CUSTODY AGREEMENT
THIS AGREEMENT is made and entered into as of the 25th day of April, 2003,
by and between Xxxxxxxxx Capital Management, Inc., ("KCM"), Buffalo Balanced
Fund, Inc., Buffalo Large Cap Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
USA Global Fund, Inc., Buffalo Small Cap Fund, Inc., and Buffalo Funds, a
Delaware statutory trust (each a "Fund", collectively the "Funds") and U.S. Bank
National Association, a national banking association (the "Custodian").
WHEREAS, the Funds are registered under the Investment Company Act of 1940,
as amended (the"1940 Act"), as open-end management investment companies, and are
authorized to issue shares of common stock or beneficial interest representing
interests in a separate portfolio of securities and other assets; and
WHERAS, KCM is registered as an investment adviser under the Investment
Advisers Act of 1940 and as the investment adviser and manager of the Funds, KCM
is contractually obligated to obtain and bear the costs of appropriate custodian
services for the Funds; and
WHEREAS, the Custodian is a bank having the qualifications prescribed in
Section 26(a)(1) of the 1940 Act; and
WHEREAS, the Funds and KCM desire to retain U.S. Bank National Association
to act as Custodian to hold and administer the Funds' Securities (defined below)
and cash pursuant to this Agreement; and
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Directors/Trustees to give Oral
Instructions and Written Instructions on behalf of the Funds and named
in Exhibit A hereto or in such resolutions of the Board of
Directors/Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board of Directors/Trustees" shall mean the Directors or Trustees
from time to time serving under the Funds' governing documents, as
from time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies
as are substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc., and any other day on which the
Funds compute the net asset value of their Shares.
1.5 "Fund Custody Account" shall mean any of the accounts in the name of
the Funds, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "Officer" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Funds.
1.8 "Oral Instructions" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i)
reasonably believed by the Custodian to have been given by an
Authorized Person, (ii) recorded and kept among the records of the
Custodian made in the ordinary course of business and (iii) orally
confirmed by the Custodian. KCM or Funds shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction,
it shall in no way affect the validity of the transaction or the
authorization thereof by KCM or Funds. If Oral Instructions vary from
the Written Instructions that purport to confirm them, the Custodian
shall notify KCM or Funds of such variance but such Oral Instructions
will govern unless the Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written
Instructions when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of
the Board of Directors/Trustees, certified by an Officer, specifically
approving the use of such clearing agency as a depository for the
Funds) any other clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities and Exchange
Act of 1934 as amended (the "1934 Act"), which acts as a system for
the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system
are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to
receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and
to service.
1.12 "Shares" shall mean, with respect to a Fund, the shares of common
stock or units of beneficial interest issued by the Funds.
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii)
any "Eligible Foreign Custodian," as that term is defined in Rule
17f-5 under the 1940 Act, having a contract with the Custodian which
the Custodian has determined will provide reasonable care of assets of
the Funds based on the standards specified in Section 3.3 below. Such
contract shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the
foregoing) such that the Funds will be adequately protected against
the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their
safe custody or administration, in the case of cash deposits, liens or
rights in favor of creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws; (iii) that beneficial
ownership for the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or
administration; (iv) that adequate records will be maintained
identifying the assets as belonging to the Funds or as being held by a
third party for the benefit of the Funds; (v) that the Funds'
independent public accountants will be given access to those records
or confirmation of the contents of those records; and (vi) that the
Funds will receive periodic reports with respect to the safekeeping of
the Funds' assets, including, but not limited to, notification of any
transfer to or from a Fund's account or a third party account
containing assets held for the benefit of the Funds. Such contract may
contain, in lieu of any or all of the provisions specified above, such
other provisions that the Custodian determines will provide, in their
entirety, the same or a greater level of care and protection for Fund
assets as the specified provisions, in their entirety.
1.14 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more
persons reasonably believed by the Custodian to be Authorized Persons,
or (iii) communications between electro-mechanical or electronic
devices provided that the use of such devices and the procedures for
the use thereof shall have been approved by resolutions of the Board
of Directors/Trustees, a copy of which, certified by an Officer, shall
have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Funds and KCM hereby appoint the Custodian as
custodian of all Securities and cash owned by or in the possession of
the Funds at any time during the period of this Agreement, on the
terms and conditions set forth in this Agreement, and the Custodian
hereby accepts such appointment and agrees to perform the services and
duties set forth in this Agreement.
2.2 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by KCM:
(a) A copy of the Declaration of Trust and Articles of Incorporation
certified by the Secretary;
(b) A copy of the Bylaws of the Funds certified by the Secretary;
(c) A copy of the resolution of the Board of Directors/Trustees of
the Funds appointing the Custodian, certified by the Secretary;
(d) A copy of the then current Prospectus of the Funds; and
(e) A certification of the Chairman and Secretary of the Funds
setting forth the names and signatures of the current Officers of
the Funds and other Authorized Persons.
2.3 Notice of Appointment of Dividend and Transfer Agent. KCM agrees to
notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Funds.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Funds (other than Securities
maintained in a Securities Depository or Book-Entry System) shall be
physically segregated from other Securities and non-cash property in
the possession of the Custodian (including the Securities and non-cash
property of the other series of the Funds) and shall be identified as
subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the
Fund, subject only to draft or order of the Custodian, in which the
Custodian shall enter and carry all Securities, cash and other assets
of such Fund which are delivered to it.
3.3 Appointment of Agents.
(a) In its discretion, the Custodian may appoint one or more
Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to
carry out such other provisions of this Agreement as it may
determine, provided, however, that the appointment of any such
agents and maintenance of any Securities and cash of the Funds
shall be at the Custodian's expense and shall not relieve the
Custodian of any of its obligations or liabilities under this
Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors/Trustees in connection with this Agreement, the
Custodian wishes to appoint other Sub-Custodians to hold property
of the Funds, it will so notify KCM and the Funds and provide
information reasonably necessary to determine any such new
Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act,
including a copy of the proposed agreement with such
Sub-Custodian. KCM shall at the meeting of the Board of
Directors/Trustees next following receipt of such notice and
information give a written approval or disapproval of the
proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Directors/Trustees of the
placement of the Securities and cash of the Funds with a
particular Sub-Custodian and of any material changes in the
Funds' arrangements. The Custodian shall promptly take such steps
as may be required to withdraw assets of the Funds from any
Sub-Custodian that has ceased to meet the requirements of Rule
17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to KCM and Funds that it agrees to
exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of property of the
Funds. The Custodian further warrants that a Fund's assets will
be subject to reasonable care, based on the standards applicable
to custodians in the relevant market, if maintained with each
Sub-Custodian, after considering all factors relevant to the
safekeeping of such assets, including, without limitation: (i)
the Sub-Custodian's practices, procedures, and internal controls,
for certificated securities (if applicable), the method of
keeping custodial records, and the security and data protection
practices; (ii) whether the Sub-Custodian has the requisite
financial strength to provide reasonable care for Fund assets;
(iii) the Sub-Custodian's general reputation and standing and, in
the case of a Securities Depository, the Securities Depository's
operating history and number of participants; and (iv) whether
the Funds will have jurisdiction over and be able to enforce
judgments against the Sub-Custodian, such as by virtue of the
existence of any offices of the Sub-Custodian in the United
States or the Sub-Custodian's consent to service of process in
the United States.
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Funds' assets with a
particular Sub-Custodian and the contract governing the Funds'
arrangements with such Sub-Custodian.
3.4 Delivery of Assets to Custodian. The Funds shall deliver, or cause to
be delivered, to the Custodian all of the Funds' Securities, cash and
other assets, including (a) all payments of income, payments of
principal and capital distributions received by the Funds with respect
to such Securities, cash or other assets owned by the Funds at any
time during the period of this Agreement, and (b) all cash received by
the Funds for the issuance, at any time during such period, of Shares.
The Custodian shall not be responsible for such Securities, cash or
other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities
Depository or in a Book-Entry System, subject to the following
provisions:
(a) Prior to a deposit of Securities of each Fund in any Securities
Depository or Book-Entry System, KCM or a Fund shall deliver to
the Custodian a resolution of the Board of Directors/Trustees,
certified by an Officer, authorizing and instructing the
Custodian on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for
deposit therein and to make use of such Securities Depository or
Book-Entry System to the extent possible and practical in
connection with its performance hereunder, including, without
limitation, in connection with settlements of purchases and sales
of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.
(b) Securities of each Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of each
Fund maintained in a Book-Entry System or Securities Depository
shall, by book-entry, identify such Securities as belonging to
each Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that such Securities have been
transferred to the Depository Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of the applicable Fund. If Securities
sold by a Fund are held in a Book-Entry System or Securities
Depository, the Custodian shall transfer such Securities upon (i)
receipt of advice from the Book-Entry System or Securities
Depository that payment for such Securities has been transferred
to the Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of the applicable Fund.
(e) The Custodian shall provide the Funds and KCM with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Funds are kept)
on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Funds for any loss or damage to
the Funds resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, a Fund shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person from any loss or
damage to the Fund arising from the use of such Book-Entry System
or Securities Depository, if and to the extent that the Fund has
not been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund
Custody Accounts but only in the following cases:
(a) For the purchase of Securities for the Funds but only in
accordance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any Sub-Custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of
options on Securities, against delivery to the Custodian (or such
Sub-Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of
futures contracts and options on futures contracts, against
delivery to the Custodian (or such Sub-Custodian) of evidence of
title thereto in favor of the Funds or any nominee referred to in
Section 3.9 below; and (iv) in the case of repurchase or reverse
repurchase agreements entered into between a Fund and a bank
which is a member of the Federal Reserve System or between a Fund
and a primary dealer in U.S. Government securities, against
delivery of the purchased Securities either in certificate form
or through an entry crediting the Custodian's account at a
Book-Entry System or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Funds;
(c) For the payment of any dividends or capital gain distributions
declared by the Funds;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Funds, including but not limited to the following payments for
the account of the Funds: interest; taxes; administration,
investment advisory, accounting, auditing, transfer agent,
custodian, director and legal fees; and other operating expenses
of the Funds; in all cases, whether or not such expenses are to
be in whole or in part capitalized or treated as deferred
expenses;
(f) For transfer in accordance with the provisions of any agreement
among a Fund or KCM, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with rules of The Options Clearing Corporation and of
any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Funds;
(g) For transfer in accordance with the provision of any agreement
among a Fund or KCM, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Funds;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the affected
Funds' Board of Directors/Trustees, certified by an Officer,
specifying the amount and purpose of such payment, declaring such
purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver
Securities from the Fund Custody Accounts but only in the following
cases:
(a) Upon the sale of Securities for the account of the Funds but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Funds; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Funds, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Funds; (h) In
the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Funds, but only against receipt of such collateral as the Funds
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Funds requiring a pledge of assets by the Funds, but only against
receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Funds;
(l) For delivery in accordance with the provisions of any agreement
among the Funds or KCM, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD, relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or of any
similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Funds;
(m) For delivery in accordance with the provisions of any agreement
among the Funds or KCM, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Funds; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Fund's Board of Directors/Trustees, certified by an Officer,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by KCM or the Funds, the Custodian shall with respect to all
Securities held for the Funds:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Funds are entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Funds, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS"), the Funds and KCM at such time, in such manner
and containing such information as is prescribed by the IRS;
(f) Hold for the Funds, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities issued
with respect to Securities of the Funds; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Funds.
3.9 Registration and Transfer of Securities. All Securities held for the
Funds that are issued or issuable only in bearer form shall be held by
the Custodian in that form, provided that any such Securities shall be
held in a Book-Entry System if eligible therefor. All other Securities
held for the Funds may be registered in the name of the Fund, the
Custodian, or any Sub-Custodian appointed pursuant to Section 3.3
above, or in the name of any nominee of any of them, or in the name of
a Book-Entry System, Securities Depository or any nominee of either
thereof. The Fund or KCM shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form
for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of the
Fund.
3.10 Records.
(a) The Custodian shall maintain, for the Funds, complete and accurate
records with respect to Securities, cash or other property held for
the Funds, including (i) journals or other records of original entry
containing an itemized daily record in detail of all receipts and
deliveries of Securities and all receipts and disbursements of cash;
(ii) ledgers (or other records) reflecting (A) Securities in transfer,
(B) Securities in physical possession, (C) monies and Securities
borrowed and monies and Securities loaned (together with a record of
the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and
interest receivable; and (iii) canceled checks and bank records
related thereto. The Custodian shall keep such other books and records
of the Funds as KCM or the Funds shall reasonably request, or as may
be required by the 1940 Act, including, but not limited to, Section 31
of the 1940 Act and Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to KCM and the Funds and in compliance
with rules and regulations of the Securities and Exchange Commission,
(ii) be the property of the Funds and at all times during the regular
business hours of the Custodian be made available upon request for
inspection by duly authorized officers, employees or agents of KCM and
the Funds and employees or agents of the Securities and Exchange
Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2
under the 0000 Xxx.
3.11 Fund Reports by Custodian. The Custodian shall furnish KCM with a
daily activity statement and a summary of all transfers to or from
each Fund Custody Account on the day following such transfers. At
least monthly and from time to time, the Custodian shall furnish KCM
with a detailed statement of the Securities and moneys held by the
Custodian and the Sub-Custodians for the Funds under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide KCM and the
Funds with such reports, as KCM and the Funds may reasonably request
from time to time, on the internal accounting controls and procedures
for safeguarding Securities, which are employed by the Custodian or
any Sub-Custodian appointed pursuant to Section 3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the
Funds, to be promptly executed by the registered holder of such
Securities, without indication of the manner in which such proxies are
to be voted, and shall promptly deliver to KCM such proxies, all proxy
soliciting materials and all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly deliver
to KCM all information received by the Custodian and pertaining to
Securities being held by the Funds with respect to optional tender or
exchange offers, calls for redemption or purchase, or expiration of
rights as described in the Standards of Service Guide attached as
Exhibit B. If KCM desires to take action with respect to any tender
offer, exchange offer or other similar transaction, KCM shall notify
the Custodian at least five Business Days prior to the date on which
the Custodian is to take such action. KCM will provide or cause to be
provided to the Custodian all relevant information for any Security
which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
4.1 Purchase of Securities. Promptly upon each purchase of Securities for
the Funds, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities,
and the title or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any) or other units
purchased, (c) the date of purchase and settlement, (d) the purchase
price per unit, (e) the total amount payable upon such purchase, and
(f) the name of the person to whom such amount is payable. The
Custodian shall upon receipt of such Securities purchased by the Funds
pay out of the moneys held for the account of the Funds the total
amount specified in such Written Instructions to the person named
therein. The Custodian shall not be under any obligation to pay out
moneys to cover the cost of a purchase of Securities for the Funds, if
in the Funds Custody Account there is insufficient cash available to
the Funds for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities for
the Funds is made by the Custodian in advance of receipt of the
Securities purchased but in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to
the Funds for such Securities to the same extent as if the Securities
had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by the
Funds, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities,
and the title or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any), or other units sold,
(c) the date of sale and settlement, (d) the sale price per unit, (e)
the total amount payable upon such sale, and (f) the person to whom
such Securities are to be delivered. Upon receipt of the total amount
payable to the Funds as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in
such Written Instructions. Subject to the foregoing, the Custodian may
accept payment in such form as shall be satisfactory to it, and may
deliver Securities and arrange for payment in accordance with the
customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to
deliver Securities against payment, shall be entitled, if in
accordance with generally accepted market practice, to deliver such
Securities prior to actual receipt of final payment therefor. In any
such case, the Funds shall bear the risk that final payment for such
Securities may not be made or that such Securities may be returned or
otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for
the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from time
to time, the Custodian may credit a Fund's Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the
sale of Securities which it has been instructed to deliver against
payment, (ii) proceeds from the redemption of Securities or other
assets of the Funds, and (iii) income from cash, Securities or other
assets of the Funds. Any such credit shall be conditional upon actual
receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. The Custodian may, in its
sole discretion and from time to time, permit the Funds to use funds
so credited to the Fund Custody Accounts in anticipation of actual
receipt of final payment. Any such funds shall be repayable
immediately upon demand made by the Custodian at any time prior to the
actual receipt of all final payments in anticipation of which funds
were credited to the Fund Custody Accounts.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Funds to
facilitate the settlement of a Fund's transactions in the Fund Custody
Accounts. Any such advance shall be repayable immediately upon demand
made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares
of the Funds, the Custodian shall wire each amount specified in such
Proper Instructions to or through such bank as KCM or the Funds may
designate with respect to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount
paid by the Custodian to such bank in accordance with such Proper
Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Funds, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Funds or KCM, the Custodian and a broker-dealer registered under
the 1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Funds,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Funds or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Funds,
(c) which constitute collateral for loans of Securities made by the
Funds,
(d) for purposes of compliance by the Funds with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and firm
commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors/Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for the Funds only. All Proper Instructions relating
to a segregated account shall specify the Funds.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this
Agreement, and shall be without liability to KCM or any Fund for
any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability or claim unless such loss, damage,
cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any
Sub-Custodian appointed pursuant to Section 3.3 above. The
Custodian shall be entitled to rely on and may act upon advice of
counsel on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. The
Custodian shall promptly notify KCM of any action taken or
omitted by the Custodian pursuant to advice of counsel. The
Custodian shall not be under any obligation at any time to
ascertain whether KCM or the Funds is in compliance with the 1940
Act, the regulations thereunder, the provisions of KCM's charter
documents or by-laws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable
for, or considered to be the custodian of, any cash belonging to
the Funds or any money represented by a check, draft or other
instrument for the payment of money, until the Custodian or its
agents actually receive such cash or collect on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent
that it is in the exercise of reasonable care, the Custodian
shall not be responsible for the title, validity or genuineness
of any property or evidence of title thereto received or
delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for the
Funds if such Securities are in default or payment is not made
after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument
in writing received by it and reasonably believed by it to be
genuine. The Custodian shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by it
pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the
Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by the
Funds or KCM to keep the books of account of the Funds and/or
compute the value of the assets of the Funds. The Custodian shall
take all such reasonable actions as the Funds or KCM may from
time to time request to enable the Funds or KCM to obtain, from
year to year, favorable opinions from the Fund's independent
accountants with respect to the Custodian's activities hereunder
in connection with (a) the preparation of the Funds' reports on
Form N-1A, Form N-CSR and Form N-SAR and any other reports
required by the Securities and Exchange Commission, and (b) the
fulfillment by the Funds of any other requirements of the
Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by KCM and the Funds. KCM and the Funds shall
indemnify, defend and hold harmless the Custodian and any
Sub-Custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such Sub-Custodian, from and
against any loss, damage, cost, expense (including attorneys'
fees and disbursements), liability (including, without
limitation, liability arising under the Securities Act of 1933,
the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a)
from the fact that Securities are registered in the name of any
such nominee, or (b) from any action or inaction by the Custodian
or such Sub-Custodian (i) at the request or direction of or in
reliance on the advice of KCM or the Funds, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its
obligations under this Agreement or any sub-custody agreement
with a Sub-Custodian appointed pursuant to Section 3.3 above,
provided that neither the Custodian nor any such Sub-Custodian
shall be indemnified, defended and held harmless from and against
any such loss, damage, cost, expense, liability or claim arising
from the Custodian's or such Sub-Custodian's negligence, bad
faith or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify,
defend and hold harmless KCM and the Funds from and against any
loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including without limitation,
liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking
laws) or claim arising from the negligence, bad faith or willful
misconduct of the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or any nominee of the Custodian or
of such Sub-Custodian.
8.3 Indemnity to be Provided. If KCM requests the Custodian to take
any action with respect to Securities, which may, in the opinion
of the Custodian, result in the Custodian or its nominee becoming
liable for the payment of money or incurring liability of some
other form, the Custodian shall not be required to take such
action until KCM shall have provided indemnity therefor to the
Custodian in an amount and form satisfactory to the Custodian.
8.4 Security. If the Custodian advances cash or Securities to the
Funds for any purpose, either at KCM's request or as otherwise
contemplated in this Agreement, or in the event that the
Custodian or its nominee incurs, in connection with its
performance under this Agreement, any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence,
bad faith or willful misconduct), then, in any such event, any
property at any time held for the account of the Funds shall be
security therefor, and should the Funds fail promptly to repay or
indemnify the Custodian, the Custodian shall be entitled to
utilize available cash of such Fund and to dispose of other
assets of such Fund to the extent necessary to obtain
reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian, the Funds nor KCM shall be liable for any failure or
delay in performance of their obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than sixty (60) days
after the date of the giving of such notice. If a successor
custodian shall have been appointed by the Board of
Directors/Trustees, the Custodian shall, upon receipt of a notice
of acceptance by the successor custodian, on such specified date
of termination (a) deliver directly to the successor custodian
all Securities (other than Securities held in a Book-Entry System
or Securities Depository) and cash then owned by the Funds and
held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository
to an account of or for the benefit of the Funds at the successor
custodian, provided that KCM shall have paid to the Custodian all
fees, expenses and other amounts to the payment or reimbursement
of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations
under this Agreement. KCM may at any time immediately terminate
this Agreement in the event of the appointment of a conservator
or receiver for the Custodian by regulatory authorities or upon
the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by KCM or the Funds on or before the date of
termination specified pursuant to Section 10.1 above, then the
Custodian shall have the right to deliver to a bank or
corporation company of its own selection, which (a) is a "bank"
as defined in the 1940 Act and (b) has aggregate capital, surplus
and undivided profits as shown on its then most recent published
report of not less than $25 million, all Securities, cash and
other property held by Custodian under this Agreement and to
transfer to an account of or for the Funds at such bank or trust
company all Securities of the Funds held in a Book-Entry System
or Securities Depository. Upon such delivery and transfer, such
bank or trust company shall be the successor custodian under this
Agreement and the Custodian shall be relieved of all obligations
under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by KCM and the Custodian. The fees and other charges in effect on the date
hereof and applicable to the Funds are set forth in Exhibit C attached hereto.
ARTICLE XII
NOTICES
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given on the date delivered
personally or by courier service, or three (3) days after sent by registered or
certified mail, postage prepaid, return receipt requested, or on the date sent
and confirmed received by facsimile transmission to the other party's address
set forth below:
Notice to KCM and the Funds shall be sent to:
Xxxxxxxxx Capital Management, Inc.
0000 Xxxx 00xx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
with a copy to:
U.S. Bancorp Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
and notice to the Custodian shall be sent to:
U.S. Bank National Association
000 Xxxxxx Xxxxxx, X.X. XX-XX-X0XX
Xxxxxxxxxx, Xxxx 00000
Attention: Mutual Fund Custody Services
Facsimile: (000) 000-0000
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XII.
ARTICLE XIII
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2 References to Custodian. KCM shall not circulate any printed
matter which contains any reference to Custodian without the
prior written approval of Custodian, excepting printed matter
contained in the prospectus or statement of additional
information for the Funds and such other printed matter as merely
identifies Custodian as custodian for the Funds. KCM shall submit
printed matter requiring approval to Custodian in draft form,
allowing sufficient time for review by Custodian and its counsel
prior to any deadline for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall
operate as a waiver thereof. The exercise by either party hereto
of any right hereunder shall not preclude the exercise of any
other right, and the remedies provided herein are cumulative and
not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced
by an instrument in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts,
each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this
Agreement shall not be assignable by either party hereto without
the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the date
first above written.
U.S. BANK NATIONAL XXXXXXXXX CAPITAL
ASSOCIATION MANAGEMENT, INC.
By:_______________________________ By: _______________________________
Xxx X. Xxxxxxx, President Xxxx X. Xxxxxxxxx, President
Title: ___________________________ Title: ____________________________
Buffalo Balanced Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Large Cap Fund, Inc.
Buffalo USA Global Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo Funds (the Delaware statutory trust)
By:
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Title:
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