CUSTODIAN CONTRACT
between
Xxxxx Series Fund, Inc.
and
NORWEST BANK MINNESOTA, N.A.
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It..................................1
2. Duties of the Custodian with Respect to Property of the Fund Held by
the Custodian in the United States.....................................................1
2.1 Holding Securities.............................................................1
2.2 Delivery of Securities.........................................................1
2.3 Registration of Securities.....................................................3
2.4 Bank Accounts..................................................................3
2.5 Payments for Shares............................................................3
2.6 Availability of Federal Funds..................................................3
2.7 Collection of Income...........................................................3
2.8 Payment of Company Monies......................................................3
2.9 Liability for Payment in Advance of Receipt of Securities Purchased............4
2.10 Payments for Repurchases or Redemptions of Shares of a Fund....................4
2.11 Appointment of Agents..........................................................4
2.12 Deposit of Fund Assets in Securities System....................................4
2.13 Segregated Account.............................................................5
2.14 Ownership Certificates for Tax Purposes........................................6
3. Duties of Custodian with Respect to Fund Property Held Outside of the United States....6
3.1 Appointment of Foreign Sub-Custodians..........................................6
3.2 Assets to be Held..............................................................6
3.3 Segregation of Securities......................................................6
3.4 Agreement with Foreign Banking Institution.....................................6
3.5 Access of Independent Accountants of the Company...............................7
3.6 Reports by Custodian...........................................................7
3.7 Foreign Securities Transactions................................................7
3.8 Foreign Securities Lending.....................................................8
3.9 Liability of Foreign Sub-Custodians............................................8
3.10 Monitoring Responsibilities....................................................8
3.11 Branches of United States Banks................................................8
3.12 Expropriation Insurance........................................................8
4. Proxies ...............................................................................9
5. Communications Relating to Fund Portfolio Securities...................................9
6. Proper Instructions....................................................................9
7. Actions Permitted Without Express Authority............................................9
8. Evidence of Authority..................................................................9
9. Class Actions..........................................................................10
10. Duties of Custodian With Respect to the Books of Account and Calculation of Net
Asset Value and Net Income.............................................................10
11. Records................................................................................10
12. Opinion of Company's Independent Accountant............................................10
13. Reports to Company by Independent Public Accountant....................................10
14. Compensation of Custodian..............................................................11
15. Responsibility of Custodian............................................................11
16. Effective Period, Termination and Amendment............................................11
17. Successor Custodian....................................................................12
18. Interpretive and Additional Provisions.................................................12
19. Minnesota Law to Apply.................................................................12
20. Prior Contracts........................................................................12
21. General................................................................................13
CUSTODIAN CONTRACT
This AGREEMENT made as of March 23, 1998, by and between Xxxxx Series
Fund, Inc., a Nebraska corporation having its principal office and place of
business at Xxx Xxxxxxx Xxxxx, xxxxx 000, 0000 Xxxxx 000 Xxxxxx, Xxxxx,
Xxxxxxxx, (the "Company"), and Norwest Bank Minnesota, N.A., a national banking
association having its principal office and place of business at Sixth and
Marquette, Xxxxxxxxxxx, XX 00000 (the "Custodian").
WHEREAS, the Company is a mutual fund whose shares are currently
offered in the following series (which, together with each future series of the
Company that adopts this contract are hereafter referred to individually as a
"Fund" and collectively as the "Funds") as set forth in Exhibit A.
WHEREAS, the Company desires to appoint the Custodian as the custodian
for each Fund, and the Custodian desires to accept such appointment;
WITNESSETH, that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
The Company hereby employs the Custodian as the custodian of the assets
of each Fund, including securities the Company desires to be held in places
within the United States ("domestic securities") and securities the Company
desires to be held outside of the United States ("foreign securities"). The
Company agrees to deliver to the Custodian all securities and cash owned by each
Fund, and all payments of income, payments of principal or capital distributions
received by the Fund with respect to all securities owned by the Fund from time
to time, and the cash consideration received by the Fund for such new or
treasury shares of capital stock ("Shares") of the Fund as may be issued or sold
from time to time. The Custodian shall not be responsible for any property of a
Fund held or received by the Fund and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
6), the Custodian shall from time to time employ one or more sub-custodians, but
only in accordance with any necessary approvals by the Board of Directors of the
Company, and provided that the appointment by the Custodian of any
sub-custodians shall not relieve the Custodian of any of its responsibilities or
liabilities hereunder.
2. Duties of the Custodian with Respect to Fund Property held by the
Custodian in the United States.
2.1 Holding Securities.
The Custodian shall hold and physically segregate for the account of
each of the Funds all non-cash property, including all securities owned by the
Funds, other than securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a Federal Reserve
Bank, as Custodian may select, and to permit such deposited assets to be
registered in the name of Custodian or Custodian's agent or nominee on the
records of such Federal Reserve Bank or such registered clearing agency or the
nominee of either, and to employ and use securities depositories, clearing
agencies, clearance systems, sub-custodians or agents located outside the United
States in connection with transactions involving foreign securities,
collectively referred to herein as a "Securities System".
2.2 Delivery of Securities.
The Custodian shall release and deliver securities owned by the Company
for the account of a Fund held by the Custodian or in a Securities System
account of the Custodian only upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Company on behalf of a Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund;
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5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Company for the account of a Fund or into the name
of any nominee or nominees of the Custodian or into the name
or nominee name of any agent appointed pursuant to Section
2.11 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a
different number of bonds, 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;
7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts of
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Company on behalf of a Fund, but only against receipt
of adequate collateral as agreed upon from time to time by the
Custodian and the Company, which may be in the form of cash or
obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with
any loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of securities
owned by a Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Company on behalf of a Fund requiring a pledge of assets
by the Company on behalf of such Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Company on behalf of a Fund, the Custodian
and a broker-dealer registered under the Securities Exchange
Act of 1934 (the "Exchange Act") and a member of the National
Association of Securities Dealers, Inc. ("NASD"), relating to
the compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Company;
13) For delivery in accordance with the provisions of any
agreement among the Company 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
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Company on behalf of a Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the applicable Fund, for delivery to
such Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time to
time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemptions; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certificate signed
by an officer of the Company, specifying the securities to be
delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
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2.3 Registration of Securities.
Domestic securities held by the Custodian (other than bearer
securities) shall be registered in the name of the Company for the account of
the applicable Fund(s) or in the name of any nominee of the Company or of any
nominee of the Custodian which nominee shall be assigned exclusively to the
Company, unless the Company has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the applicable Fund(s), or in the name or nominee
name of any agent appointed pursuant to Section 2.11 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Company under the terms of this
Contract shall be in "street name" or other good delivery form.
2.4 Bank Accounts.
Cash held by the Custodian for each Fund and otherwise uninvested may
be deposited in the Banking Department of the Custodian or in such other banks
or trust companies as the Custodian may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of 1940 and
that each such bank or trust company and the cash to be deposited with each such
bank or trust company shall be approved by vote of a majority of the Board of
Directors of the Company. Such cash shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Payments for Shares.
The Custodian shall receive from the Transfer Agent of each Fund and
deposit into the Fund account such payments as are received for Shares of the
Fund issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by it of
payments for Shares of the Funds.
2.6 Availability of Federal Funds.
Upon mutual agreement between the Company and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions, make federal funds
available to the Funds as of specified times agreed upon from time to time by
the Company and the Custodian in the amount of checks received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
The Custodian shall, or shall cause its agent or sub-custodian to,
collect on a timely basis all income and other payments with respect to
registered securities held hereunder to which each Fund shall be entitled either
by law or pursuant to custom in the securities business, and shall collect on a
timely basis all income and other payments with respect to bearer securities if,
on the date of payment by the issuer, such securities are held by the Custodian
or its agent or sub-custodian and shall credit such income, as collected, to the
applicable Fund's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder. Unless the Custodian is
the lending agent in connection with securities loaned by the Fund, income due
each Fund on securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Company. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Company with
such information or data as may be necessary to assist the Company in arranging
for the timely delivery to the Custodian of the income to which each Fund is
properly entitled.
2.8 Payment of Company Monies.
Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of each Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
each Fund but only (a) against the delivery of such securities
or evidence of title to such options, futures contracts or
options on futures contracts, to the Custodian (or any bank,
banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment
Company Act of 1940 to act as a custodian and has been
designated by the Custodian as its agent for this purpose)
registered in the name of the Company for the account of a
Fund or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer; (b) in
the case of a purchase effected through a Securities System,
in accordance with the conditions
3
set forth in Section 2.12 hereof or (c) in the case of the
repurchase agreements entered into between the Company and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Company for the account of a Fund of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from a Fund;
2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by a Fund as
set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by a
Fund, including but not limited to the following payments for
the account of such Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Company and the applicable Fund;
6) For payment of the amount of dividends received in respect of
securities sold short; or
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certificate signed by an
officer of the Company, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
The Custodian shall not make payment for the purchase of domestic
securities for the account of a Fund in advance of receipt of the securities
purchased in the absence of specific written instructions from the Company to so
pay in advance. In any and every case where payment for purchase of domestic
securities for the account of a Fund is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific written
instructions from the Company to so pay in advance, the Custodian shall be
absolutely liable to the Company (for the account of the Fund) for such
securities to the same extent as if the securities had been received by the
Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation or Bylaws and any applicable votes
of the Board of Directors of the Company, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
2.11 Appointment of Agents.
The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940 to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as the Custodian may
from time to time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of any of its responsibilities or liabilities
hereunder.
2.12 Deposit of Fund Assets in Securities Systems.
The Custodian may deposit and/or maintain domestic securities owned by
any Fund in a clearing agency registered with the Securities and Exchange
commission under Section 17A of the Exchange Act, which acts as a securities
depository, or in a Federal Reserve Bank, as Custodian may select, and to permit
such deposited assets to be registered in the name of Custodian or Custodian's
agent or nominee on the records of such Federal Reserve Bank or such registered
clearing agency or the nominee of either (collectively referred to herein as
"Securities System") in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and subject to
the following provisions:
4
1) The Custodian may keep domestic securities of a Fund in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of a Fund which are maintained in a Securities
System shall identify by book-entry those securities belonging
to such Fund;
3) The Custodian shall pay for domestic securities purchased for
the account of a Fund upon (i) the simultaneous receipt of
advice from the Securities System that such securities have
been transferred to the 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. The Custodian shall
transfer domestic securities sold for the account of a Fund
upon (i) the simultaneous receipt of advice from the
Securities System that payment for such securities has been
transferred to the 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. Copies of all advises
from the Securities System of transfers of securities for the
account of a Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Company at
its request. Upon request, the Custodian shall furnish the
Company confirmation of each transfer to or from the account
of a Fund in the form of a written advice or notice and shall
furnish to the Company copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of each Fund.
4) The Custodian shall provide the Company with any report
obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System;
5) The Custodian shall have received the initial certificate
required by Article 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Company (for the account of
each Fund) for any loss or damage to the applicable Fund(s)
resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent or employee to
enforce effectively such rights as it may have against the
Securities System; at the election of the Company, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
applicable Funds have not been made whole for any such loss or
damage.
2.13 Segregated Account.
The Custodian shall upon receipt of Proper Instructions 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 an account by the Custodian pursuant to Section 2.12
hereof, (i) in accordance with the provisions of any agreement among the
Company, the Custodian and a broker-dealer registered under the Exchange Act and
a member of 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 Company for the account of
any Fund, (ii) for the purpose of segregating cash or government securities in
connection with options purchased, sold or written by the Company for the
account of any Fund or commodity futures contracts or options thereon purchased
or sold by the Company for the account of any Fund, (iii) for the purpose of
compliance by the Company with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate purposes,
but only, in the case of the clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Directors of the
Company signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes.
The Custodian shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of each Fund held
by it and in connection with transfers of securities.
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3. Duties of the Custodian with Respect to Fund Property Held Outside of
the United States.
3.1 Appointment of Foreign Sub-Custodians.
The Custodian is authorized and instructed, either directly or
indirectly (through one or more sub-custodian U.S. banks), to employ as
sub-custodians for any Fund's securities and other assets maintained outside of
the United States the foreign banking institutions, foreign securities
depositories and foreign clearing agencies designated in the Funds current
Statement of Additional Information; provided, however, that, notwithstanding
the list of institutions of such information set forth in the Statement of
Additional Information, the Custodian (including any of its agents and
subcustodians) is authorized to directly or indirectly employ or retain any
sub-custodian, depository or clearing agency only if said employed or retained
institution qualifies as either (a) an "eligible foreign custodian", as defined
in Rule 17f-5 under the Investment Company Act of 1940, or (b) a "bank", as
defined in Section 2(a)(5) of the Investment Company Act of 1940, that in turn
qualifies as an eligible domestic custodian under Section 17(f) of the
Investment Company Act of 1940; and provided further that the Custodian shall be
liable to the Company for any loss of any Fund assets custodied with any
institution directly or indirectly employed or retained by the Custodian (or any
of its agents or sub-custodians) that does not meet the qualifications of either
clause (a) of (b) of the preceding provision.
Upon receipt of Proper Instructions, together with a certified
resolution of the Company's Board of Directors, the Custodian and the Company
may agree to amend Schedule A hereto from time to time to designate additional
or alternative foreign banking institutions, foreign securities depositories and
foreign clearing agencies to act as sub-custodians. Each foreign banking
institution shall be authorized to deposit securities in foreign securities
depositories and foreign clearing agencies authorized pursuant to Rule 17f-5
under the Investment Company Act of 1940. Upon receipt of Proper Instructions
from the Company the Custodian shall promptly cease the employment of any one or
more of such sub-custodians for maintaining custody of the assets of the
applicable Fund(s).
3.2 Assets to be Held.
The Custodian shall limit the securities and other assets maintained in
the custody of the foreign sub-custodian to: (a) "foreign securities", as
defined in paragraph (c) (1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the Custodian or the
Company may determine to be reasonably necessary to effect the foreign
securities transactions of the applicable Fund(s).
3.3 Segregation of Securities.
The Custodian shall identify on its books as belonging to the Company
for the account of one or more of the Fund(s), the foreign securities of each
such Fund held by each foreign sub-custodian. Each agreement pursuant to which
the Custodian or its duly appointed U.S. sub-custodian employs a foreign banking
institution shall require that such institution establish a custody account for
the Custodian (or its U.S. sub-custodian, as the case may be) on behalf of its
customers and physically segregate in that account securities and other assets
of the Custodian's customers, and, in the event that such institution deposits a
Fund's securities in a foreign securities depository, the sub-custodian shall
identify on its books as belonging to the Custodian (or its U.S. sub-custodian,
as the case may be), as agent for the Custodian's customers, the securities so
deposited (all collectively referred to as the "Account").
3.4 Agreement with Foreign Banking Institution.
Each agreement with a foreign banking institution shall provide that:
(a) each Fund's assets will not be subject to any right, charge, security
interest, lien or claim or any kind in favor of the foreign banking institution
or its creditors, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for each Fund's assets will be freely
transferable without the payment of money or value other than for custody or
administration, which may include payment of stamp duties or government taxes;
(c) adequate records will be maintained identifying the assets as belonging to
the customers of Custodian; (d) officers of or auditors employed by, or other
representatives of the Custodian, including independent public accountants for
each Fund, will be given access to the books and records of the foreign banking
institution relating to its actions given under its agreement with the Custodian
or shall be given confirmation of the contents of such books and records; and
(e) assets of each Fund held by the foreign sub-custodian will be subject only
to the instructions of the Company, the Custodian or their agents.
6
3.5 Access of Independent Accountants of the Company.
Upon request of the Company, the Custodian will use its best efforts to
arrange for the independent accountants of the Company to be afforded access to
the books and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance of
such foreign banking institutions under its agreement with the Custodian (or its
U.S. sub-custodian, as the case may be).
3.6 Reports by Custodian.
The Custodian will supply to the Company from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of each
Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of each applicable Fund's
securities and other assets and advices or notifications of any transfers of
securities to or from each custodial account maintained by a foreign
sub-custodian for the Custodian on behalf of each applicable Fund indicating, as
to securities acquired for the Fund, the identity of the entity having physical
possession of such securities.
3.7 Foreign Securities Transactions.
1) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the
Custodian shall make or cause its foreign sub-custodian to
transfer, exchange or deliver foreign securities owned by the
Company for the account of a Fund, but except to the extent
explicitly provided herein only in any of the cases specified
in Section 2.2.
2) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the
Custodian shall pay out or cause its foreign sub-custodian to
pay out monies of a Fund, but except to the extent explicitly
provided herein only in any of the cases specified in Section
2.8.
3) Settlement and payment for securities received for the account
of a Fund and delivery of securities maintained for the
account of a Fund may, upon receipt of Proper Instructions, be
effected in accordance with the customary or established
securities trading or securities processing practices and
procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such
securities from such purchaser or dealer.
4) With respect to any transaction involving foreign securities,
the Custodian or any sub-custodian in its discretion may cause
a Fund's account to be credited on either the contractual
settlement date or the actual settlement date with the
proceeds of any sale or exchange of foreign securities from
the account of the applicable Fund and to be debited on either
the contractual settlement date or the actual settlement date
for the cost of foreign securities purchased or acquired for
such Fund according to Custodian's then current internal
policies and procedures pertaining to securities settlement,
which policies and procedures may change from time to time.
Custodian shall advise the Company of any changes to such
policies and procedures. The Custodian may reverse any such
credit or debit made on the contractual settlement date if the
transaction with respect to which such credit or debit was
made fails to settle within a reasonable period, determined by
Custodian in its reasonable discretion, after the contractual
settlement date except that if any foreign securities
delivered pursuant to this section are returned by the
recipient thereof, the Custodian may cause any such credits
and debits to be reversed at any time.
5) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
6) Until the Custodian receives written instructions to the
contrary the Custodian shall, or shall cause the sub-custodian
to, collect all interest and dividends paid on securities held
in each applicable Fund's account, unless such payment is in
default. Unless otherwise instructed, the Custodian shall
convert interest, dividends and principal received with
respect to securities in a Fund's account into United States
dollars, and the Custodian shall perform foreign exchange
contracts for the conversion of United States dollars to
foreign currencies for the settlement of trades whenever it is
practicable to do so through customary banking channels.
Customary banking channels may vary based upon industry
practice in each jurisdiction, and shall include the banking
facilities of the Custodian's affiliates, in accordance with
such affiliate's then prevailing internal policy on funds
repatriation. All risk and expense incident to such foreign
collection and conversions is the responsibility of each
applicable Fund's account, and Custodian shall have no
responsibility for fluctuation in exchange rates affecting
collections or conversions.
7
3.8 Foreign Securities Lending.
Notwithstanding any other provisions contained in this Contract, the
Custodian and any sub-custodian shall deliver and receive securities loaned or
returned in connection with securities lending transactions only upon and in
accordance with Proper Instructions; provided, if the Custodian is not the
lending agent in connection with such securities lending, then neither the
Custodian or any sub-custodian shall undertake, or otherwise be responsible for,
(i) marking to market values for such loaned securities.
(ii) collection of dividends, interest or other disbursements or
distributions made with respect to such loaned securities
(iii)receipt of corporate action notices, communications, proxies or
instruments with respect to such loaned securities, and
(iv) custody, safekeeping, valuation or any other actions or services
with respect to any collateral securing any such securities
lending transactions.
In the event that the Custodian is the applicable Fund's lending agent
in connection with a specific securities loan, the Custodian shall undertake to
perform all of the above duties with regard to such loan, except that the
Company shall not receive, nor be enabled to vote, proxies in connection with
such loaned security.
3.9 Liability of Foreign Sub-Custodians.
Each agreement pursuant to which the Custodian (or its U.S.
sub-custodian bank, as applicable) employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Custodian and Custodian's customers from and against any loss, damage, cost,
expense, liability or claim arising out of such sub-custodian's negligence,
fraud, bad faith, willful misconduct or reckless disregard of its duties. At the
election of the Company, it shall be entitled to be subrogated to the right of
the Custodian with respect to any claims against the Custodian's U.S.
sub-custodian bank (if any) or a foreign banking institution as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Company has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Monitoring Responsibilities.
The Custodian shall furnish annually to the Company information
concerning the foreign sub-custodians employed by the Custodian (or its U.S.
sub-custodian bank, as applicable). Such information shall be similar in kind
and scope to that furnished to the Company in connection with the initial
approval of this Contract (and any contracts with U.S. and foreign
sub-custodians entered into pursuant hereto). In addition, the Custodian will
promptly inform the Company in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or is
notified by the Custodian's U.S. sub-custodian bank (if any) or a foreign
banking institution employed as foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (United States dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case computed in
accordance with generally accepted United States accounting principles).
3.11 Branches of United States Banks.
Except as otherwise set forth in this Contract, the provisions hereof
shall not apply where the custody of any Fund's assets maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section 2(a) (5)
of the Investment Company Act of 1940 which meets the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-custodian
shall be governed by Article 1 of this Contract.
3.12 Expropriation Insurance.
The Custodian represents that it does not intend to obtain any
insurance for the benefit of the Company or any Fund which protects against the
imposition of exchange control restrictions or the transfer from any foreign
jurisdiction of the proceeds of sale of any securities or against confiscation,
expropriation or nationalization of any securities or the assets of the issuer
of such securities is organized or in which securities are held for safekeeping
either by Custodian or any sub custodians in such country. The Custodian
represents that its understanding of the position of the Staff of the Securities
and Exchange Commission is that any investment company investing in securities
of foreign issuers has the responsibility for reviewing the possibility of the
imposition of exchange control restrictions which would affect the liquidity of
such investment company's assets and the possibility of exposure to political
risk, including the appropriateness of insuring against such risk.
8
4. Proxies.
The Custodian shall, with respect to the securities held hereunder,
cause to be promptly executed by the registered holder of such securities, if
the securities are registered otherwise than in the name of the Company or a
nominee of the Company, all proxies, without indication of the manner in which
such proxies are to be voted, and shall promptly deliver to the Company such
proxies, all proxy soliciting materials and all notices relating to such
securities.
5. Communications Relating to Fund Portfolio Securities.
The Custodian shall transmit promptly to the Company all written
information (including, without limitation, dependency of calls and maturities
of securities and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Company) received by the Custodian from
issuers of the securities being held for each Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Company all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Company desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the Company
shall notify the Custodian at least three business days prior to the date on
which the Custodian is to take such action.
6. Proper Instructions.
Proper Instructions as used in this Contract means a writing signed or
initialed by one or more person or persons as the Board of Directors of the
Company shall have from time to time authorized. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall cause
all oral instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by the Board
of Directors of the Company accompanied by a detailed description of procedures
approved by the Board of Directors, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for each Fund's assets.
7. Actions Permitted Without Express Authority.
The Custodian may in its discretion, without express authority from the
Company:
1) Make payments to itself or others for minor expenses of
handling securities provided that all such payments shall be
accounted for to the Company;
2) Surrender securities in temporary form for securities in
definitive form;
3) Endorse for collection, in the names of the applicable Fund,
checks, drafts and other negotiable instruments; and
4) In general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Company except as otherwise directed by the Board of
Directors of the Company.
8. Evidence of Authority.
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Company. The Custodian may receive and accept a certified copy of a vote of the
Board of Directors of the Company as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action duly made or taken by the Board of Directors as described in such
vote, and such vote may be considered as in full force and effect until receipt
by the Custodian of written notice to the contrary.
9. Class Actions. The Custodian shall transmit promptly to the Company
all notices or other communications received by it in connection with any
class action lawsuit relating to securities currently or previously held for
one or more of the Funds. Upon being directed by the Company to do so, the
Custodian shall furnish to the Company any and all written materials which
establish the holding/ownership, amount held/owned, and period of
holding/ownership of the securities in question.
9
10. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Company and each Fund under the Investment Company Act of
1940, with particular attention to Section 31 thereof and Rule 31a-1 and 31a-2
thereunder. The Custodian shall also maintain records as directed by the Company
in connection with applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Company and
the Funds. With respect to securities and cash deposited with a Securities
System, a sub-custodian or an agent of the Custodian, the Custodian shall
identify on its books all such securities and cash as belonging to the Company
for the account of the applicable Fund(s). All such records shall be the
property of the Company and shall at all times during the regular business hours
of the Custodian be open for inspection by duly authorized officers, employees
or agents of the Company. Such records shall be made available to the Company
for review by employees and agents of the Securities and Exchange Commission.
The Custodian shall furnish to the Company, and its agents as directed by the
Company, as of the close of business on the last day of each month a statement
showing all transactions and entries for the account of the Company during that
month, and all holdings as of month-end.
All records so maintained in connection with the performance of its
duties under this Agreement shall remain the property of the Company and, in the
event of termination of this Agreement, shall be delivered to the Company.
Subsequent to such delivery, and surviving the termination of this Agreement,
the Company shall provide the Custodian access to examine and photocopy such
records as the Custodian, in its discretion, deems necessary, for so long as
such records are retained by the Company.
11. Opinion of Company's Independent Accountant.
The Custodian shall take all reasonable action, as the Company may from
time to time request, to obtain from year to year favorable opinions from the
Company's independent accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of the Company's Form N-1A and
Form N-SAR or other reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
12. Reports to Company by Independent Public Accountants.
The Custodian shall provide the Company, at such times as the Company
may reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports shall be of
sufficient scope, and in sufficient detail, as may reasonably be required by the
Company to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
13. Compensation of Custodian.
For performance by the Custodian pursuant to this Agreement, the
Company, out of the assets of each applicable Fund, agrees to pay the Custodian
annual asset fees and supplemental charges as set out in Exhibit B. Fees and
supplemental charges may be changed from time to time subject to mutual written
agreement between the Company and the Custodian.
14. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Company or any Fund for any action taken or omitted by
it in good faith and without negligence. It shall be entitled to rely on and may
act upon advice of counsel of, or reasonably acceptable to, the Company on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
If the Company requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to the Company being liable for the payment of money or
incurring liability of some other
10
form, the Company, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
reasonably satisfactory to it.
If the Company requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of a Fund shall be
security therefor and should the Company fail to repay the Custodian promptly
with respect to any Fund, the Custodian shall be entitled to utilize available
cash and to dispose of assets to the extent necessary to obtain reimbursement.
The Custodian shall not be liable for any loss or damage to the Company
or any Fund resulting from participation in a securities depository unless such
loss or damage arises by reason of any negligence, misfeasance, or willful
misconduct of officers or employees of the Custodian, or from its failure to
enforce effectively such rights as it may have against any securities depository
or from use of a sub-custodian or agent. Anything in this Contract to the
contrary notwithstanding, the Custodian shall exercise, in the performance of
its obligations undertaken or reasonably assumed with respect to this Agreement,
reasonable care, for which the Custodian shall be responsible to the same extent
as if it were performing such duties directly. The Custodian shall be
responsible for the securities and cash held by or deposited with any
sub-custodian or agent to the same extent as if such securities and cash were
directly held by or deposited with the Custodian. The Custodian hereby agrees
that it shall indemnify and hold the Company and each applicable Fund harmless
from and against any loss which shall occur as a result of the failure of a
foreign sub-custodian holding the securities and cash to provide a level of
safeguards for maintaining any Fund's securities and cash not materially
different from that provided by a United States custodian holding such
securities and cash in the United States.
The Custodian agrees to indemnify and hold the Company and each of the
Funds harmless for any and all loss, liability and expense, including reasonable
legal fees and expenses, arising out of the Custodian's own negligence or
willful misconduct or that of its officers, agents, sub-custodians or employees
in the performance of the Custodian's duties and obligations under this
Contract.
15. Effective Period, Termination and Amendment.
The Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however, that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Company has approved the initial
use of a particular Securities System, as required by Rule 17f-4 under the
Investment Company Act of 1940, provided further, however, that the Company
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of its Articles of Incorporation,
and further provided, that the Company may at any time by action of its Board of
Directors, with respect to any Fund (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Company on behalf of each Fund
shall pay to the Custodian such compensation as may be due as of the date of
such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
16. Successor Custodian.
If a successor custodian shall be appointed by the Board of Directors
of the Company, the Custodian shall, upon termination, deliver to such successor
custodian all securities, funds and other properties held by the Custodian and
all instruments held by the Custodian relative thereto and all property held by
it under this Contract and to transfer to an account of such successor custodian
all of each Fund's securities held in any Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Company, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as
11
defined in the Investment Company Act of 1940, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of each Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under and pursuant to this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Company to procure the certified copy of the vote referred to or
of the Board of Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Company may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation or Bylaws of the Company. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
18. Minnesota Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the State of Minnesota.
19. Prior Contracts.
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Company and the Custodian relating to the custody of
each Fund's assets. This Contract shall not be assignable by any party hereto;
provided however, that any entity into which the Company or the Custodian, as
the case may be, may be merged or converted or with which it may be
consolidated, or any entity succeeding to all or substantially all of the
business of the Company or the custody business of the Custodian, shall succeed
to the respective rights and shall assume the respective duties of the Company
or the Custodian, as the case may be, hereunder.
20. General.
Nothing expressed or mentioned in or to be implied from any provision
of this Contract is intended to, or shall be construed to give any person or
corporation other than the parties hereto, any legal or equitable right, remedy
or claim under or in respect to this Contract, or any covenant, condition and
provision herein contained, this Contract and all of the covenants, conditions
and provisions hereof being intended to be and being the sole and exclusive
benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized officers as of the day
and year first above written.
Xxxxx Series Fund, Inc. Norwest Bank Minnesota, N.A.
By /s/ Xxxxxxx X. Xxxxx By /s/ Xxxxxx X. Zapalka
ATTEST ATTEST
By /s/ Xxxx X. Xxxxxxxx By /s/ Xxxxx Xxxxxxx
12
