys held for the account of such 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 a Fund, if in the relevant
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
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for the purchase of Securities for a Fund is made by the Custodian in
advance of receipt for the account of the Fund of the Securities
purchased but in the absence of specific Written or Oral Instructions
to so pay in advance, the Custodian shall be liable to the Fund for
such Securities to the same extent as if the Securities had been
received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title
or other description thereof, (b) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (c) the
date of sale and settlement (d) the sale price per unit, (e) the total
amount payable upon such sale, and (f) the person to whom such
Securities are to be delivered. Upon receipt of the total amount
payable to the Trust 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 Trust 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 of the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from time
to time, the Custodian may credit the relevant Custody Account, prior
to actual receipt of final 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 Trust, and (iii) income from cash, Securities or other
assets of the Trust. 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 Trust to use funds so
credited to its 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
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 Trust to
facilitate the settlement of a Trust transactions on behalf of a Fund
in its Custody Account. Any such advance shall be repayable immediately
upon demand made by Custodian.
ARTICLE V
REDEMPTION OF TRUST SHARES
Transfer of Funds. From such funds as may be available for the purpose in the
relevant Custody Account, and upon receipt of Proper Instructions specifying
that the funds are required to redeem Shares of a Fund, the Custodian shall wire
each amount specified in such Proper Instructions to or through such bank as the
Trust may designate with respect to such amount in such Proper Instructions.
Upon effecting payment or distribution in accordance with proper Instructions,
the Custodian shall not be under any obligation or have any responsibility
thereafter with respect to any such paying bank.
ARTICLE VI
SEGREGATED ACCOUNTS
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Upon receipt of Proper Instructions, the Custodian shall establish and maintain
a segregated account or accounts for and on behalf of each 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
Trust, 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 Trust,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by a Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by a
Fund,
(d) for purposes of compliance by the Trust 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
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(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 Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate
purposes.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement,
and shall be without liability to the Trust for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or
claim unless such loss, damages, cost, expense, liability or claim
arises directly or indirectly from bad faith, negligence or reckless or
willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian's cumulative
liability within a calendar year shall be limited with respect to the
Trust or any party claiming by, through or on behalf of the Trust for
the initial and all subsequent renewal terms of this Agreement, to the
actual damages sustained by the Trust (actual damages for uninvested
funds shall be the overnight Feds fund rate). 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, subject to the standard of care set
forth above. The Custodian shall promptly notify the Trust of any
action taken or omitted by the Custodian pursuant to advice of counsel.
Except as otherwise explicitly set forth herein, the Custodian shall
not be under any obligation at any time to ascertain whether the Trust
is in compliance with the 1940 Act, the regulations thereunder, the
provisions of the Trust's charter documents or by-laws, or its
investment objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to the Trust 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.
7.3 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.
7.4 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 Trust
if such Securities are in default or payment is not made after due
demand or presentation.
7.5 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/or
any Written Instructions actually received by it pursuant to this
Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set
forth in this Agreement, and no covenant or obligation shall be implied
in this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply necessary
information, by the Trust, to the entity or entities appointed by the
Trust to keep the books of account of the Trust and/or compute the
value of the assets of the Trust. The Custodian shall take all such
reasonable actions as the Trust may from time to time request to enable
the Trust to obtain, from year to year, favorable opinions from the
Trust's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the
Trust's registration statement on Form N-1A, its reports on Form N-SAR
and any other reports required by the
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Securities and Exchange Commission, and (b) the fulfillment by the
Trust of any other requirements of the Securities and Exchange
Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3
above, and any nominee of the Custodian or of such sub-custodian from
and against any loss, damage, cost, expense (including attorneys' fees
and disbursements), liability (including, without limitation, liability
arising under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or claim
arising directly or indirectly (a) from the fact that Securities are
registered in the name of any such nominee, or (b) from any action or
inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon
Proper Instructions, or (c) generally, from the performance of its
obligations under this Agreement or any sub-custody agreement with a
sub-custodian appointed pursuant to Section 3.3 above or, in the case
of any such sub-custodian, from the performance of its obligations
under such custody agreement, provided that neither the Custodian nor
any such sub-custodian shall be indemnified and held harmless from and
against any such loss, damage, cost, expense, liability or claim
arising from the Custodian's or such sub-custodian's negligence, bad
faith or willful misconduct, or the negligence, bad faith or wilful
misconduct of an agent or employee of the Custodian or a sub-custodian.
8.2 Indemnity to be Provided. If the Trust requests the Custodian to take
any action with respect to Securities, which may, in the opinion of the
custodian, result in the Custodian or its nominee becoming liable for
the payment of money or incurring liability of some other form, the
Custodian shall not be required to take such action until the Trust
shall have provided indemnity therefor to the Custodian in an amount
and form satisfactory to the Custodian.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust 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; 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 the Custodian in the event of a failure
or delay shall use its best efforts to ameliorate the effects of any such
failure or delay. Notwithstanding the foregoing, the Custodian shall maintain
sufficient disaster recovery procedures to minimize interruptions.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of the date
first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the
date of the giving of such notice. If a successor custodian shall have
been appointed by the Board of Trustees, the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian, on such
specified date of termination (a) deliver directly to the successor
custodian all Securities (other than Securities held in a Book-Entry
System
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or Securities Depository) and cash then owned by the Trust and held by
the Custodian as custodian, and (b) transfer any Securities held in a
Book-Entry System or Securities Depository to an account of or for the
benefit of the Trust at the successor custodian, provided that the
Trust shall have paid to the Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be
entitled. Upon such delivery and transfer, the Custodian shall be
relieved of all obligations under this Agreement. The Trust 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 in the State of Ohio or upon the happening of a
like event at the direction of an appropriate regulatory agency or
court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian is not
designated by the Trust on or before the date of termination specified
pursuant to Section 10.2 above, then the Custodian shall have the right
to deliver to a bank or trust company of its own selection, which is
(a) a "Bank" as defined in the 1940 Act, (b) has aggregate capital,
surplus and undivided profits as shown on its then most recent
published report of not less than $25 million, and (c) is doing
business in New York, New York, all Securities, cash and other property
held by Custodian under this Agreement and to transfer to an account of
or for the Trust at such bank or trust company all Securities of the
Trust 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. If, after reasonable
inquiry, Custodian cannot find a successor custodian as contemplated in
this Section 10.3, then Custodian shall have the right to deliver to
the Trust all Securities and cash then owned by the Trust and to
transfer any Securities held in a Book-Entry System or Securities
Depository to an account of or for the Trust. Thereafter, the Trust
shall be deemed to be its own custodian with respect to the Trust and
the Custodian shall be relieved of all obligations under this
Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to time
by the Trust and the Custodian. The fees and other charges in effect on the date
hereof and applicable to the Funds are set forth in Exhibit C attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
The Trust is a business trust organized under the laws of the Commonwealth of
Massachusetts. A copy of the Trust's Agreement and Declaration of Trust is
hereby made a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and any and all amendments thereto so filed or
hereafter filed. Notice is hereby given that the obligations of the Trust
entered into in the name of the Trust or on behalf thereof by any of the
Trustees, officers, employees or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, officers, employees,
agents or shareholders of the Trust or the Funds personally, but bind only the
assets of the Trust, and all persons dealing with any of the Funds of the Trust
must look solely to the assets of the Trust belonging to such Fund for the
enforcement of any claims against the Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and other
communications to be given hereunder shall be in writing and shall be sent or
delivered to the other party at the address set forth under its name herein
below:
To the Trust: To the Fund:
Magna Funds The Fifth Third Bank
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c/o Bisys Fund Services 00 Xxxxxxxx Xxxxxx Xxxxx
0000 Xxxxxxx Xxxx Xxxxxxxxxx, Xxxx 00000
Xxxxxxxx, Xxxx 00000 Attn: Area Manager - Trust Operations
Attn: Xxxx Xxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmission by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust 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 or its
registration statement for the Trust and such other printed matter as
merely identifies Custodian as custodian for the Trust. The Trust 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.
14.3 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
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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.
14.4 Amendments. This Agreement cannot be changed orally and no amendment to
this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each
of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall
not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall
not be assignable by either party hereto without the written consent of
the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: MAGNA FUNDS
--------------------------
By: -------------------------------
Its: ------------------------------
ATTEST: THE FIFTH THIRD BANK
--------------------------
By: -------------------------------
Its: ------------------------------
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Dated: June 2, 1997
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
MAGNA FUNDS AND THE FIFTH THIRD BANK
JUNE 2, 1997
Name of Fund Date
------------ ----
Magna Growth and Income Fund June 2, 1997
Magna Intermediate Government Bond Fund June 2, 1997
MAGNA FUNDS
By: ------------------------------------
Its: ------------------------------------
THE FIFTH THIRD BANK
By: ------------------------------------
Its: ------------------------------------
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Dated: _______, 199__
EXHIBIT B
TO THE CUSTODY AGREEMENT BETWEEN
MAGNA FUNDS AND THE FIFTH THIRD BANK
_____________, 199__
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons authorized
by the Trust to Administer each Custody Account.
Name Signature
--------------------------------- --------------------------------
--------------------------------- --------------------------------
--------------------------------- --------------------------------
--------------------------------- --------------------------------
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SIGNATURE RESOLUTION
RESOLVED, That all of the following officers of MAGNA FUNDS and any of them,
namely the Chairman, President, Vice President, Secretary and Treasurer, are
hereby authorized as signers for the conduct of business for an on behalf of the
Funds with THE FIFTH THIRD BANK:
CHAIRMAN
------------------------------ ------------------------------
PRESIDENT
------------------------------ ------------------------------
VICE PRESIDENT
------------------------------ ------------------------------
VICE PRESIDENT
------------------------------ ------------------------------
VICE PRESIDENT
------------------------------ ------------------------------
VICE PRESIDENT
------------------------------ ------------------------------
TREASURER
------------------------------ ------------------------------
SECRETARY
------------------------------ ------------------------------
In addition, the following Assistant Treasurer is authorized to sign on behalf
of the Trust for the purpose of effecting securities transactions:
ASSISTANT TREASURER
The undersigned officers of MAGNA FUNDS hereby certify that the foregoing is
within the parameters of a Resolution adopted by Trustees of the Trust in a
meeting held -----------------, 19---, directing and authorizing preparation
of documents and to do everything necessary to effect the Custody Agreement
between MAGNA FUNDS and THE FIFTH THIRD BANK.
By:
---------------------------------
Its:
---------------------------------
By:
---------------------------------
Its:
----------------------------------
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EXHIBIT C
TO THE CUSTODY AGREEMENT BETWEEN
MAGNA FUNDS AND THE FIFTH THIRD BANK
_____________, 19__
MUTUAL FUND CUSTODY FEE SCHEDULE
BASIC ACCOUNT CHARGE
FUND SIZE:
Less than $50MM $
$50MM - $99MM $
$100MM - $199MM $
$200MM - $349MM $
Greater than $350MM $
TRANSACTION FEES
DTC/FED Eligible Trades $
DTC/FED Ineligible Trades $
Amortized Security Trades $
Repurchase Agreements (purchase and maturity) $
Third Party Repo's (purchase and maturity) $
Physical Commercial Paper Trades
(purchase and maturity) $
Book-Entry Commercial Paper Trades
(purchase and maturity) $
Options, each transaction $
Amortized Security Receipts $
A transaction is a purchase, sale, maturity, redemption, tender, exchange,
dividend reinvestment, deposit or withdrawal of a security (with the exception
of Fifth Third Certificates of Deposit, Commercial Paper & Repo's).
MISCELLANEOUS FEES
Wire Transfers & Check Disbursements $
Depository/Transfer Agent Reject $
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