CUSTODY AGREEMENT
Exhibit (g)(1)
AGREEMENT dated as of November 1, 2009, between ASSET MANAGEMENT FUND, a statutory trust
organized under the laws of the State of Delaware, having its principal office and place of
business at 000 X, Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 (the “Fund”), and THE NORTHERN TRUST
COMPANY (the “Custodian”), an Illinois bank or trust company having not less than $2 million
aggregate capital, surplus and undivided profits, with its principal place of business at 00 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H :
That for and in consideration of the mutual promises hereinafter set forth, the Fund
and the Custodian agree as follows:
1. | Definitions. |
Whenever used in this Agreement or in any Schedules to this Agreement, the
following words and phrases, unless the context otherwise requires, shall have the following
meanings:
(a)
“Articles of Incorporation ” shall mean the Declaration of Trust of the Fund, including
all amendments thereto.
(b) “Authorized Person” shall be deemed to include the Chairman of the Board of Directors,
the President, and any Vice President, the Secretary, the Treasurer or any other person,
whether or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Directors to give Instructions on behalf of the Fund and listed in the
certification annexed hereto as Schedule A or such other certification as may be received
by the Custodian from time to time pursuant to Section 18(a).
(c) “Board of Directors” shall mean the Board of Trustees of the Fund.
(d) “Book-Entry System” shall mean the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its nominee or
nominees.
(e)
“Delegate of the Fund” shall mean and include any entity to whom the Board of
Directors of the Fund has delegated responsibility under Rule 17f-5 of the 1940 Act.
(f) “Depository” shall mean a clearing corporation that is: (i) registered with the Securities
and Exchange Commission as a clearing agency under Section 17(a) of the Securities Exchange Act of
1934, as amended, its successor or successors and its nominee or nominees; or (ii) A Federal
Reserve Bank or other person authorized to operate the federal book entry system described in the
regulations of the Department of Treasury codified at 31 CFR 357, Subpart B, or book-entry systems
operated pursuant to comparable regulations of other federal agencies
(g) “Instruction” shall mean written (including telecopied, telexed, or electronically transmitted
in a form that can be converted to print) or oral instructions actually received by the Custodian
which the Custodian reasonably believes were given by an Authorized
Person. An Instruction shall
also include any instrument in writing actually received by the Custodian which the Custodian
reasonably believes to be genuine and to be signed by any two officers of the Fund, whether or not
such officers arc Authorized Persons. Except as otherwise provided in this Agreement,
“Instructions” may include instructions given on a standing
basis.
(h) “1940 Act” shall mean the Investment Company Act of 1940, and the Rules and
Regulations thereunder, all as amended from time to time.
(i) “Portfolio” refers to each of the separate and distinct investment portfolios of the
Fund which the Fund and the Custodian shall have agreed in writing shall be subject to this
Agreement, as identified in Schedule B hereto.
(j) “Prospectus” shall include each current prospectus and statement of additional
information of the Fund with respect to a Portfolio.
(k) “Rule 17f-5” shall mean Rule 17f-5 under the 1940 Act.
(l) “Rule 17f-7” shall mean Rule 17f-7 under the 1940 Act.
(m) “Shares” refers to the shares of the Fund.
(n) “Security” or “Securities” shall be deemed to include bonds, debentures, notes, stocks,
shares, evidences of indebtedness, and other securities, commodity interests and investments from
time to time owned by the Fund and held in a Portfolio.
(o) “Sub-Custodian” shall mean and include (i) any branch of the Custodian, and (ii) any
“eligible foreign custodian,” as that term is defined in Rule 17f-5 under the 1940 Act, approved by
the Fund or a Delegate of the Fund in the manner required by Rule 17f-5. For the avoidance of
doubt, the term “Sub-Custodian” shall not include any central securities depository or clearing
agency.
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(o) “Eligible Securities Depository” shall have the same meaning as set forth
in Rule 17f-7(b)(l).
(p) “Transfer Agent” shall mean the person which performs as the transfer agent,
dividend disbursing agent and shareholder servicing agent for the Fund.
2. | Appointment of Custodian. |
(a) The Fund hereby constitutes and appoints the Custodian as custodian of all the
Securities and moneys owned by or in the possession of a Portfolio during the period of
this Agreement.
(b) The
Custodian hereby accepts appointment as such custodian and agrees to perform the duties thereof as hereinafter set forth.
(c) If the Fund has more than one Portfolio, the Custodian will segregate the assets
of each Portfolio to which this Agreement relates into a separate account for each such
Portfolio containing the assets of such Portfolio (and all investment earnings thereon).
Unless the context otherwise requires, any reference in this Agreement to any actions to be
taken by the Fund shall be deemed to refer to the Fund acting on behalf of one or more of
its Portfolios, any reference in this Agreement to any assets of the Fund, including,
without limitation, any portfolio securities and cash and earnings thereon, shall be deemed
to refer only to assets of the applicable Portfolio, any duty or obligation of the
Custodian hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to such individual Portfolio and any obligation or liability of the fund hereunder
shall be binding only with respect to such individual Portfolio, and shall be discharged
only out of the assets of such Portfolio.
3. | Appointment and Removal of Sub-Custodians. |
(a) The
Custodian may appoint one or more Sub-Custodians to act as sub-custodian or
sub-custodians of Securities and moneys at any time held in any Portfolio, upon the terms
and conditions specified in this Agreement. The Custodian shall oversee the maintenance by
any Sub-Custodian of any Securities or moneys of any Portfolio.
(b) The Agreement between the Custodian and each Sub-Custodian described in clause (ii) of
Section 1 (o) and acting hereunder shall contain any provisions necessary to comply with
Rule 17f-5 under the 1940 Act.
(c) Prior to the Custodian’s use of any Sub-Custodian described in clause (ii) of Paragraph
1 (o), the Fund or a Delegate of the Fund must approve such Sub-Custodian in the manner
required by Rule 17f-5 and provide the Custodian with satisfactory evidence of such
approval.
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(d) The Custodian shall promptly take such steps as may be required to remove
any Sub-Custodian that has ceased to be an “eligible foreign custodian” or has otherwise
ceased to meet the requirements under Rule 17f-5. If the Custodian intends to remove any
Sub-Custodian previously approved by the Fund or a Delegate of the Fund pursuant to
paragraph 3(c), and the Custodian proposes to replace such Sub-Custodian with a
Sub-Custodian that has not yet been approved by the Fund or a Delegate of the Fund, it will
so notify the Fund or a Delegate of the Fund and provide it with information reasonably
necessary to determine such proposed Sub-Custodian’s eligibility under Rule 17f-5,
including a copy of the proposed agreement with such Sub-Custodian. The Fund shall at the
meeting of the Board of Directors next following receipt of such notice and information, or
a Delegate of the Fund shall promptly after receipt of such notice and information,
determine whether to approve the proposed Sub-Custodian and will promptly thereafter give
written notice of the approval or disapproval of the proposed action.
(e) The Custodian hereby represents to the Fund that in its opinion, after due
inquiry, the established procedures to be followed by each Sub-Custodian in connection with
the safekeeping of property of a Portfolio pursuant to this Agreement afford reasonable
care for the safekeeping of such property based on the standards applicable in the relevant
market.
4. | Use of Sub-Custodians and Securities Depositories. |
With respect to property of a Portfolio which is maintained by the Custodian in the
custody of a Sub-Custodian pursuant to Section 3:
(a) The Custodian will identify on its books as belonging to the particular Portfolio
any property held by such Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the Securities placed in its care to
be held in a foreign securities depository, such Sub-Custodian will be required by its
agreement with the Custodian to identify on its books such Securities as being held for the
account of the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject only to the instructions of the
Custodian or its agents; and any Securities held in an foreign securities depository for
the account of a Sub-Custodian will be subject only to the instructions of such
Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in an account with a
Sub-Custodian which includes exclusively the assets held by the Custodian for
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its customers, and will cause such account to be designated by such Sub-Custodian as
a special custody account for the exclusive benefit of customers of
the Custodian.
(e) Before any Securities are placed in a foreign securities depository, the Custodian
shall provide the fund’s Board of Directors with an analysis of the custody risks
associated with maintaining assets with the foreign securities depository.
(f) The Custodian or its agent shall continue to monitor the custody risks associated with
maintaining the Securities with a foreign securities depository and shall promptly notify
the Fund’s Board of Directors of any material changes in said risks.
5. | Compensation. |
(a) The Fund will compensate the Custodian for its services rendered under this Agreement
in accordance with the fees set forth in the Omnibus Fee Agreement between the Fund and the
Custodian dated as of November 1, 2009 and incorporated herein.
(b) If the Fund requests that the Custodian act as Custodian for any Portfolio hereafter
established, at the time the Custodian commences serving as such for said Portfolio, the
compensation for such services shall be agreed to in writing by the Fund and the Custodian.
(c) The Custodian (not the Fund) will be responsible for the payment of the compensation of
each Sub-Custodian.
6. | Custody of Cash and Securities. |
(a)
Receipt and Holding of Assets. The Fund will deliver or cause to be delivered
to the Custodian and any Sub-Custodians all Securities and moneys of any Portfolio at any
time during the period of this Agreement and shall specify the Portfolio to which the
Securities and moneys are to be specifically allocated. The Custodian will not be
responsible for such Securities and moneys until actually received by it or by a
Sub-Custodian. The Fund may, from time to time in its sole discretion, provide the
Custodian with Instructions as to the manner in which and in what amounts Securities, and
moneys of a Portfolio are to be held on behalf of such Portfolio in the Book-Entry System
or a Depository. Securities and moneys of a Portfolio held in the Book-Entry System or a
Depository will be held in accounts which include only assets of Custodian that are held
for its customers.
(b) Accounts and Disbursements. The Custodian shall establish and maintain a
separate account for each Portfolio and shall credit to the separate account all
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moneys received by it or a Sub-Custodian for the account of such Portfolio and shall disburse,
or cause a Sub-Custodian to disburse, the same only:
1. In payment for Securities purchased for the Portfolio, as provided in Section 7 hereof;
2. In payment of dividends or distributions with respect to the Shares of such Portfolio,
as provided in Section 11 hereof;
3. In payment of original issue or other taxes with respect to the Shares of such
Portfolio, as provided in Section 12(c) hereof;
4. In payment for Shares which have been redeemed by such Portfolio, as provided in
Section 12 hereof;
5. In reimbursement of the expenses and liabi1ities of the Custodian attributable to the
Fund, as provided in Sections 5 hereof;
6. Pursuant to Instructions setting forth the name of the Portfolio and the name and
address of the person to whom the payment is to be made, the amount to be paid and the
purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a Portfolio under this Section 6
exceeds the funds available in that Portfolio’s account, the Custodian or relevant Sub-Custodian,
as the case may be, may, in its discretion, advance the Fund on behalf of that Portfolio an amount
equal to such excess and such advance shall be deemed an overdraft from the Custodian or such
Sub-Custodian to that Portfolio payable on demand, bearing interest at the rate of interest
customarily charged by the Custodian or such Sub-Custodian on similar
overdrafts.
(d) Registration of Securities and Physical Separation. All Securities held for a Portfolio
which are issued or issuable only in bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian or a Sub-Custodian in that form; all other
Securities held for a Portfolio may be registered in the name of that Portfolio, in the name of any
duly appointed registered nominee of the Custodian or a Sub-Custodian as the Custodian or such
Sub-Custodian may from time to time determine, or in the name of the Book-Entry System or a
Depository or their successor or successors, or their nominee or nominees. The Fund reserves the
right to instruct the Custodian as to the method of registration and safekeeping of the Securities.
The Fund agrees to furnish to the Custodian appropriate instruments to enable the Custodian or any
Sub-Custodian to hold or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or a Depository, any Securities which
the Custodian of a Sub-Custodian may hold for
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the account of a Portfolio and which may from time to time be registered in the name of a
Portfolio. The Custodian shall hold all such Securities specifically allocated to a Portfolio which
are not held in the Book-Entry System or a Depository in a separate account for such Portfolio in
the name of such Portfolio physically segregated at all times from those of any other person or
persons.
(e) Segregated Accounts. Upon receipt of an Instruction, the Custodian will establish
segregated accounts on behalf of a Portfolio to hold liquid or other assets as it shall be directed
by such Instruction and shall increase or decrease the assets in such segregated accounts only as
it shall be directed by subsequent Instruction.
(f) Collection of Income and Other Matters Affecting Securities. Except as otherwise
provided in an Instruction, the Custodian, by itself or through the use of the Book-Entry System or
a Depository with respect to Securities therein maintained, shall, or shall promptly instruct the
relevant Sub-Custodian to:
1. Collect all income due or payable with respect to Securities in accordance with
this Agreement;
2. Present for payment and collect the amount payable upon all Securities which may
mature or be called, redeemed or retired, or otherwise become payable;
3. Surrender Securities in temporary form for derivative Securities;
4. Execute any necessary declarations or certificates of ownership under the federal
income tax laws or the laws or regulations of any other taxing authority now or hereafter
in effect; and
5. Hold directly, or through the Book-Entry System or a Depository with respect to
Securities therein deposited, for the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the Custodian or relevant
Sub-Custodian for each Portfolio.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of an Instruction, the
Custodian, directly or through the use of the Book-Entry System or a Depository, shall, or shall
promptly instruct the relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and delivered to such persons as
may be designated in such Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Fund as owner of any Securities may be exercised;
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2. Deliver or cause to be delivered any Securities held for a Portfolio in exchange for
other Securities or cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation, or the exercise of any
conversion privilege;
3. Deliver or cause to be delivered any Securities held for a Portfolio to any protective
committee, reorganization committee or other person in connection with the reorganization,
refinancing, merger, consolidation or recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the separate account for each such Portfolio
certificates of deposit, interim receipts or other instruments or documents as may be issued to it
to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the assets specifically allocated to the
separate account of a Portfolio and take such other steps as shall be stated in Written
Instructions to be for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;
5. Deliver Securities upon sale of such Securities for the account of a Portfolio pursuant to
Section 7;
6. Deliver Securities upon the receipt of payment in connection with any repurchase agreement
related to such Securities entered into on behalf of a Portfolio;
7. Deliver Securities of a Portfolio to the issuer thereof or its agent when such Securities are
called, redeemed, retired or otherwise become payable; provided, however, that in any such case the
cash or other consideration is to be delivered to the Custodian or Sub-Custodian, as the case may
be;
8. Deliver Securities for delivery in connection with any loans of securities made by a Portfolio
but only against receipt of adequate collateral as agreed upon from time to time by the Custodian
and the Fund which may be in the form of cash or obligations issued by the United States
Government, its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection with any borrowings by a Portfolio
requiring a pledge of Portfolio assets, but only against receipt of the amounts borrowed;
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10. Deliver Securities to the Transfer Agent or its designee or to the holders of
Shares in connection with distributions in kind, in satisfaction of requests by
holders of Shares for repurchase or redemption;
11. Deliver Securities for any other proper business purpose, but only upon
receipt of, in addition to written Instructions, a copy of a resolution or other
authorization of the Fund certified by the Secretary of the Fund, 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 business purpose, and naming the
person or persons to whom delivery of such Securities shall be made.
(h)
Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for the payment of
money received by the Custodian for the account of a Portfolio.
(i) Execution of Required Documents. The Custodian is hereby authorized to
execute any and all applications or other documents required by a regulatory agency or
similar entity as a condition of making investments in the foreign market under such
entity’s jurisdiction.
7. | Purchase and Sale of Securities. |
(a) Promptly after the purchase of Securities, the Fund or its designee shall deliver to the
Custodian an Instruction specifying with respect to each such purchase: (1) the name of the
Portfolio to which such Securities are to be specifically allocated; (2) the name of the
issuer and the title of the Securities; (3) the number of shares or the principal amount
purchased and accrued interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such purchase; and (7) the name
of the person from whom or the broker through whom the purchase was made, if any. The
Custodian or specified Sub-Custodian shall receive the Securities
purchased by or for a
Portfolio and upon receipt thereof (or upon receipt of advice from a Depository or the
Book-Entry System that the Securities have been transferred to the Custodian’s account)
shall pay to the broker or other person specified by the Fund or its designee out of the
moneys held for the account of such Portfolio the total amount payable upon such purchase,
provided that the same conforms to the total amount payable as set forth in such
Instruction.
(b) Promptly after the sale of Securities, the Fund or its designee shall deliver to the
Custodian an Instruction specifying with respect to each such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2) the name of the
issuer and the title of the Securities; (3) the number of shares or principal amount sold,
and accrued interest, if any; (4) the date of sale; (5) the sale price per unit; (6) the
total amount payable to the Portfolio upon such sale; and (7)
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the name of the broker through whom or the person to whom the sale was made. The Custodian
or relevant Sub-Custodian shall deliver or cause to be delivered the Securities to the
broker or other person designated by the Fund upon receipt of the total amount payable to
such Portfolio upon such sale, provided that the same conforms to the total amount payable
to such Portfolio as set forth in such Instruction. Subject to the foregoing, the Custodian
or relevant Sub-Custodian may accept payment in such form as shall be satisfactory to it,
and may deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the Portfolios may be invested
by the Custodian for short term purposes pursuant to standing Instructions from the Fund.
8. | Lending of Securities. |
If the Fund and the Custodian enter into a separate written agreement authorizing
the Custodian to lend Securities, the Custodian may lend Securities pursuant to such
agreement. Such agreement must be approved by the Fund in the manner required by any
applicable law, regulation or administrative pronouncement, and may provide for the payment
of additional reasonable compensation to the Custodian.
9. | Investment in Futures, Options on Futures and Options. |
The Custodian shall pursuant to Instructions (which may be standing instructions) (i) with
respect to futures or options on futures, transfer initial margin to a futures commission
merchant or safekeeping bank or, with respect to options, transfer collateral to a broker;
(ii) pay or demand variation margin to or from a designated futures commission merchant or
other broker based on daily marking to market calculations and in accordance with accepted
industry practices; and (iii) subject to the Custodian’s consent, enter into separate
procedural, safekeeping or other agreements with respect to the custody of initial margin
deposits or collateral in transactions involving futures contracts or options, as the case
may be. The Custodian shall have no custodial or investment responsibility for any assets
transferred to a safekeeping bank, futures commission merchant or broker pursuant to this
paragraph. In addition, in connection with options transactions in a Portfolio, the
Custodian is authorized to pledge assets of the Portfolio as collateral for such
transactions in accordance with industry practice.
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10. | Provisional Credits and Advancements. |
(a) The Custodian is authorized, but shall not be obligated, to credit the account of a
Portfolio provisionally on payable date with interest, dividends, distributions,
redemptions, shareholder subscription amounts or other amounts due. Otherwise, such amounts
will be credited to the Portfolio on the date such amounts are actually received and
reconciled to the Portfolio. In cases where the Custodian has credited a Portfolio with such
amounts prior to actual receipt, collection and reconciliation, the Fund acknowledges that
the Custodian shall be entitled to recover any such credit on demand from the Fund and
further agrees that the Custodian may reverse such credit if and to the extent that
Custodian does not receive such amounts in the ordinary course of business.
(b) In cases where the Custodian credits the Portfolio with cash prior to actual receipt and
reconciliation, the Custodian may reverse such credit as of the expected payment date. The
Fund agrees that it will not make any claim or pursue any legal action against the Custodian
for loss or other detriment allegedly arising or resulting from the Custodian’s good faith
determination to effect, not effect or reverse any provisional credit the Portfolio.
(c) The Fund recognizes that any decision to effect a provisional credit or an advancement
of the Custodian’s own funds under this agreement will be an accommodation granted entirely
at the Custodian’s option and in light of the particular circumstances, which circumstances
may involve conditions in different countries, markets and classes of assets at different
times. The Fund shall make the Custodian whole for any loss which it may incur from granting
such accommodations and acknowledges that the Custodian shall be entitled to recover any
relevant amounts from the Fund on demand. All amounts thus due to the Custodian shall be
paid by the Fund from the account of the relevant Portfolio unless otherwise paid on a
timely basis and in that connection the Fund acknowledges that the Custodian has a
continuing lien on all assets of such Portfolio to secure such payments and agrees that the
Custodian may apply or set off against such amounts any amounts credited by or due from the
Custodian to the Fund. If funds in the Portfolio are insufficient to make any such payment
the Fund shall promptly deliver to the Custodian the amount of such deficiency in
immediately available funds when and as specified by the Custodian’s written or oral
notification to the Fund.
(d) To the extent the Fund invests in assets outside the United States, in connection with
the Custodian’s global custody service the Fund will maintain deposits at the Custodian’s
London Branch. The Fund acknowledges and agrees that such deposits are payable only in the
currency in which an applicable deposit is denominated; that such deposits are payable only
on the Fund’s demand at the Custodian’s London Branch; that such deposits are not payable at
any of the Custodian’s offices in the United States; and that the Custodian will not in any
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manner directly or indirectly promise or guarantee any such payment in the United
States.
The Fund further acknowledges and agrees that such deposits are subject to cross-border
risk, and therefore the Custodian will have no obligation to make payment of deposits if and
to the extent that the Custodian is prevented from doing so by reason of applicable law or
regulation or any Sovereign Risk event affecting the London Branch or the currency in which
the applicable deposit is denominated. “Sovereign Risk” for this purpose means
nationalization, expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, taxes, levies or other charges
affecting the property rights of persons who are not residents of the affected jurisdiction;
or acts of war, terrorism, insurrection or revolution; or any other act or event beyond the
Custodian’s control.
THE FUND ACKNOWLEDGES AND AGREES THAT DEPOSIT ACCOUNTS MAINTAINED AT FOREIGN BRANCHES
OF UNITED STATES BANKS (INCLUDING, IF APPLICABLE, ACCOUNTS IN WHICH CUSTOMER FUNDS FOR THE
PURCHASE OF SECURITIES ARE HELD ON AND AFTER CONTRACTUAL SETTLEMENT DATE), ARE NOT INSURED
BY THE U.S. FEDERAL DEPOSIT INSURANCE CORPORATION; MAY NOT BE GUARANTEED BY ANY LOCAL OR
FOREIGN GOVERNMENTAL AUTHORITY; ARE UNSECURED; AND IN A LIQUIDATION MAY BE SUBORDINATED IN
PRIORITY OF PAYMENT TO DOMESTIC (U.S.- DOMICILED) DEPOSITS. THEREFORE, BENEFICIAL OWNERS OF
SUCH FOREIGN BRANCH DEPOSITS MAY BE UNSECURED CREDITORS OF THE NORTHERN TRUST COMPANY.
Deposit account balances that are owned by United States residents are expected
to be maintained in an aggregate amount of at least $100,000 or the
equivalent in other currencies.
11. | Payment of Dividends or Distributions. |
(a) In the event that the Board of Directors of the Fund (or a committee thereof) authorizes
the declaration of dividends or distributions with respect to a Portfolio, an Authorized
Person shall provide the Custodian with Instructions specifying the record date,
the date of payment of such distribution and the total amount payable to the Transfer Agent
or its designee on such payment date.
(b) Upon the payment date specified in such Instructions, the Custodian shall pay the
total amount payable to the Transfer Agent or its designee out of the moneys specifically
allocated to and held for the account of the appropriate Portfolio.
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12. | Sale and Redemption of Shares. |
(a) Whenever the Fund shall sell any Shares, the Fund shall deliver or cause to be
delivered to the Custodian an Instruction specifying the name of the Portfolio whose Shares
were sold and the amount to be received by the Custodian for the sale of such Shares.
(b) Upon receipt of such amount from the Transfer Agent or its designee, the Custodian
shall credit such money to the separate account of the Portfolio specified in the
Instruction described in paragraph (a) above.
(c) Upon issuance of any Shares in accordance with the foregoing provisions of this Section
12, the Custodian shall pay all original issue or other taxes required to be paid in
connection with such issuance upon the receipt of an Instruction specifying the amount to
be paid.
(d) Except as provided hereafter, whenever any Shares are redeemed, the Fund shall deliver
or cause to be delivered to the Custodian an Instruction specifying the name of the
Portfolio whose Shares were redeemed and the total amount to be paid for the Shares
redeemed.
(e) Upon receipt of an Instruction described in paragraph (d) above, the Custodian shall
pay to the Transfer Agent (or such other person as the Transfer Agent directs) the total
amount specified in such Instruction. Such payment shall be made from the separate account
of the Portfolio specified in such Instruction.
13. | Indebtedness. |
(a) The Fund or its designee will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money, using Securities as collateral,
a notice or undertaking in the form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian an Instruction stating with
respect to each such borrowing: (1) the name of the Portfolio for which the borrowing is to
be made; (2) the name of the bank; (3) the amount and terms of the borrowing, which may be
set forth by incorporating by reference an attached promissory note, duly endorsed by the
Fund, or other loan agreement; (4) the time and date, if known, on which the loan is to be
entered into (the “borrowing date”); (5) die date on which the loan becomes due and payable;
(6) the total amount payable to the Fund for the separate account of the Portfolio on the
borrowing date; (7) die market value of Securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares or the principal
amount of any particular Securities; (8) whether the Custodian is to deliver such collateral
through the
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Book-Entry System or a Depository; and (9) a statement that such loan is in
conformance with the 1940 Act and the Prospectus.
(b) Upon receipt of the Instruction referred to in paragraph (a) above, the Custodian
shall deliver on the borrowing date the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Instruction. The Custodian may, at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all rights therein given the
lending bank by virtue of any promissory note or loan agreement. The Custodian shall
deliver as additional collateral in the manner directed by the Fund from time to time such
Securities specifically allocated to such Portfolio as may be specified in the Instruction
to collateralize further any transaction described in this Section 13. The Fund shall cause
all Securities released from collateral status to be returned directly to the Custodian,
and the Custodian shall receive from time to time such return of collateral as may be
tendered to it. In the event that the Fund fails to specify in such Instruction all of the
information required by this Section 13, the Custodian shall not be under any obligation to
deliver any Securities. Collateral returned to the Custodian shall be
held hereunder as it
was prior to being used as collateral.
14. | Corporate Actions. |
Whenever the Custodian or any Sub-Custodian receives information concerning Securities held
for a Portfolio which requires discretionary action by the beneficial owner of the
Securities (other than a proxy), such as subscription rights, bond issues, stock repurchase
plans and rights offerings, or legal notices or other material intended to be transmitted to
Securities holders (“Corporate Actions”), the Custodian will give the Fund or its designee
notice of such Corporate Actions to the extent that the Custodian’s central corporate
actions department has actual knowledge of a Corporate Action in time
to notify the Fund.
When a rights entitlement or a fractional interest resulting from a rights issue, Stock
dividend, stock split or similar Corporate Action which bears an expiration date is
received, the Custodian will endeavor to obtain an Instruction relating to such Corporate
Action from an Authorized Person, but if such Instruction is not
received in time for the
Custodian to take timely action, or actual notice of such Corporate Action was
received too late to seek such an Instruction, the Custodian is authorized to sell, or cause
a Sub-Custodian to sell, such rights entitlement or fractional interest and to credit the
applicable account with the proceeds and to take any other action it deems, in good faith,
to be appropriate, in which case, provided it has met the standard of care in Section 16
hereof, it shall be held harmless by the particular Portfolio involved for any such action.
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The
Custodian will deliver proxies promptly to the Fund or its designated
[ILLEGIBLE] pursuant to special arrangements which may have been agreed to in writing between the
parties hereto. Such proxies shall be executed in the [ILLEGIBLE] nominee name relating to
Securities registered in the name of such nominee [ILLEGIBLE]: without indicating the manner in which
such proxies are to be voted; and [ILLEGIBLE] bearer Securities
are involved, proxies will be
delivered in accordance with an applicable Instruction, if any.
15. | Persons Having Access to the Portfolios. |
(a) Neither the Fund nor any officer, director, employee or agent of the Fund the Fund’s
investment adviser, or any sub-investment adviser, shall have physical access to the assets
of any Portfolio held by the Custodian or any Sub-Custodian [ILLEGIBLE] be authorized or permitted to
withdraw any investments of a Portfolio, nor shall [ILLEGIBLE] the Custodian or any Sub-Custodian
deliver any assets of a Portfolio to any such person. No officer, director, employee or
agent of the Custodian who holds any similar position with the Fund’s investment adviser,
with any sub-investment adviser of the Fund or with the Fund shall have access to the assets
of any Portfolio.
(b) Nothing in this Section 15 shall prohibit any Authorized Person from giving Instructions
to the Custodian so long as such Instructions do not result in delivery of or access to
assets of a Portfolio prohibited by paragraph (a) of this
Section 15.
(c) The Custodian represents that it maintains a system that is reasonably designed to
prevent unauthorized persons from having access to the assets that it
holds (by any means) for its customers.
Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to perform only such
services as are set forth in this Agreement or expressly contained in an Instruction given
to the Custodian which is not contrary to the provisions of this Agreement.
(b) Standard of Care.
1. The Custodian will use reasonable care prudence and diligence
with respect to its obligations under this Agreement and the safekeeping of property
of the Portfolios. The Custodian shall be liable to, and shall indemnify and hold
harmless the Fund from and against any loss which shall occur as the result of the
failure of the Custodian or a Sub-Custodian to exercise reasonable care, prudence
and diligence with respect to their respective obligations under this Agreement and
the safekeeping of such property. The determination of whether the Custodian or
Sub-Custodian
15
has exercised reasonable care, prudence and diligence in connection with their obligations under
this Agreement shall be made in light of prevailing standards applicable to professional custodians
in the jurisdiction in which such custodial services are performed. In the event of any loss to the
Fund by reason of the failure of the Custodian or a Sub-Custodian to exercise reasonable care,
prudence and diligence, the Custodian shall be liable to the Fund only to the extent of the Fund’s
direct damages and expenses, which damages, for purposes of property only, shall be determined
based on the market value of the property which is the subject of the loss at the date of discovery
of such loss and without reference to any special condition or circumstances.
2. The Custodian will not be responsible for any act, omission, or default of, or for the solvency
of, any central securities depository or clearing agency.
3. The Custodian will not be responsible for any act, omission, or default of, or for the solvency
of, any broker or agent (not referred to in paragraph (b)(2) above) which it or a Sub-Custodian
appoints and uses unless such appointment and use is made or done negligently or in bad faith. In
the event such an appointment and use is made or done negligently or in bad faith, the Custodian
shall be liable to the Fund only for direct damages and expenses (determined in the manner
described in paragraph (b)(l) above) resulting from such appointment and use and, in the case of
any loss due to an act, omission or default of such agent or broker, only to the extent that such
loss occurs as a result of the failure of the agent or broker to exercise reasonable care
(“reasonable care” for this purpose to be determined in light of the prevailing standards
applicable to agents or brokers, as appropriate, in the jurisdiction where the services are
performed).
4. The Custodian shall be entitled to rely, and may act, upon the advice of counsel experienced in
the matters that are the subject of this Agreement (who may be counsel for the Fund) and shall be
without liability for any action reasonably taken or omitted in good faith and without negligence
pursuant to such advice.
5.
The Custodian shall be entitled to rely upon any Instruction it receives pursuant to the
applicable Sections of this Agreement that it reasonably believes to be genuine and to be from an
Authorized Person. In the event that the Custodian receives oral Instructions, the Fund or its
designee shall cause to be delivered to the Custodian, by the close of business no later than the
business day following the day that such oral Instructions were given to the Custodian, written
Instructions confirming such oral Instructions, whether by hand delivery, telex or otherwise. The
16
Fund agrees that the fact that no such confirming written Instructions are received
by the Custodian shall in no way affect the validity of the
transactions or enforceability
of the transactions hereby authorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in connection with (i) acting upon oral Instructions
given to the Custodian hereunder, provided such instructions reasonably appear to have
been received from an Authorized Person or (ii) deciding not to act solely upon oral
Instructions, provided that the Custodian first contacts the giver of such oral
Instructions and requests written confirmation immediately following any such decision not
to act.
6. The Custodian shall supply the Fund or its designee with such daily information
regarding the cash and Securities positions and activity of each Portfolio as the
Custodian and the Fund or its designee shall from time to time agree. It is understood
that such information will not be audited by the Custodian and the Custodian represents
that such information will be the best information then available to
the Custodian. The
Custodian shall have no responsibility whatsoever for the pricing of Securities, accruing
for income, or for the failure of the Fund or its designee to reconcile differences
between the information supplied by the Custodian and information obtained by the Fund or
its designee from other sources, including but not limited to pricing vendors and the
Fund’s investment adviser. Subject to the foregoing, to the extent that any miscalculation
by the Fund or its designee of a Portfolio’s net asset value is attributable to the
willful misfeasance, bad faith or negligence of the Custodian (including any Sub-Custodian
) in supplying or omitting to supply the Fund or its designee with information as
aforesaid, the Custodian shall be liable to the Fund for any resulting loss (subject to
such de minimis rule of change in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of the foregoing, the 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 any Portfolio, the
legality of the purchase thereof, or the propriety of the amount specified by the
Fund or its designee for payment therefor;
2. The legality of the sale of any Securities by any Portfolio or the propriety of
the amount of consideration for which the same are sold;
3. The legality of the issue or sale of any Shares, or the sufficiency of the amount to be
received therefor;
17
4. The legality of the redemption of any Shares, or the propriety of the amount to
be paid therefor;
5. The legality of the declaration or payment of any dividend or distribution by the
Fund; or
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the exclusive benefit of the Fund, but
hereby warrants that as of the date of this Agreement it is maintaining a bankers Blanket Bond and
hereby agrees to notify the Fund in the event that such bond is canceled or otherwise lapses.
(e) Consistent
with and without limiting the language contained in Section 16(a), it is
specifically acknowledged that the Custodian shall have no duty or responsibility to:
1. Question any Instruction or make any suggestions to the Fund or an Authorized Person
regarding any Instruction;
2. Supervise or make recommendations with respect to investments or the retention of
Securities;
3.
Subject to Section 16(b)(3) hereof, evaluate or report to the Fund or an Authorized
Person regarding the financial condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this Agreement; or
4.
Review or reconcile trade confirmations received from brokers.
(f) Amounts Due from or to Transfer Agent. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due to any Portfolio from the Transfer
Agent or its designee nor to take any action to effect payment or distribution by the Transfer
Agent or its designee of any amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under any duty or obligation
to ascertain whether any Securities at any time delivered to or held by it for the Fund and
specifically allocated to a Portfolio are such as may properly be held by the Fund under the
provisions of the Articles of Incorporation and the Prospectus.
(h) Indemnification. The Fund agrees to indemnify and hold the Custodian harmless from
all loss, cost, taxes, charges, assessments, claims, and liabilities (including, without
limitation, liabilities arising under the Securities Act of 1933,
18
the
Securities Exchange Act of 1934 and the 1940. Act and state or foreign securities laws) and
expenses (including reasonable attorneys fees and disbursements) arising directly or indirectly
from any action taken or omitted by the Custodian (i) at the request or on the direction of or in
reliance on the advice of the Fund or in reasonable reliance upon the Prospectus or (ii) upon an
Instruction; provided, that the foregoing indemnity shall not apply to any loss, cost, tax, charge,
assessment, claim, liability or expense to the extent the same is attributable to the Custodian’s
or any Sub-Custodian’s negligence, willful misconduct, bad faith or reckless disregard of duties
and obligations under this Agreement or any other agreement relating to the custody of Fund
property.
(i) The Fund agrees to hold the Custodian harmless from any liability or loss resulting from
the imposition or assessment of any taxes or other governmental charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be liable for any loss which
results from:
1. the general risk of investing;
2. subject to Section 16(b) hereof, investing or holding property in a particular country
including, but not limited to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions which prevent the
orderly execution of securities transactions or affect the value of property held pursuant
to this Agreement; or
3. consequential, special or punitive damages for any act or failure to act under any
provision of this Agreement, even if advised of the possibility thereof.
(k)
Force Majeure. No party shall be liable to the other for any delay in
performance, or nonperformance, of any obligation hereunder to the extent that the same is due to
forces beyond its reasonable control, including but not limited to delays, errors or interruptions
caused by the other party or third parties, any industrial, juridical, governmental, civil or
military action, acts of terrorism, insurrection or revolution, nuclear fusion, fission or
radiation, failure or fluctuation in electrical power, heat, light, air conditioning or
telecommunications equipment, or acts of God. The foregoing provisions shall not relieve Northern
from any duty to act in accordance with the standard of care set forth in this Agreement in
responding to an event of force majeure.
(1) Inspection of Books and Records. The Custodian shall create and maintain all
records relating to its activities and obligations under this Agreement
19
in such manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder, and under
applicable federal and state laws. All such records shall be the property of the Fund and
shall at all times during regular business hours of the Custodian be open for inspection by
duly authorized officers, employees and agents of the Fund and by the appropriate employees
of the Securities and Exchange Commission. The Custodian shall, at the Fund’s request,
supply the Fund with a tabulation of Securities and shall, when requested to do so by the
Fund and for such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
(m) Accounting Control Report. The Custodian shall provide, promptly, upon
request of the Fund, such reports as are available concerning the internal accounting
controls and financial strength of the Custodian.
17. | Term and Termination. |
(a) This Agreement shall become effective on the date first set forth above (the “Effective
Date”) and shall continue in effect thereafter until terminated in accordance with Section
17(b).
(b) Either of the parties hereto may terminate this Agreement with respect to any Portfolio
by giving to the other party a notice in writing specifying the date of such termination,
which, in case the Fund is the terminating party, shall be not less than ninety (90) days
after the date of Custodian receives such notice or, in case the Custodian is the
terminating party, shall be not less than one hundred eighty (180) days after the date the
Fund receives such notice. In the event such notice is given by the Fund, it shall be
accompanied by a certified resolution of the Board of Directors, electing to terminate this
Agreement with respect to any Portfolio and designating a successor custodian or custodians.
(c) If either of the parties hereto (i) breaches any material provision of this Agreement,
or (ii) is in default in the performance of its duties or obligations hereunder and such
default has a material adverse effect on the other party, then in each case the
non-defaulting party may give notice to the defaulting party specifying the nature of the
default in sufficient detail to permit the defaulting party to identify and cure such
default. If the defaulting party fails to cure such default within sixty (60) days of
receipt of such notice or within such other period of time as the parties may agree is
necessary for such cure, then the non-defaulting party may terminate this Agreement upon
notice of not less than five (5) business days to the defaulting party. In the event of a
termination of the Fund for cause, the Fund shall not be obligated to pay the “Early
Termination Fee” as defined in the Omnibus Fee Agreement.
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(d) In the event such notice is given by the Custodian pursuant to (b) or (c) above,
the Fund shall, on or before the termination date, deliver to the Custodian a certified
resolution of the Board of Directors, designating a successor custodian or custodians. In
the absence of such designation by the Fund, the Custodian may designate a successor
custodian, which shall be a person qualified to so act under the 0000 Xxx. If the Fund
fails to designate a successor custodian with respect to any Portfolio, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon the delivery by
the Custodian of all Securities (other than Securities held in the Book-Entry System which
cannot be delivered to the Fund) and moneys of such Portfolio, be deemed to be its own
custodian and the Custodian shall thereby be relieved of all duties and responsibilities
pursuant to this Agreement, other than the duty with respect to Securities held in the
Book- Entry System which cannot be delivered to the Fund.
(e) Upon the date set forth in such notice as provided in this Section 17, this Agreement
shall terminate to the extent specified in such notice, and the Custodian shall upon
receipt of a notice of acceptance by the successor custodian on that date deliver directly
to the successor custodian all Securities and moneys then held by the Custodian and
specifically allocated to the Portfolio or Portfolios specified, after deducting all fees,
expenses and other amounts for the payment or reimbursement of which it shall then be
entitled with respect to such Portfolio or Portfolios.
18. | Miscellaneous. |
(a) Annexed hereto as Schedule A is a certification signed by two of the present officers of
the Fund setting forth the names of the present Authorized Persons. The Fund agrees to
furnish to the Custodian a new certification in similar form in the event that any such
present Authorized Person ceases to be such an Authorized Person or in the event that other
or additional Authorized Persons are elected or appointed. Until such new certification is
received by the Custodian, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Instructions which Custodian reasonably believes were
given by an Authorized Person, as identified in the last delivered certification. Unless
such certification specifically limits the authority of an Authorized Person to specific
matters or requires that the approval of another Authorized Person is
required. Custodian
shall be under no duty to inquire into the right of such person, acting alone, to give any
instructions whatsoever under this Agreement.
(b) Any notice or other instrument in writing, authorized or required by this Agreement to
be given to the Custodian, shall be sufficiently given if addressed to the Custodian and
mailed or delivered to it at its offices at its address stated on the first page hereof or
at such other place as the Custodian may from time to time designate in writing.
21
(c) Any notice or other instrument in writing, authorized or required by this Agreement to be given
to the Fund, shall be sufficiently given if addressed to the Fund and mailed or delivered to it at
its offices at its address shown on the first page hereof or at such other place as the Fund may
from time to time designate in writing.
(d) Except as expressly provided herein, Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the same formality as this Agreement.
(e) This Agreement shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns; provided, however, that this Agreement shall not be assignable
by the Fund without the written consent of the Custodian, or by the Custodian without the written
consent of the Fund, and any attempted assignment without such written consent shall be null and
void.
(f) This Agreement shall be construed in accordance with the laws of the State of Illinois.
(g) The captions of the Agreement are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their construction or effect.
(h) This Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but such counterparts shall, together, constitute only one instrument.
(i) The Fund and the Custodian agree that the obligations of the Fund under this Agreement
shall not be binding upon or any member of the Board of Directors or any shareholder, nominee,
officer, employee or agent, whether past, present or future, of the Fund individually, but are
binding only upon the assets and property of the Fund or of the appropriate Portfolio(s) thereof.
The execution and delivery of this Agreement have been duly authorized by the Fund and signed by an
authorized officer of the Fund, acting as such, but neither such authorization by the Fund nor such
execution and delivery by such officer shall be deemed to have been made by any member of the Board
of Directors or by any officer or shareholder of the Fund individually or to impose any liability
on any of them personally, but shall bind only the assets and property of the Fund or of the
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[ILLEGIBLE]
The undersigned, Xxx Xxxxxxxxx, does hereby certify that he is the duly elected, qualified
and acting Secretary of Asset Management Fund (the “Fund”) and further certifies that the person
whose signature appears above is a duly elected, qualified and acting officer of the Fund with full
power and authority to execute this Custody Agreement on behalf of the Fund and to take such other
actions and execute such other documents as may be necessary to effectuate this
![SIGNATURE](https://www.sec.gov/Archives/edgar/data/705318/000095012309073977/c55267apc5526702.gif)
![SIGNATURE](https://www.sec.gov/Archives/edgar/data/705318/000095012309073977/c55267apc5526703.gif)
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