Exhibit 8
CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT
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THIS AGREEMENT made the _____ day of December, 1995, by and between
INVESTORS FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of
the state of Missouri, having its trust office located at 000 Xxxx 00xx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000 ("Custodian"), and STATE BOND INVESTMENT FUNDS,
INC., a Maryland corporation, having its principal office and place of business
at 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx (00000-0000
("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
custodian of the securities and monies of Fund's investment portfolio and as its
agent to perform certain investment accounting and recordkeeping functions; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints Custodian
as:
A. Custodian of the securities and monies at any time owned by the Fund;
and
B. Agent to perform certain accounting and recordkeeping functions
relating to portfolio transactions required of a duly registered
investment company under Rule 31a of the Investment Company Act of 1940
(the "1940 Act") and to calculate the net asset value of the Fund.
2. REPRESENTATIONS AND WARRANTIES.
A. Fund hereby represents, warrants and acknowledges to Custodian:
1. That it is a corporation or trust (as specified above) duly
organized and existing and in good standing under the laws of its
state of organization, and that it is registered under the 1940
Act; and
2. That it has the requisite power and authority under applicable law,
its articles of incorporation and its bylaws to enter into this
Agreement; that it has taken all requisite action necessary to
appoint Custodian as custodian and investment accounting and
recordkeeping agent for the Fund; and that this Agreement
constitutes a legal, valid and binding obligation of Fund,
enforceable in accordance with its terms.
B. Custodian hereby represents, warrants and acknowledges to Fund:
1. That it is a trust company duly organized and existing and in good
standing under the laws of the State of Missouri; and
2. That it has the requisite power and authority under applicable law,
its charter and its bylaws to enter into and perform this Agreement;
that this Agreement has been duly executed and delivered by
Custodian; and that this Agreement constitutes a legal, valid and
binding obligation of Custodian, enforceable in accordance with its
terms.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. Delivery of Assets
Except as permitted by the 1940 Act, Fund will deliver or cause to be
delivered to Custodian on the effective date of this Agreement, or as
soon thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it or from
time to time coming into its possession during the time this Agreement
shall continue in effect. Custodian shall have no responsibility or
liability whatsoever for or on account of securities or monies not so
delivered.
B. Delivery of Accounts and Records
Fund shall turn over or cause to be turned over to Custodian all of the
Fund's relevant accounts and records previously maintained. Custodian
shall be entitled to rely conclusively on the completeness and
correctness of the accounts and records turned
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over to it, and Fund shall indemnify and hold Custodian harmless of and from
any and all expenses, damages and losses whatsoever arising out of or in
connection with any error, omission, inaccuracy or other deficiency of such
accounts and records or in the failure of Fund to provide, or to provide in
a timely manner, any accounts, records or information needed by the
Custodian to perform its functions hereunder.
C. Delivery of Assets to Third Parties
Custodian will receive delivery of and keep safely the assets of Fund
delivered to it from time to time segregated in a separate account, and if
Fund is comprised of more than one portfolio of investment securities (each
a "Portfolio") Custodian shall keep the assets of each Portfolio segregated
in a separate account. Custodian will not deliver, assign, pledge or
hypothecate any such assets to any person except as permitted by the
provisions of this Agreement or any agreement executed by it according to
the terms of Section 3.S. of this Agreement. Upon delivery of any such
assets to a subcustodian pursuant to Section 3.S. of this Agreement,
Custodian will create and maintain records identifying those assets which
have been delivered to the subcustodian as belonging to the Fund, by
Portfolio if applicable. The Custodian is responsible for the safekeeping of
the securities and monies of Fund only until they have been transmitted to
and received by other persons as permitted under the terms of this
Agreement, except for securities and monies transmitted to subcustodians
appointed under Section 3.S. of this Agreement, for which Custodian remains
responsible to the extent provided in Section 3.S. hereof. Custodian may
participate directly or indirectly through a subcustodian in the Depository
Trust Company (DTC), Treasury/Federal Reserve Book Entry System (Fed
System), Participant Trust Company (PTC) or other depository approved by the
Fund (as such entities are defined at 17 CFR Section 270.17f-4(b)) (each a
"Depository" and collectively, the "Depositories").
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D. Registration of Securities
The Custodian shall at all times hold registered securities of the Fund
in the name of the Custodian, the Fund, or a nominee of either of them,
unless specifically directed by instructions to hold such registered
securities in so-called "street name," provided that, in any event, all
such securities and other assets shall be held in an account of the
Custodian containing only assets of the Fund, or only assets held by
the Custodian as a fiduciary or custodian for customers, and provided
further, that the records of the Custodian at all times shall indicate
the Fund or other customer for which such securities and other assets
are held in such account and the respective interests therein. If,
however, the Fund directs the Custodian to maintain securities in
"street name", notwithstanding anything contained herein to the
contrary, the Custodian shall be obligated only to utilize its best
efforts to timely collect income due the Fund on such securities and to
notify the Fund of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange offers.
All securities, and the ownership thereof by Fund, which are held by
Custodian hereunder, however, shall at all times be identifiable on the
records of the Custodian. The Fund agrees to hold Custodian and its
nominee harmless for any liability as a shareholder of record of
securities held in custody.
E. Exchange of Securities
Upon receipt of instructions as defined herein in Section 4.A.,
Custodian will exchange, or cause to be exchanged, portfolio securities
held by it for the account of Fund for other securities or cash issued
or paid in connection with any reorganization, recapitalization,
merger, consolidation, split-up of share, change of par value,
conversion or otherwise, and will deposit any such securities in
accordance with the terms of any reorganization or protective plan.
Without instructions, Custodian is authorized to exchange securities
held by it in temporary form for securities in
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definitive form, to effect an exchange of shares when the par value of the
stock is changed, and, upon receiving payment therefor, to surrender bonds
or other securities held by it at maturity or when advised of earlier call
for redemption, except that Custodian shall receive instructions prior to
surrendering any convertible security.
F. Purchases of Investments of the Fund -- Other Than Options and Futures
Fund will, on each business day on which a purchase of securities (other
than options and futures) shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such purchase:
1. If applicable, the name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares and the principal amount purchased, and accrued
interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission, taxes and
other expenses payable in connection with the purchase;
7. The total amount payable upon such purchase;
8. The name of the person from whom or the broker or dealer through whom
the purchase was made; and
9. Whether the security is to be received in certificated form or via a
specified Depository.
In accordance with such instructions, Custodian will pay for out of monies
held for the account of Fund, but only insofar as such monies are available
for such purpose, and receive the portfolio securities so purchased by or
for the account of Fund, except that Custodian may in its sole discretion
advance funds to the Fund which may result in an overdraft because the
monies held by the Custodian on behalf of the Fund are
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insufficient to pay the total amount payable upon such purchase. Except as
otherwise instructed by Fund, such payment shall be made by the Custodian
only upon receipt of securities: (a) by the Custodian; (b) by a clearing
corporation of a national exchange of which the Custodian is a member; or
(c) by a Depository. Notwith standing the foregoing, (i) in the case of a
repurchase agreement, the Custodian may release funds to a Depository prior
to the receipt of advice from the Depository that the securities underlying
such repurchase agreement have been transferred by book-entry into the
account maintained with such Depository by the Custodian, on behalf of its
customers, provided that the Custodian's instructions to the Depository
require that the Depository make payment of such finds only upon transfer by
book-entry of the securities underlying the repurchase agreement in such
account; (ii) in the case of time deposits, call account deposits, currency
deposits and other deposits, foreign exchange transactions, futures
contracts or options, the Custodian may make payment therefor before receipt
of an advice or confirmation evidencing said deposit or entry into such
transaction; and (iii) in the case of the purchase of securities, the
settlement of which occurs outside of the United States of America, the
Custodian may make, or cause a subcustodian appointed pursuant to Section
3.S.2. of this Agreement to make, payment therefor in accordance with
generally accepted local custom and market price.
G. Sales and Deliveries of Investments of the Fund -- Other than Options and
Futures
Fund will, on each business day on which a sale of investment securities
(other than options and futures) of Fund has been made, deliver to Custodian
instructions specifying with respect to each such sale:
1. If applicable, the name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares and principal amount sold, and accrued interest, if
any;
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4. The date on which the securities sold were purchased or other
information identifying the securities sold and to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission, taxes or other
expenses payable in connection with such sale;
8. The total amount to be received by Fund upon such sale; and
9. The name and address of the broker or dealer through whom or person to
whom the sale was made.
In accordance with such instructions, Custodian will deliver or cause to be
delivered the securities thus designated as sold for the account of Fund to
the broker or other person specified in the instructions relating to such
sale. Except as otherwise instructed by Fund, such delivery shall be made
upon receipt of payment therefor: (a) in such form as is satisfactory to
the Custodian; (b) credit to the account of the Custodian with a clearing
corporation of a national securities exchange of which the Custodian is a
member; or (c) credit to the account of the Custodian, on behalf of its
customers, with a Depository. Notwithstanding the foregoing: (i) in the
case of securities held in physical form, such securities shall be
delivered in accordance with "street delivery custom" to a broker or its
clearing agent; or (ii) in the case of the sale of securities, the
settlement of which occurs outside of the United States of America, the
Custodian may make, or cause a subcustodian appointed pursuant to Section
3.S.2. of this Agreement to make, payment therefor in accordance with
generally accepted local custom and market practice.
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H. Purchases or Sales of Options and Futures
Fund will, on each business day on which a purchase or sale of the following
options and/or futures shall be made by it, deliver to Custodian
instructions which shall specify with respect to each such purchase or sale:
1. If applicable, the name of the Portfolio making such purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date;
d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded; and
j. Name and address of the broker or dealer through whom the sale or
purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
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g. Whether the transaction is an opening, exercising, expiring or
closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased; and
j. The name and address of the broker or dealer through whom the sale
or purchase was made, or other applicable settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when available,
the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession of Custodian,
Fund shall deliver a substantially complete and executed custodial
safekeeping account and procedural agreement which shall be
incorporated by reference into this Custody Agreement); and
f. The name and address of the futures commission merchant through whom
the sale or purchase was made, or other applicable settlement
instructions.
5. Options on Index Future Contracts
a. The underlying index future contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
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f. Whether the transaction involves an opening, exercising, expiring or
closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. Securities Pledged or Loaned
If specifically allowed for in the prospectus of Fund, and subject to such
additional terms and conditions as Custodian may require:
1. Upon receipt of instructions, Custodian will release or cause to be
released securities held in custody to the pledgee designated in such
instructions by way of pledge or hypothecation to secure any loan
incurred by Fund; provided, however, that the securities shall be
released only upon payment to Custodian of the monies borrowed, except
that in cases where additional collateral is required to secure a
borrowing already made, further securities may be released or caused to
be released for that purpose upon receipt of instructions. Upon receipt
of instructions, Custodian will pay, but only from funds available for
such purpose, any such loan upon redelivery to it of the securities
pledged or hypothecated therefor and upon surrender of the note or notes
evidencing such loan.
2. Upon receipt of instructions, Custodian will release securities held in
custody to the borrower designated in such instructions; provided,
however, that the securities will be released only upon deposit with
Custodian of full cash collateral as specified in such instructions, and
that Fund will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of instructions and
the loaned securities, Custodian will release the cash collateral to the
borrower.
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J. Routine Matters
Custodian will, in general, attend to all routine and mechanical matters in
connection with the sale, exchange, substitution, purchase, transfer, or
other dealings with securities or other property of Fund except as may be
otherwise provided in this Agreement or directed from time to time by the
Fund in writing.
K. Deposit Accounts
Custodian will open and maintain one or more special purpose deposit
accounts in the name of Custodian ("Accounts"), subject only to draft or
order by Custodian upon receipt of instructions. All monies received by
Custodian from or for the account of Fund shall be deposited in said
Accounts. Barring events not in the control of the Custodian such as
strikes, lockouts or labor disputes, riots, war or equipment or transmission
failure or damage, fire, flood, earthquake or other natural disaster, action
or inaction of governmental authority or other causes beyond its control, at
9:00 a.m., Kansas City time, on the second business day after deposit of any
check into an Account, Custodian agrees to make Fed Funds available to the
Fund in the amount of the check. Deposits made by Federal Reserve wire will
be available to the Fund immediately and ACH wires will be available to the
Fund on the next business day. Income earned on the portfolio securities
will be credited to the Fund based on the schedule attached as Exhibit A.
The Custodian will be entitled to reverse any credited amounts where credits
have been made and monies are not finally collected. If monies are collected
after such reversal, the Custodian will credit the Fund in that amount.
Custodian may open and maintain Accounts in its own banking department, or
in such other banks or trust companies as may be designated by it or by Fund
in writing, all such Accounts, however, to be in the name of Custodian and
subject only to its draft or order. Funds received and held for the account
of different Portfolios shall be maintained in separate Accounts established
for each Portfolio.
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L. Income and Other Payments to Fund
Custodian will:
1. Collect, claim and receive and deposit for the account of Fund all
income and other payments which become due and payable on or after the
effective date of this Agreement with respect to the securities
deposited under this Agreement, and credit the account of Fund in
accordance with the schedule attached hereto as Exhibit A. If, for any
reason, the Fund is credited with income that is not subsequently
collected, Custodian may reverse that credited amount.
2. Execute ownership and other certificates and affidavits for all federal,
state and local tax purposes in connection with the collection of bond
and note coupons; and
3. Take such other action as may be necessary or proper in connection with:
a. the collection, receipt and deposit of such income and other
payments, including but not limited to the presentation for payment
of:
1. all coupons and other income items requiring presentation; and
2. all other securities which may mature or be called, redeemed,
retired or otherwise become payable and regarding which the
Custodian has actual knowledge, or should reasonably be expected
to have knowledge; and
b. the endorsement for collection, in the name of the Fund, of all
checks, drafts or other negotiable instruments.
Custodian, however, will not be required to institute suit or take other
extraordinary action to enforce collection except upon receipt of
instructions and upon being indemnified to its satisfaction against the
costs and expenses of such suit or other actions. Custodian will receive,
claim and collect all stock dividends, rights and other
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similar items and will deal with the same pursuant to instructions. Unless
prior instructions have been received to the contrary, Custodian will,
without further instructions, sell any rights held for the account of Fund
on the last trade date prior to the date of expiration of such rights.
M. Payment of Dividends and other Distributions
On the declaration of any dividend or other distribution on the shares of
capital stock of Fund ("Fund Shares") by the Board of Directors of Fund,
Fund shall deliver to Custodian instructions with respect thereto. On the
date specified in such instructions for the payment of such dividend or
other distribution, Custodian will pay out of the monies held for the
account of Fund, insofar as the same shall be available for such purposes,
and credit to the account of the Dividend Disbursing Agent for Fund, such
amount as may be specified in such instructions.
N. Shares of Fund Purchased by Fund
Whenever any Fund Shares are repurchased or redeemed by Fund, Fund or its
agent shall advise Custodian of the aggregate dollar amount to be paid for
such shares and shall confirm such advice in writing. Upon receipt of such
advice, Custodian shall charge such aggregate dollar amount to the account
of Fund and either deposit the same in the account maintained for the
purpose of paying for the repurchase or redemption of Fund Shares or deliver
the same in accordance with such advice. Custodian shall not have any duty
or responsibility to determine that Fund Shares have been removed from the
proper shareholder account or accounts or that the proper number of Fund
Shares have been cancelled and removed from the shareholder records.
O. Shares of Fund Purchased from Fund
Whenever Fund Shares are purchased from Fund, Fund will deposit or cause to
be deposited with Custodian the amount received for such shares. Custodian
shall not
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have any duty or responsibility to determine that Fund Shares purchased from
Fund have been added to the proper shareholder account or accounts or that
the proper number of such shares have been added to the shareholder records.
P. Proxies and Notices
Custodian will promptly deliver or mail or have delivered or mailed to Fund
all proxies properly signed, all notices of meetings, all proxy statements
and other notices, requests or announcements affecting or relating to
securities held by Custodian for Fund and will, upon receipt of
instructions, execute and deliver or cause its nominee to execute and
deliver or mail or have delivered or mailed such proxies or other
authorizations as may be required. Except as provided by this Agreement or
pursuant to instructions hereafter received by Custodian, neither it nor its
nominee will exercise any power inherent in any such securities, including
any power to vote the same, or execute any proxy, power of attorney, or
other similar instrument voting any of such securities, or give any consent,
approval or waiver with respect thereto, or take any other similar action.
Q. Disbursements
Custodian will pay or cause to be paid, insofar as funds are available for
the purpose, bills, statements and other obligations of Fund (including but
not limited to obligations in connection with the conversion, exchange or
surrender of securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal fees, auditors'
fees, transfer agents' fees, brokerage commissions, compensation to
personnel, and other operating expenses of Funds pursuant to instructions of
Fund setting forth the name of the person to whom payment is to be made, the
amount of the payment, and the purpose of the payment.
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R. Daily Statement of Accounts
Custodian will, within a reasonable time, render to Fund a detailed
statement of the amounts received or paid and of securities received or
delivered for the account of Fund during each business day. Custodian will,
from time to time, upon request by Fund, render a detailed statement of the
securities and monies held for Fund under this Agreement, and Custodian will
maintain such books and records as are necessary to enable it to do so.
Custodian will permit such persons as are authorized by Fund, including
Fund's independent public accountants, reasonable access to such records or
will provide reasonable confirmation of the contents of such records, and if
demanded, Custodian will permit federal and state regulatory agencies to
examine the securities, books and records. Upon the written instructions of
Fund or as demanded by federal or state regulatory agencies, Custodian will
instruct any subcustodian to permit such persons as are authorized by Fund,
including Fund's independent public accountants, reasonable access to such
records or to provide reasonable confirmation of the contents of such
records, and to permit such agencies to examine the books, records and
securities held by such subcustodian which relate to the Fund.
S. Appointment of Subcustodian
1. Notwithstanding any other provisions of this Agreement, all or any of
the monies or securities of Fund may be held in Custodian's own custody
or in the custody of one or more other banks or trust companies acting
as sub custodians as may be selected by Custodian. Any such subcustodian
selected by the Custodian must have the qualifications required for a
custodian under the 1940 Act, as amended. Custodian shall be responsible
to the Fund for any loss, damage or expense suffered or incurred by the
Fund resulting from the actions or omissions of any subcustodians
selected and appointed by Custodian (except subcustodians appointed at
the request of Fund and as
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provided in Subsection 2 below) to the same extent Custodian would be
responsible to the Fund under Section 5. of this Agreement if it committed
the act or omission itself. Upon request of the Fund, Custodian shall be
willing to contract with other subcustodians reasonably acceptable to the
Custodian for purposes of (i) effecting third-party repurchase transactions
with banks, brokers, dealers, or other entities through the use of a common
custodian or subcustodian, or (ii) providing depository and clearing agency
services with respect to certain variable rate demand note securities, or
(iii) for other reasonable purposes specified by Fund; provided, however,
that the Custodian shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the actions or
omissions of any such subcustodian only to the same extent such subcustodian
is responsible to the Custodian. The Fund shall be entitled to review the
Custodian's contracts with any such subcustodians appointed at the request
of Fund. Custodian shall be responsible to the Fund for any loss, damage or
expense suffered or incurred by the Fund resulting from the actions or
omissions of any Depository only to the same extent such Depository is
responsible to Custodian.
2. Notwithstanding any other provisions of this Agreement, Fund's foreign
securities (as defined in Rule 17f-5(c)(1) under the 0000 Xxx) and Fund's
cash or cash equivalents, in amounts deemed by the Fund to be reasonably
necessary to effect Fund's foreign securities transactions, may be held in
the custody of one or more banks or trust companies acting as subcustodians,
and thereafter, pursuant to a written contract or contracts as approved by
Fund's Board of Directors, may be transferred to accounts maintained by any
such subcustodian with eligible foreign custodians, as defined in Rule
17f-5(c)(2).
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Custodian shall be responsible to the Fund for any loss, damage or expense
suffered or incurred by the Fund resulting from the actions or omissions of
any foreign subcustodian only to the same extent the foreign subcustodian is
liable to the domestic subcustodian with which the Custodian contracts for
foreign subcustody purposes.
T. Accounts and Records
Custodian will prepare and maintain, with the direction and as interpreted
by the Fund, Fund's accountants and/or other advisors, in complete, accurate
and current form all accounts and records (i) required to be maintained by
Fund with respect to portfolio transactions under Rule 31a of the 1940 Act,
(ii) required to be maintained as a basis for calculation of the Fund's net
asset value, and (iii) as otherwise agreed upon between the parties.
Custodian relies upon Fund to furnish, in writing or its electronic digital
equivalent, accurate and timely information needed by Custodian to complete
Fund's records and perform daily calculation of the Fund's net asset value.
Custodian shall incur no liability and Fund shall indemnify and hold
harmless Custodian from and against any liability arising from any failure
of Fund to furnish such information in a timely and accurate manner, even if
Fund subsequently provides accurate but untimely information. It shall be
the responsibility of Fund to furnish Custodian with the declaration, record
and payment dates and amounts of any dividends or income and any other
special actions required concerning each of its securities when such
information is not readily available from generally accepted securities
industry services or publications.
U. Accounts and Records Property of Fund
Custodian acknowledges that all of the accounts and records maintained by
Custodian pursuant to this Agreement are the property of Fund, and will be
made available to Fund for inspection or reproduction within a reasonable
period of time, upon demand.
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Custodian will assist Fund's independent auditors, or upon approval of Fund,
or upon demand, any regulatory body, in any requested review of Fund's
accounts and records but shall be reimbursed by Fund for all expenses and
employee time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from Fund of the necessary information or
instructions, Custodian will supply information from the books and records
it maintains for Fund that Fund needs for tax returns, questionnaires,
period reports to shareholder and such other reports and information
requests as Fund and Custodian shall agree upon from time to time.
V. Adoption of Procedures
Custodian and Fund may from time to time adopt procedures as they agree
upon, and Custodian may conclusively assume that no procedure approved or
directed by Fund or its accountants or other advisors conflicts with or
violates any requirements of its prospectus, articles of incorporation,
bylaws, any applicable law, rule or regulation, or any order, decree or
agreement by which Fund may be bound. Fund will be responsible to notify
Custodian of any changes in statutes, regulations, rules, require ments or
policies which might necessitate changes in Custodian's responsibilities or
procedures.
W. Calculation of Net Asset Value
Custodian will calculate Fund's net asset value, in accordance with Fund's
prospectus. Custodian will price the securities and foreign currency
holdings of Fund for which market quotations are available by the use of
outside services designated by Fund which are normally used and contracted
with for this purpose; all other securities and foreign currency holdings
will be priced in accordance with Fund's instructions. Custodian will have
no responsibility for the accuracy of the prices quoted by these outside
services or for the information supplied by Fund or for acting upon such
instructions.
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X. Advances
In the event Custodian or any subcustodian shall, in its sole
discretion, advance cash or securities for any purpose (including but
not limited to securities settlements, purchase or sale of foreign
exchange or foreign exchange contracts and assumed settlement) for the
benefit of any Portfolio, the advance shall be payable by the Fund on
demand. Any such cash advance shall be subject to an overdraft charge at
the rate set forth in the then-current fee schedule from the date
advanced until the date repaid. As security for each such advance, Fund
hereby grants Custodian and such sub custodian a lien on and security
interests in all property at any time held for the account of the
applicable Portfolio, including without limitation all assets acquired
with the amount advanced. Should the Fund fail to promptly repay the
advance, the Custodian and each subcustodian shall be entitled to
utilize available cash and to dispose of such Portfolio's assets
pursuant to applicable law to the extent necessary to obtain
reimbursement of the amount advanced and any related overdraft charges.
Y. Exercise of Rights; Tender Offers
Upon receipt of instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar securities to the issuer or trustee
thereof, or to the agent of such issuer or trustee, for the purpose of
exercise or sale, provided that the new securities, cash or other
assets, if any, are to be delivered to the Custodian; and (b) deposit
securities upon invitations for tenders thereof, provided that the
consideration for such securities is to be paid or delivered to the
Custodian or the tendered securities are to be returned to the
Custodian.
4. INSTRUCTIONS.
A. The term "instructions," as used herein, means written (including
telecopied or telexed) or oral instructions which Custodian reasonably
believes were given by a designated representative of Fund. Fund shall
deliver to Custodian, prior to delivery
19
of any assets to Custodian and thereafter from time to time as changes
therein are necessary, written instructions naming one or more
designated representatives to give instructions in the name and on
behalf of the Fund, which instructions may be received and accepted by
Custodian as conclusive evidence of the authority of any designated
representative to act for Fund and may be considered to be in full force
and effect (and Custodian will be fully protected in acting in reliance
thereon) until receipt by Custodian of notice to the contrary. Unless
such written instructions delegating authority to any person to give
instructions specifically limit such authority to specific matters or
require that the approval of anyone else will first have been obtained,
Custodian will be under no obligation to inquire into the right of such
person, acting alone, to give any instructions whatsoever which
Custodian may receive from such person. If Fund fails to provide
Custodian any such instructions naming designated representatives, any
instructions received by Custodian from a person reasonably believed to
be an appropriate representative of Fund shall constitute valid and
proper instructions hereunder.
B. No later than the next business day immediately following each oral
instruction, Fund will send Custodian written confirmation of such oral
instruction. At Custodian's sole discretion, Custodian may record on
tape, or otherwise, any oral instruction whether given in person or via
telephone, each such recording identifying the parties, the date and the
time of the beginning and ending of such oral instruction.
C. If Custodian shall provide Fund direct access to any computerized
recordkeeping and reporting system used hereunder or if Custodian and
Fund shall agree to utilize any electronic system of communication, Fund
shall be fully responsible for any and all consequences of the use or
misuse of the terminal device, passwords, access instructions and other
means of access to such system(s) which are utilized by, assigned to or
otherwise made available to the Fund. Fund agrees to implement and
20
enforce appropriate security policies and procedures to prevent
unauthorized or improper access to or use of such system(s). Custodian
shall be fully protected in acting hereunder upon any instructions,
communications, data or other information received by Custodian by
such means as fully and to the same effect as if delivered to
Custodian by written instrument signed by the requisite authorized
representative(s) of Fund. Fund shall indemnify and hold Custodian
harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability which may be suffered
or incurred by Custodian as a result of the use or misuse, whether
authorized or unauthorized, of any such system(s) by Fund or by any
person who acquires access to such system(s) through the terminal
device, passwords, access instructions or other means of access to
such system(s) which are utilized by, assigned to or otherwise made
available to the Fund, except to the extent attributable to any
negligence or willful misconduct by Custodian.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall at all times use reasonable care and due diligence and
act in good faith in performing its duties under this Agreement.
Custodian shall not be responsible for, and the Fund shall indemnify
and hold Custodian harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and
liability which may be asserted against Custodian, incurred by
Custodian or for which Custodian may be held to be liable, arising out
of or attributable to:
1. All actions taken by Custodian pursuant to this Agreement or any
instructions provided to it hereunder, provided that Custodian has
acted in good faith and with due diligence and reasonable care;
and
2. The Fund's refusal or failure to comply with the terms of this
Agreement (including without limitation the Fund's failure to pay
or reimburse Custodian under this indemnification provision), the
Fund's negligence or willful
-21-
misconduct, or the failure of any representation or warranty of
the Fund hereunder to be and remain true and correct in all
respects at all times.
B. Custodian may request and obtain at the expense of Fund the advice and
opinion of counsel for Fund or of its own counsel with respect to
questions or matters of law, and it shall be without liability to Fund
for any action taken or omitted by it in good faith, in conformity
with such advice or opinion. If Custodian reasonably believes that it
could not prudently act according to the instructions of the Fund or
the Fund's accountants or counsel, it may in its discretion, with
notice to the Fund, not act according to such instructions.
C. Custodian may rely upon the advice and statements of Fund, Fund's
accountants and officers or other authorized individuals, and other
persons believed by it in good faith to be expert in matters upon
which they are consulted, and Custodian shall not be liable for any
actions taken, in good faith, upon such advice and statements.
D. If Fund requests Custodian in any capacity to take any action which
involves the payment of money by Custodian, or which might make it or
its nominee liable for payment of monies or in any other way,
Custodian shall be indemnified and held harmless by Fund against any
liability on account of such action; provided, however, that nothing
herein shall obligate Custodian to take any such action except in its
sole discretion.
E. Custodian shall be protected in acting as custodian hereunder upon any
instructions, advice, notice, request, consent, certificate or other
instrument or paper appearing to it to be genuine and to have been
properly executed. Custodian shall be entitled to receive upon request
as conclusive proof of any fact or matter required to be ascertained
from Fund hereunder a certificate signed by an officer or designated
representative of Fund. Fund shall also provide Custodian instructions
with respect to any matter concerning this Agreement requested by
Custodian.
-22-
F. Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any securities purchased by or for
Fund, the legality of the purchase of any securities or foreign
currency positions or evidence of ownership required by Fund to be
received by Custodian, or the propriety of the decision to
purchase or amount paid therefor;
2. The legality of the sale of any securities or foreign currency
positions by or for Fund, or the propriety of the amount for which
the same are sold;
3. The legality of the issue or sale of any Fund Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the repurchase or redemption of any Fund Shares,
or the propriety of the amount to be paid therefor; or
5. The legality of the declaration of any dividend by Fund, or the
legality of the issue of any Fund Shares in payment of any stock
dividend.
G. Custodian shall not be liable for, or considered to be Custodian of,
any money represented by any check, draft, wire transfer,
clearinghouse funds, uncollected funds, or instrument for the payment
of money to be received by it on behalf of Fund until Custodian
actually receives such money; provided, however, that it shall advise
Fund promptly if it fails to receive any such money in the ordinary
course of business and shall cooperate with Fund toward the end that
such money shall be received.
H. Except as provided in Section 3.S., Custodian shall not be responsible
for loss occasioned by the acts, neglects, defaults or insolvency of
any broker, bank, trust company, or any other person with whom
Custodian may deal.
I. Custodian shall not be responsible or liable for the failure or delay
in performance of its obligations under this Agreement, or those of
any entity for which it is responsible hereunder, arising out of or
caused, directly or indirectly, by circumstances beyond
-23-
the affected entity's reasonable control, including, without
limitation: any interruption, loss or malfunction of any utility,
transportation, computer (hardware or software) or communication
service; inability to obtain labor, material, equipment or
transportation, or a delay in mails; governmental or exchange action,
statute, ordinance, rulings, regulations or direction; war, strike,
riot, emergency, civil disturbance, terrorism, vandalism, explosions,
labor disputes, freezes, floods, fires, tornados, acts of God or
public enemy, revolutions, or insurrection.
J. EXCEPT FOR VIOLATIONS OF SECTION 9, IN NO EVENT AND UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES FOR ANY ACT OR FAILURE TO
ACT UNDER ANY PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THIS
POSSIBILITY THEREOF.
6. COMPENSATION. In consideration for its services hereunder as Custodian and
investment accounting and recordkeeping agent, Fund will pay to Custodian
such compensation as shall be set forth in a separate fee schedule to be
agreed to by Fund and Custodian from time to time. A copy of the initial
fee schedule is attached hereto and incorporated herein by reference.
Custodian shall also be entitled to receive, and Fund agrees to pay to
Custodian, on demand, reimbursement for Custodian's cash disbursements and
reasonable out-of-pocket costs and expenses, including attorney's fees,
incurred by Custodian in connection with the performance of services
hereunder. Custodian will also be entitled to charge against any monies
held by it for the account of Fund the amount of any loss,
7. TERM AND TERMINATION. The initial term of this Agreement shall be for a
period of one (1) year. Thereafter, either party to this Agreement may
terminate the same by notice in writing, delivered or mailed, postage
prepaid, to the other party hereto and received not less
-24-
than ninety (90) days prior to the date upon which such termination will
take effect. Upon termination of this Agreement, Fund will pay Custodian
its fees and compensation due here under and its reimbursable
disbursements, costs and expenses paid or incurred to such date and Fund
shall designate a successor custodian by notice in writing to Custodian by
the termination date. In the event no written order designating a successor
custodian has been delivered to Custodian on or before the date when such
termination becomes effective, then Custodian may, at its option, deliver
the securities, funds and properties of Fund to a bank or trust company at
the selection of Custodian, and meeting the qualifications for custodian
set forth in the 1940 Act and having not less than Two Million Dollars
($2,000,000) aggregate capital, surplus and undivided profits, as shown by
its last published report, or apply to a court of competent jurisdiction
for the appointment of a successor custodian or other proper relief, or
take any other lawful action under the circumstances; provided, however,
that Fund shall reimburse Custodian for its costs and expenses, including
reasonable attorney's fees, incurred in connection therewith. Custodian
will, upon termination of this Agreement and payment of all sums due to
Custodian from Fund hereunder or otherwise, deliver to the successor
custodian so specified or appointed, or as specified by the court, at
Custodian's office, all securities then held by Custodian hereunder, duly
endorsed and in form for transfer, and all funds and other properties of
Fund deposited with or held by Custodian hereunder, and Custodian will co-
operate in effecting changes in book-entries at all Depositories. Upon
delivery to a successor custodian or as specified by the court, Custodian
will have no further obligations or liabilities under this Agreement.
Thereafter such successor will be the successor custodian under this
Agreement and will be entitled to reasonable compensation for its services.
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 Fund to appoint a successor custodian, the Custodian shall
be entitled to compensation as provided in the then-current fee schedule
hereunder for its services during such period as the Custodian
-25-
retains possession of such securities, funds and other properties, and the
provisions of this Agreement relating to the duties and obligations of the
Custodian shall remain in full force and effect.
8. NOTICES. Notices, requests, instructions and other writings addressed to
Fund at 0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, or at such other address as Fund may have designated to
Custodian in writing, will be deemed to have been properly given to Fund
hereunder; and notices, requests, instructions and other writings addressed
to Custodian at its offices at 000 Xxxx 00xx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx
00000, Attention: Custody Department, or to such other address as it may
have designated to Fund in writing, will be deemed to have been properly
given to Custodian hereunder.
9. CONFIDENTIALITY.
A. Fund shall preserve the confidentiality of the computerized investment
portfolio recordkeeping and accounting system used by Custodian (the
"Portfolio Accounting System") and the tapes, books, reference
manuals, instructions, records, programs, documentation and
information of, and other materials relevant to, the Portfolio
Accounting System and the business of Custodian ("Confidential
Information"). Fund shall not voluntarily disclose any such
Confidential Information to any other person other than its own
employees who reasonably have a need to know such information pursuant
to this Agreement. Fund shall return all such Confidential Information
to Custodian upon termination or expiration of this Agreement.
B. Fund has been informed that the Portfolio Accounting System is
licensed for use by Custodian from DST Systems, Inc. ("Licensor"), and
Fund acknowledges that Custodian and Licensor have proprietary rights
in and to the Portfolio Accounting System and all other Custodian or
Licensor programs, code, techniques, know-how, databases, supporting
documentation, data formats, and procedures, including without
limitation any changes or modifications made at the request or expense
or both of
-26-
Fund (collectively, the "Protected Information"). Fund acknowledges
that the Protected Information constitutes confidential material and
trade secrets of Custodian and Licensor. Fund shall preserve the
confidentiality of the Protected Information, and Fund hereby
acknowledges that any unauthorized use, misuse, disclosure or taking
of Protected Information, residing or existing internal or external to
a computer, computer system, or computer network, or the knowing and
unauthorized accessing or causing to be accessed of any computer,
computer system, or computer network, may be subject to civil
liabilities and criminal penalties under applicable law. Fund shall so
inform employees and agents who have access to the Protected
Information or to any computer equipment capable of accessing the
same. Licensor is intended to be and shall be a third party
beneficiary of the Fund's obligations and undertakings contained in
this paragraph.
10. MULTIPLE PORTFOLIOS. If Fund is comprised of more than one Portfolio:
A. Each Portfolio shall be regarded for all purposes hereunder as a
separate party apart from each other Portfolio. Unless the context
otherwise requires, with respect to every transaction covered by this
Agreement, every reference herein to the Fund shall be deemed to
relate solely to the particular Portfolio to which such transaction
relates. Under no circumstances shall the rights, obligations or
remedies with respect to a particular Portfolio constitute a right,
obligation or remedy applicable to any other Portfolio. The use of
this single document to memorialize the separate agreement of each
Portfolio is understood to be for clerical convenience only and shall
not constitute any basis for joining the Portfolios for any reason.
B. Additional Portfolios may be added to this Agreement, provided that
Custodian consents to such addition. Rates or charges for each
additional Portfolio shall be as agreed upon by Custodian and Fund in
writing.
-27-
11. MISCELLANEOUS.
A. This Agreement shall be construed according to, and the rights and
liabilities of the parties hereto shall be governed by, the laws of
the State of Missouri, without reference to the choice of laws
principles thereof.
B. All terms and provisions of this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
C. The representations and warranties, the indemnifications extended
hereunder, and the provisions of Section 9. hereof are intended to and
shall continue after and survive the expiration, termination or
cancellation of this Agreement.
D. No provisions of the Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed
by each party hereto.
E. The failure of either party to insist upon the performance of any
terms or conditions of this Agreement or to enforce any rights
resulting from any breach of any of the terms or conditions of this
Agreement, including the payment of damages, shall not be construed as
a continuing or permanent waiver of any such terms, conditions, rights
or privileges, but the same shall continue and remain in full force
and effect and if no such forbearance or waiver had occurred. No
waiver, release or discharge of any party's rights hereunder shall be
effective unless contained in a written instrument signed by the party
sought to be charged.
F. The captions in the Agreement are included for convenience of
reference only, and in no way define or limit any of the provisions
hereof or otherwise affect their construction or effect.
G. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
-28-
H. If any provision of this Agreement shall be determined to be invalid
or unenforceable, the remaining provisions of this Agreement shall not
be affected thereby, and every provision of this Agreement shall
remain in full force and effect and shall remain enforceable to the
fullest extent permitted by applicable law.
I. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.
J. Neither the execution nor performance of this Agreement shall be
deemed to create a partnership or joint venture by and between
Custodian and Fund.
K. Except as specifically provided herein, this Agreement does not in any
way affect any other agreements entered into among the parties hereto
and any actions taken or omitted by either party hereunder shall not
affect any rights or obligations of the other party hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers.
INVESTORS FIDUCIARY TRUST COMPANY
By:
----------------------------------
Title:-------------------------------
STATE BOND INVESTMENT FUNDS, INC.
By:
----------------------------------
Title:
-------------------------------
-29-
EXHIBIT A
---------
INVESTORS FIDUCIARY TRUST COMPANY
AVAILABILITY SCHEDULE BY TRANSACTION TYPE
====================================================================================================
TRANSACTION DTC PHYSICAL FED
----------- --- -------- ---
----------------------------------------------------------------------------------------------------
TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE CREDIT DATE FUNDS TYPE
====================================================================================================
Calls Puts As Received C or F* As Received C or F*
----------------------------------------------------------------------------------------------------
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
----------------------------------------------------------------------------------------------------
Tender Reorgs. As Received C As Received C N/A
----------------------------------------------------------------------------------------------------
Dividends Paydate C Paydate C N/A
----------------------------------------------------------------------------------------------------
Floating Rate Int. Paydate C Paydate C N/A
----------------------------------------------------------------------------------------------------
Floating Rate Int. N/A As Rate Received C N/A
(No Rate)
----------------------------------------------------------------------------------------------------
Mtg. Backed P&I Paydate C Paydate + 1 C Paydate F
Bus.
Day
----------------------------------------------------------------------------------------------------
Fixed Rate Int. Paydate C Paydate C Paydate F
----------------------------------------------------------------------------------------------------
Euroclear N/A C Paydate c
====================================================================================================
Legend
------
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
