CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT (the "Agreement") is made as of January 6, 2003,
between each registered investment company having executed this Agreement, each
a corporation organized and existing under the laws of the state of Kansas (each
a "Fund" and collectively, the "Funds"), and Banc of America Securities LLC, a
Delaware limited liability company (the "Custodian").
WHEREAS, each Fund is a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, each Fund is authorized to issue its shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, each Fund desires to retain the Custodian to serve as custodian of
each series of the Funds listed on Schedule 1 (such series listed on Schedule 1
as the same may be amended from time to time in accordance with the terms of
this Agreement, being referred to herein as the "Portfolio(s)") in compliance
with the requirements of the 1940 Act, and the Custodian is willing to so serve
as custodian, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT. (a) Each Fund
hereby employs the Custodian as the custodian of all monies and securities
received or owned by the Portfolios, including securities to be held in places
within the United States ("Domestic Securities") and foreign assets, as defined
in Rule 17f-5(a)(2) promulgated under the 1940 Act, to be held outside the
United States ("Foreign Securities").
(b) Each Fund, on behalf of its respective Portfolios, will deliver to
the Custodian all securities and monies received or owned by the Portfolios at
any time. The Custodian shall not be responsible for such securities or monies
until it shall actually receive them, provided that any failure to receive such
securities or monies is not the result of the Custodian's negligence.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS HELD IN THE UNITED
STATES.
2.1. HOLDING ASSETS. (a) Except for Domestic Securities deposited and
maintained in a Securities System pursuant to paragraph (b) of this Section 2.1,
the Custodian shall hold all Domestic Securities physically segregated at all
times from those of any other person or persons and shall xxxx such Domestic
Securities in such manner as to clearly identify them as the property of the
applicable Portfolio.
(b) The Custodian may deposit and maintain Domestic Securities in a
clearing agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934 (the "Exchange Act"), which
acts as a securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and the Board of Governors (the "Federal Reserve
Board") of the Federal Reserve System (collectively, the "Securities System") in
accordance with applicable rules and regulations of the Federal Reserve Board
and the Securities and Exchange Commission. The Domestic Securities will be
represented in an account of the Custodian ("Account") in the Securities System,
which shall include only those assets which the Custodian shall hold in its
capacity as a fiduciary or otherwise for customers, and the Domestic Securities
shall be identified by book-entry in the records of the Custodian as belonging
to the applicable Portfolio. Each Fund, on behalf of its respective Portfolios,
will provide to the Custodian with information reasonably requested by the
Custodian to demonstrate the Fund's compliance with Rule 17f-4(d)(5) promulgated
under the 1940 Act. The Fund represent that they will comply with Rule
17f-4(d)(5).
(c) The Custodian shall upon receipt of Proper Instructions (as
defined in Article 4 hereof) establish and maintain a segregated account or
accounts for and on behalf of each Portfolio, into which account or accounts may
be transferred cash or Domestic Securities, including Domestic Securities
maintained by the Custodian in an Account with the Securities System (i) in
accordance with the provisions of any agreement between a Fund, the Custodian,
any other broker-dealer registered under the Exchange Act and a member of the
National Association of Securities Dealers, Inc. ("NASD") or any futures
commission merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of The Options Clearing Corporation, any registered
national securities exchange, the Commodity Futures Trading Commission, any
registered contract market ("Contract Market"), or of any similar organization
or organizations, regarding escrow or other arrangements in connection with
transactions by a Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by such
Portfolio or commodity futures contracts or options thereon or forward currency
contracts purchased or sold by such Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or releases of the Securities
and Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies, and (iv) for other proper business purposes,
but only, in the case of this clause (iv), upon receipt of Proper Instructions
and a certified copy of a resolution or consent of the Board of the relevant
Fund setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper business purposes.
(d) The Custodian shall open and maintain a separate bank account or
account in the United States in the name of each Portfolio of a Fund, subject
only to draft or order by the Custodian acting pursuant to the terms of this
Agreement, and shall hold in such account or accounts, subject to the provisions
hereof, all monies received by it from or for the account of the applicable
Portfolio. Monies held by the Custodian for a Portfolio may be deposited by the
Custodian to its credit as Custodian in such banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that every
such bank or trust company shall be qualified to act as a custodian under the
1940 Act and that each such bank or trust company and the funds to be deposited
with each such bank or trust company shall be approved by the Board of the
relevant Fund. Such monies shall be deposited by the Custodian in its capacity
as such and shall be withdrawable by the Custodian only in such capacity. The
Custodian shall, upon receipt of Proper Instructions, invest monies received in
and other instruments as may be set forth in such Proper Instructions.
2.2. DELIVERY OF SECURITIES. The Custodian shall release and deliver
Domestic Securities held by the Custodian or in a Securities System for a
Portfolio upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, only in the following
cases:
(i) upon the sale of such Domestic Securities for the account of the
Portfolio and (A) upon the receipt of payment registered form, in "street
name" or in other good delivery form therefor; (B) in the case of a sale
effected through a Securities System, upon (a) receipt of advice from the
Securities System that payment for such Domestic Securities has been
transferred to the Account and (b) the making of an entry on the records
of the Custodian to reflect such transfer and payment; or (C) to a broker
or its clearing agent, against receipt therefor, for examination in
accordance with "street delivery" custom;
(ii) upon the receipt of payment in connection with any repurchase
agreement related to such Domestic Securities entered into by the
Portfolio;
(iii) to a depository agent or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of an issuer or the tender or other similar offers for such
Domestic Securities, and the Custodian shall obtain and hold under the
terms of this Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to evidence such
delivery;
(iv) to the issuer thereof, or its agent, when such Domestic
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;
(v) to the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominee name of any
sub-custodian or agent appointed pursuant to Section 2.8 hereof, or for
exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of such Domestic
Securities; PROVIDED, HOWEVER, that, in any such case, the new securities
are to be delivered to the Custodian;
(vi) in exchange for other securities issued or cash paid in
connection with the merger, consolidation, recapitalization,
reorganization, refinancing or liquidation of the issuer of such Domestic
Securities, or the exercise of any conversion privilege or pursuant to any
deposit agreement;
(vii) in the case of warrants, rights or similar securities, upon the
surrender thereof in the exercise of such warrants, rights or similar
securities or, in the case of interim receipts or temporary securities,
the surrender thereof for definitive securities; PROVIDED, HOWEVER, that,
in any such case, the new securities and cash, if any, are to be delivered
to the Custodian;
(viii) in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Portfolio, which may be in the
form of cash or obligations, issued by the United States government, its
agencies or instrumentalities;
(ix) as security in connection with any borrowings by the Portfolio
requiring a pledge of assets by the Portfolio, but only against receipt of
amounts borrowed;
(x) in accordance with the provisions of any agreement among the
Portfolio, the Custodian and/or any other broker/dealer registered under
the Exchange Act and a member of the NASD, relating to compliance with the
rules of The Options Clearing Corporation, of any registered national
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio;
(xi) in accordance with the provisions of any agreement among the
Portfolio, the Custodian and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of
the Commodity Futures Trading Commission, a Contract Market, or any
similar organization or organizations, regarding account deposits in
connection with transactions by the Portfolio;
(xii) upon receipt of instructions from the transfer agent for the
Portfolio (the "Transfer Agent"), for delivery to the Transfer Agent or to
the holders of shares in the Portfolio in connection with distributions in
kind upon any repurchases of such shares; and
(xiii) for any other proper business purpose, but only upon receipt of
Proper Instructions specifying the Domestic Securities to be delivered,
setting forth the purposes for which such delivery is to be made,
declaring such purposes to be proper business purposes, and naming the
person or persons to whom delivery of such Domestic Securities shall be
made.
2.3. REGISTRATION OF SECURITIES. Domestic Securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
relevant Portfolio or in the name of any nominee of the Fund on behalf of a
Portfolio, or of any nominee of the Custodian which nominee shall be assigned
exclusively to a Portfolio, unless the Portfolio has authorized in writing the
appointment of a nominee to be used in common with other investment companies
having the same investment adviser as the Portfolio, or in the name or nominee
name of any sub-custodian or agent appointed pursuant to Section 2.8 hereof or
in the name of a Securities System, or its successor. All Domestic Securities
accepted by the Custodian on behalf of a Portfolio under the terms of this
Agreement shall be in registered form, in "street name" or in other good
delivery form.
2.4. COLLECTION OF INCOME. The Custodian shall collect on a timely
basis all income and other payments with respect to registered Domestic
Securities held hereunder to which a Portfolio shall be entitled either by law
or pursuant to custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer Domestic Securities
if, on the date of payment by the issuer, such Domestic Securities are held by
the Custodian or agent thereof and shall credit such income or payments, as
collected, to the Portfolio's account. The Custodian shall present for payment
all Domestic Securities held hereunder which may mature or be called, redeemed
or retired or otherwise become payable, and shall detach and present for payment
all coupons and other income items requiring presentation as and when they
become due, and shall collect the amount payable on Domestic Securities held
hereunder.
2.5. PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Portfolio only in the following cases:
(i) upon the purchase of Domestic Securities, or options, futures
contracts, options on futures contracts or forward currency contracts for
the account of the Portfolio, but only (A) upon the delivery of such
Domestic Securities, or evidence of title to such options, futures
contracts, options on futures or forward currency contracts, to the
Custodian or a sub-custodian or agent appointed pursuant to Section 2.8
hereof; (B) in the case of a purchase effected through a Securities
System, upon receipt of advice from the Securities System that such
Domestic Securities have been transferred to the Account; or (C) in the
case of repurchase agreements entered into between the Portfolio and the
Custodian, or a bank, or any other broker-dealer which is a member of
NASD, upon such delivery of such Domestic Securities either in certificate
form or through an entry crediting the Custodian's account at the Federal
Reserve Bank of New York with such Domestic Securities or upon delivery of
the receipt evidencing purchase by the Portfolio of such Domestic
Securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such Domestic Securities from the
Portfolio;
(ii) in payment for repurchase of shares issued by the Portfolio;
(iii) in payment of any expense or liability incurred by the
Portfolio, including, but not limited to, the following payments for the
account of the Portfolio: interest, taxes, management, accounting,
transfer agent and legal fees and other operating expenses of the
Portfolio whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(iv) in payment of any distributions to shareholders or other holders
of interests or shares in the Portfolio;
(v) in payment of the amount of dividends received in respect of
Domestic Securities sold short;
(vi) in connection with the dissolution and liquidation of the
Portfolio; or
(vii) for any other proper purpose, but only upon receipt of Proper
Instructions setting forth the amount of such payment, the purpose for
which such payment is to be made and naming the person or persons to whom
such payment is to be made.
2.6. LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. In any and every case where payment for purchase of Domestic
Securities for the account of a Portfolio is made by the Custodian in advance of
receipt of such Domestic Securities in the absence of specific written
instructions from the Portfolio to pay in advance, the Custodian shall be
absolutely liable to the Portfolio for such Domestic Securities to the same
extent as if such Domestic Securities had been received by the Custodian, except
that, in the case of repurchase agreements entered into by a Portfolio with a
bank which is a member of the Federal Reserve System, the Custodian may transfer
funds to the account of such bank prior to the receipt of written evidence that
the Domestic Securities subject to such repurchase agreement have been
transferred by book-entry into a segregated non-proprietary account of the
Custodian maintained with the Federal Reserve Bank of New York or of the
safekeeping receipt, provided that such Domestic Securities have in fact been so
transferred by book-entry.
2.7. RESTRICTIONS ON THE CUSTODIAN. During the term of this Agreement,
the Custodian:
(i) shall not permit any other person or persons to, subject any of
the Domestic Securities or other investments it holds on behalf of a
Portfolio to any lien, encumbrance or charge of any kind in favor of the
Custodian or any person claiming through it; or
(ii) shall permit the Domestic Securities and other investments it
holds on behalf of a Portfolio to be subject, at all times, to inspection
by the Securities and Exchange Commission, through its employees or
agents.
2.8. APPOINTMENT OF AGENTS AND SUB-CUSTODIANS. The Custodian may at any
time and from time to time appoint (and may at any time remove) any banking
institution located in the United States and qualified under the 1940 Act or
Futures Commission Merchant to act (i) as a sub-custodian of Domestic Securities
and monies owned by a Portfolio, upon terms and conditions specified in Proper
Instructions, or (ii) as its agent to carry out such of the provisions of this
Article 2 as the Custodian of its responsibilities or liabilities hereunder and
the Custodian shall hold the Portfolio and Fund harmless from, and indemnify the
Portfolio and Fund against, any loss that occurs as a result of (a) the
negligence of such sub-custodian or agent or (b) the failure of any such
sub-custodian or agent to exercise reasonable care with respect to the
safekeeping of the Domestic Securities and monies of the Portfolio.
2.9. OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall
execute any necessary declarations or certificates of ownership under the
Federal income tax laws or regulations, or the laws or regulations of any other
taxing authority, in connection with receipt of income or other payments with
respect to Domestic Securities of a Portfolio held by the Custodian and in
connection with transfers of such Domestic Securities.
2.10. PROXIES AND EVIDENCE OF AUTHORITY. The Custodian shall, without
indication of the manner in which any proxies are to be voted or authority is to
be exercised, promptly execute and deliver, or cause to be promptly executed and
delivered by the registered holder of Domestic Securities registered otherwise
than in the name of a Portfolio or a nominee of a Portfolio, to such Portfolio,
or to such persons as may be designated in Proper Instructions, all proxies,
consents, authorizations and any other instruments whereby the authority of the
Fund on behalf of the Portfolio to vote or consent as owner of such Domestic
Securities may be exercised.
2.11. COMMUNICATIONS RELATING TO SECURITIES. The Custodian shall
transmit promptly to the Fund on behalf of its relevant Portfolio all written
information (including, without limitation, pendency of calls and maturities of
Domestic Securities and expirations of rights in connection therewith and
notices of exercise of put and call options written by the Portfolio and the
maturity of futures or forward currency contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the Domestic Securities
being held for the Portfolio. With respect to tender or exchange offers, the
Custodian shall transmit promptly to a Portfolio all written information
received by the Custodian from issuers of the Domestic Securities whose tender
or exchange is sought and from the party (or its agents) making the tender or
exchange offer. If a Portfolio shall desire to take action with respect to any
tender offer, exchange offer or any other similar transaction, the Portfolio
shall notify the Custodian at least two business days prior to the date on which
the Custodian is to take such action.
2.12. INSPECTION BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian shall
permit an independent public accountant chosen by the Fund on behalf of the
relevant Portfolio to verify by actual examination, at the end of each fiscal
year of the Portfolio, at the end of the first six months of each such fiscal
year, and at least one other time during each such fiscal year as such
accountant may choose, the Domestic Securities, futures contracts, options on
futures contracts, forward currency contracts, and other investments of the
Portfolio held by the Custodian, including Domestic Securities deposited and
maintained in the Securities System, and the accounting system, internal
accounting control and procedures for safeguarding all such investments.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS HELD OUTSIDE OF THE
UNITED STATES.
3.1. APPOINTMENT OF FOREIGN SUB-CUSTODIANS. Subject to the 1940 Act,
the Custodian is authorized to employ, in accordance with Section 3.5 hereof, as
sub-custodians ("Foreign Sub-Custodians") for the Foreign Securities of a
Portfolio maintained outside of the United States, the foreign banking
institutions and foreign securities depositories as may be designated in Proper
Instructions, each of which shall be an "Eligible Foreign Custodian" (as defined
in the 1940 Act). Upon the receipt of Proper Instructions, the Custodian shall
terminate the employment of any one or more of such Sub-Custodians maintaining
custody of a Portfolio's Foreign Securities.
3.2. ASSETS TO BE HELD. The Custodian shall limit the securities and
other assets maintained in the custody of a Foreign Sub-Custodian to Foreign
Securities.
3.3. FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be
agreed in writing by the Custodian and the Fund, Foreign Securities of a
Portfolio shall be maintained in a foreign securities depositories that is an
Eligible Securities Depository as defined by Rule 17f-7(b)(1) of the 1940 Act
and only through arrangements implemented by the foreign banking institutions
serving as Foreign Sub-Custodians pursuant to the terms hereof.
3.4. SEGREGATION OF SECURITIES. The Custodian shall identify on its
books as belonging to each relevant Portfolio the Foreign Securities of that
Portfolio held by each Foreign Sub-Custodian. Each agreement pursuant to which
the Custodian employs a foreign banking institution shall require that such
institution establish a custody account for the Custodian on behalf of a
Portfolio and physically segregate in that account Foreign Securities of the
Portfolio, and, in the event that such institution deposits Foreign Securities
in a foreign securities depository, that such institution shall identify on its
books as belonging to the Custodian, as agent for the Portfolio, the Foreign
Securities so deposited.
3.5. AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with
a Foreign Sub-Custodian shall provide that (a) a Portfolio's Foreign Securities
will not be subject to any right, charge, security interest, lien of claim of
any kind in favor of the Foreign Sub-Custodian or its creditors, except a claim
of payment for their safe custody or administration or, in the case of cash
deposits, liens or rights in favor of creditors of the Foreign Sub-Custodian
arising under bankruptcy, insolvency or similar laws; (b) beneficial ownership
of a Portfolio's Foreign Securities will be freely transferable without the
payment of money or value other than for safe custody or administration; (c)
adequate records will be maintained identifying the assets belonging to a
Portfolio or as being held by a third party for the benefit of a Portfolio; (d)
officers of or auditors employed by, or other representatives of, the Custodian
including, to the extent permitted under applicable law, the Fund's independent
public accountants, will be given access to the books and records of the Foreign
Sub-Custodian relating to its actions under its agreement with the Custodian;
(e) Foreign Securities of a Portfolio held by the Foreign Sub-Custodian will be
subject only to the instructions of the Custodian or its agents; and (f) a
Portfolio will receive periodic reports with respect to the safekeeping of the
Portfolio's Foreign Securities, including, without limitation, notification of
any transfer to or from the custodial account or accounts maintained by the
Foreign Sub-Custodian for the Custodian on behalf of a Portfolio.
3.6. ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of a
Portfolio, the Custodian will use its best efforts to arrange for the
independent public accountants of such Portfolio to be afforded access to the
books and records of any foreign banking institution employed as a Foreign
Sub-Custodian to the extent that such books and records relate to the
performance of any such foreign banking institution under its agreements with
the Custodian.
3.7. REPORTS BY CUSTODIAN. The Custodian will supply to the Portfolios
from time to time, as mutually agreed upon, statements in respect of the Foreign
Securities of the Portfolio held by Foreign Sub-Custodians, including but not
limited to an identification of entities having possession of such Foreign
Securities and notification of any transfers of such Foreign Securities to or
from each custodial account maintained by a Foreign Sub-Custodian for the
Custodian on behalf of a Portfolio indicating, as to Foreign Securities acquired
for the Portfolio, the identity of the entity having physical possession of such
Foreign Securities.
3.8. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNTS. (a) Upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall, or shall cause each Foreign
Sub-Custodian to, transfer, exchange or deliver Foreign Securities owned by a
Portfolio, but, except as otherwise provided herein, only as set forth in
Section 2.2 hereof.
(b) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
or cause the Foreign Sub-Custodians to pay out monies of a Portfolio, but,
except as otherwise provided herein, only as set forth in Section 2.5 hereof.
(c) Foreign Securities maintained in the custody of a Foreign
Sub-Custodian may be maintained in the name of such entity's nominee to the same
extent as set forth in Section 2.3 hereof.
3.9. LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to
which the Custodian employs a Foreign Sub-Custodian shall require such
institution to exercise reasonable care in the performance of its duties and (i)
to indemnify and hold harmless the Custodian and each Fund and its Portfolios
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with the Foreign Sub-Custodian's performance of such
obligations and (ii) provide adequate insurance in the event of a loss of a
Portfolio's assets. At the election of the Fund, a Portfolio shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
against a Foreign Sub Custodian as a consequence of any such loss, damage, cost,
expense, liability or claim, if and to the extent that a Portfolio has not been
made whole for any such loss, damage, cost, expense, liability or claim.
3.10. LIABILITY OF CUSTODIAN. The Custodian shall be liable for the
acts or omissions of a Foreign Sub-Custodian to the same extent set forth with
respect to sub-custodians generally in Section 2.8 hereof and, regardless of
whether assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim resulting
from, or caused by, the direction by a Fund on behalf of one of its Portfolios
to maintain custody of any Foreign Securities of the Portfolio in a particular
foreign country including, but not limited to, losses resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism.
3.11. MONITORING RESPONSIBILITIES. The Custodian shall furnish
annually to the Portfolios, during the month of July, all information concerning
any Foreign Sub-Custodians employed by the Custodian required under the 1940 Act
and/or reasonably requested by the Portfolios. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian shall learn of a
material adverse change in the financial or other condition of a Foreign
Sub-Custodian or shall be notified by a foreign banking institution employed as
a Foreign Sub-Custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted U.S.
accounting principles).
4. PROPER INSTRUCTIONS. Proper Instructions as used herein means a writing
signed or initialed by one or more persons (which may include a Fund's
investment adviser and or subadviser and their respective authorized
representatives) whom the Board of that Fund shall have from time to time
authorized by written formal resolution to give such instructions. Each Proper
Instruction shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian shall reasonably believe them to have been given by a person
authorized as set forth above to give such instructions with respect to the
transaction involved. Each Fund shall cause all oral instructions to be
confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Board of the relevant Fund and the Custodian shall have agreed to security
procedures reasonably designed to safeguard the Portfolio's assets.
5. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from a Portfolio:
(i) make payments to others for minor expenses of handling securities
or other similar items relating to its duties under this Agreement;
PROVIDED, HOWEVER, that all such payments shall be accounted for to the
Portfolio;
(ii) surrender securities in temporary form for securities in
definitive form;
(iii) endorse for collection, in the name of the Portfolio, checks,
drafts and other orders for the payment of money received by the Custodian
for the account of the Portfolio; and
(iv) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio, except as
otherwise directed by the Board.
6. EVIDENCE OF AUTHORITY. The Custodian shall be entitled to rely upon any
instructions, notice, request, consent, certificate or other instrument in
writing reasonably believed by it to be genuine and to have been properly
executed by or on behalf of a Portfolio. The Custodian may receive and accept a
certified copy of resolutions or consents of the Board of the relevant Fund as
conclusive evidence of (i) the authority of any person to act in accordance with
such resolutions or consents or (ii) any determination or any action by the
Board of that Fund as described in such resolution or consent and such
resolutions or consents may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
7. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT. The Custodian
shall cooperate and supply necessary information to the entity or entities
appointed by a Fund to keep the books of account of its applicable Portfolios.
8. RECORDS. (a) The Custodian shall create, maintain and preserve all
records relating to its activities and obligations under this Agreement for a
Portfolio in such manner as will meet the obligations of that Portfolio under
the 1940 Act, including, without limitation, Section 31 thereof and Rules 31a-1
and 31a-2 promulgated thereunder, applicable Federal and state tax laws and any
other law or administrative rules or procedures which maybe applicable to the
Portfolio. All such records shall be the property of the Portfolio and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Portfolio
(including the Portfolio's investment adviser) and employees and agents of the
Securities and Exchange Commission.
(b) The Custodian shall, at the Portfolio's request, supply each
Portfolio with a tabulation of securities owned by each of its Portfolios and
held by the Custodian and shall, when requested to do so by the Fund, include
certificate numbers in such tabulations. Copies of all notifications from the
Securities System of transfers of securities for the account of each Fund on
behalf of its Portfolios shall be maintained by the Custodian and be provided to
the Fund at its request. Upon request, the Custodian shall furnish each Fund
confirmation of each transfer to or from the account of one of its Portfolios in
the form of a written notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the Securities System
for the account of the Portfolio.
9. OPINIONS AND REPORTS OF INDEPENDENT ACCOUNTANTS. (a) The Custodian shall
take all reasonable action, as a Portfolio may from time to time request, to
obtain from year to year favorable opinions from the Portfolio's independent
accountants with respect to its activities hereunder in connection with the
Fund's Form N-1A and Form N-SAR or other reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
(b) The Custodian shall provide each Fund, on behalf of each of its
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
controls and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this Agreement; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.
10. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that it shall
exercise reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received by
it or delivered by it pursuant to this Agreement and shall be entitled to rely
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care and due diligence
in carrying out the provisions of this Agreement and shall not be liable for any
loss or damage arising out of any action taken or omitted to be taken by it
without negligence. The Custodian shall be entitled to rely on and may act upon
advice of counsel with respect to questions or matters of law, and shall not be
liable for any action reasonably taken or omitted to be taken pursuant to such
advice.
11. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall
become effective upon execution, shall continue in full force and effect with
respect to a Portfolio until the Portfolio shall liquidate in accordance with
applicable law (unless earlier terminated as herein provided), may be amended at
any time by mutual agreement of the parties hereto, as may be permitted by the
1940 Act, and may be terminated, as set forth herein, by a Portfolio or the
Custodian by an instrument in writing delivered or mailed, postage prepaid, to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing. A Portfolio may at any time
terminate this Agreement and substitute a bank or trust company qualified under
the 1940 Act as a successor custodian for the Custodian by giving notice as
described above to the Custodian. In addition, a Portfolio may (without giving
the above-described notice) terminate this Agreement immediately up the event of
the appointment of a conservator or receiver for the Custodian or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction. Notwithstanding anything to the contrary
contained herein, the Custodian may terminate this Agreement upon its selection
of a successor custodian to provide the services required hereunder which is
qualified under the 1940 Act and is reasonably satisfactory to the Portfolios.
12. SUCCESSOR CUSTODIAN. (a) If a successor custodian shall be appointed
pursuant to Section 11 hereof, the Custodian shall promptly deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities then held by it hereunder, along with the
funds and other properties held by the Custodian on behalf of the Portfolios
under this Agreement, and shall transfer to an account of the successor
custodian all of the Portfolios' securities held in a Securities System.
(b) If this Agreement shall terminate and/or no successor custodian
shall be appointed as provided herein, the Custodian shall, in like manner, upon
receipt of a certified copy of the resolutions or consents of the Boards of the
Funds, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such resolutions or consents. In
the event that no written order designating a successor custodian or certified
copy of resolutions or consents of a Board shall have been delivered to the
Custodian on or before the date when the termination of this Agreement shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "Bank" as defined in the 1940 Act, doing business
in New York of the Custodian's own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds, and other properties (and all
instruments relating thereto) held by the Custodian under this Agreement with
respect to that Fund, and to transfer to an account of such bank or trust
company all of that Fund's Portfolios' securities held in any Securities System.
Any bank or trust company selected to be the successor of the Custodian under
this Agreement shall enter into an agreement with a Fund substantially identical
in substance hereto.
13. ARBITRATION. The parties shall determine and settle any dispute or
controversy which shall arise out of or relate to this Agreement by arbitration
in the City of New York pursuant to the rules and procedures of the American
Arbitration Association's Securities Arbitration Rules.
14. PRIOR CONTRACTS, ETC. This Agreement sets forth the entire agreement
and understanding of the parties hereto with respect to the matters covered
hereby and the relationship between the Funds, the Portfolios and the Custodian
(in its capacity as custodian for the Portfolios). This Agreement shall inure to
the benefit of and be binding upon the Funds, the Portfolios and the Custodian,
and their respective successors, legal representatives and permitted assigns.
15. NOTICES. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to the Custodian, shall
be mailed, delivered, sent by facsimile or telegraphed and confirmed to Banc of
America Securities, 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxx X. Xxxxxx, Managing Director, Fax number (000) 000-0000 and if sent to a
Fund, shall be mailed, delivered, sent by facsimile or telegraphed and confirmed
to Security Funds, One Security Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx,00000, Attention:
Xxxxx X. Xxxxxxx, President, Fax number (000) 000-0000, with a copy to Security
Funds, One Security Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx 00000, Attention: Xxx X. Xxx,
Secretary, Fax number (000) 000-0000.
16. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles. To
the extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the Securities and
Exchange Commission thereunder.
17. TRANSMISSION OF AGREEMENT. An executed copy of this Agreement as
approved pursuant to Rule 17f-1(c) promulgated under the 1940 Act shall be
transmitted to the Securities and Exchange Commission promptly after the date
hereof.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by its duly authorized representative as
of the date first above written.
ATTEST: SECURITY EQUITY FUND
XXX X. XXX XXXXX X. XXXXXXX
----------------------------------- -------------------------------------
Xxx X. Xxx Xxxxx X. Xxxxxxx
Secretary President
ATTEST: SBL FUND
XXX X. XXX XXXXX X. XXXXXXX
----------------------------------- -------------------------------------
Xxx X. Xxx Xxxxx X. Xxxxxxx
Secretary President
ATTEST: BANC OF AMERICA SECURITIES LLC
MALLA VALE XXXX X. XXXXXX
----------------------------------- -------------------------------------
NAME: Xxxx X. Xxxxxx - Managing Director
TITLE:
SCHEDULE 1
Series of Funds to which Agreement Applies
Security Equity Fund
o Alpha Plus Series
SBL Fund
o Series Z (Alpha Plus)
