CUSTODY AGREEMENT
This AGREEMENT, dated as of _________, 1996, by and between THE
GANNETT WELSH & KOTLER FUNDS (the "Trust"), a business trust organized under
the laws of the Commonwealth of Massachusetts, acting with respect to the GW&K
EQUITY FUND and the GW&K GOVERNMENT SECURITIES FUND (individually, a "Fund"
and, collectively, the "Funds"), each of them a series of the Trust and each
of them operated and administered by the Trust and INVESTORS BANK & TRUST
COMPANY, a banking association organized under the laws of the Commonwealth of
Massachusetts (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust desires that the Funds' Securities and cash be
held and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Trust and the Custodian 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 Trustees to give Proper Instructions
on behalf of the Funds and named in Exhibit A hereto or in such resolutions of
the Board of Trustees, certified by an Officer, as may be received by the
Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, 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 for which
the Trust computes the net asset value of Shares of any Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, 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 President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
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Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Securities Depository" shall mean The Depository Trust
Company and (provided that Custodian shall have received a copy of a
resolution of the Board of 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.
1.9 "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.
1.10 "Shares" shall mean, with respect to a Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
1.11 "Sub-Custodian" shall mean and include (i) any branch of a
"qualified 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, approved by the Board of
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Trustees and having a contract with the Custodian which contract has been
approved by the Board of Trustees, and (iii) any securities depository or
clearing agency, incorporated or organized under the laws of a country other
than the United States, which operates the central system for handling of
securities or equivalent book-entries in that country or a transnational
system for the central handling of securities or equivalent book-entries,
which securities depository or clearing agency has been approved by the Board
of Trustees; provided, that the Custodian, or a Sub-Custodian has entered into
an agreement with such securities depository or clearing agency.
1.12 "Proper 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 Trustees, a copy of which, certified
by an Officer, shall have been delivered to the Custodian. Proper Instructions
may be continuing written instructions when deemed appropriate by both
parties.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and
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appoints 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.
2.2 Acceptance. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as hereinafter
set forth.
2.3 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 the Trust:
a. A copy of the Declaration of Trust of the Trust
certified by the Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board of Trustees of
the Trust appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of the Funds;
and
e. A certification of the President and Secretary of the
Trust setting forth the names and signatures of the
current Officers of the Trust and other Authorized
Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The
Trust agrees to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer
Agent of the Funds.
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ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of a Fund (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 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
Trust coupled with the name of such 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. 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 Fund shall be at the Custodian's expense and shall not relieve the
Custodian of any of its obligations or liabilities under this Agreement.
3.4 Delivery of Assets to Custodian. The Trust shall deliver,
or cause to be delivered, to the Custodian all of the Funds'
Securities, cash and other assets, including (a) all payments of
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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 the Funds in any
Securities Depository or Book-Entry System, the Trust shall
deliver to the Custodian a resolution of the Board of
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 the Funds kept in a Book-Entry System or
Securities Depository shall be kept in an account
("Depository Account") of the Custodian in such Book-Entry
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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 a
Fund maintained in a Book-Entry System or Securities
Depository shall, by book-entry, identify such Securities as
belonging to such 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 such 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 such Fund.
(e) The Custodian shall provide the Trust with copies of any
report (obtained by the Custodian from a Book-Entry System
or Securities Depository in which Securities of the Funds
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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 Trust for any loss or
damage to a Fund resulting (i) from the use of a Book-Entry
System or Securities Depository by reason of any negligence
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, the Trust 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 Funds arising from
the use of such Book-Entry System or Securities Depository,
if and to the extent that the Funds have not been made
whole for any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Accounts. Upon
receipt of Proper Instructions, the Custodian shall disburse moneys
from a Fund Custody Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i)
in the case of Securities (other than options on
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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 Fund
or any nominee referred to in Section 3.9 below; and (iv) in
the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member
of the Federal Reserve System or between the Trust 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
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by the Fund;
(c) For the payment of any dividends or capital gain
distributions declared by the Fund;
(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
Fund, including but not limited to the following payments
for the account of the Fund: interest; taxes;
administration, investment advisory, accounting, auditing,
transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; 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 the Trust, 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 Fund;
(g) For transfer in accordance with the provision of any
agreement among the Trust, 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
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any similar organization or organizations) regarding
account deposits in connection with transactions by the
Fund;
(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 Board of 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 Accounts. Upon
receipt of Proper Instructions, the Custodian shall release and
deliver Securities from a Fund Custody Account but only in the
following cases:
(a) Upon the sale of Securities for the account of the Fund 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 Fund; provided
that, in any such case, the cash or other
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consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into
the name of the Fund, 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 Fund;
(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
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the Fund, but only against receipt of such collateral as
the Trust shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Trust, 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 Trust;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, 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 Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, 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
Fund; or
(n) For any other proper corporate purpose, but only upon
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receipt, in addition to Proper Instructions, of a copy of a
resolution of the Board of 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 the Trust, the Custodian shall with respect to all
Securities held for a Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is 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 Fund, 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
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to the Internal Revenue Service ("IRS") and to the Trust at
such time, in such manner and containing such information as
is prescribed by the IRS;
(f) Hold for the Fund, 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 Fund; 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 Fund.
3.9 Registration and Transfer of Securities. All Securities held for
a Fund 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 a Fund
may be registered in the name of such 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 Trust 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 a Fund.
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3.10 Records. (a) The Custodian shall maintain, by Fund, 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 the Trust 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 the Trust and in compliance with rules
and regulations of the Securities and Exchange Commission, (ii) be the
property of the Trust 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 the Trust 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
00x-0
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xxxxx xxx 0000 Xxx.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement by Fund 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 the Trust with a
detailed statement, by Fund, of the Securities and moneys held by the
Custodian and the Sub-Custodians for the Funds under this a Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the
Trust with such reports, as the Trust 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 a Fund,
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 the Trust 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 the Trust 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. If
the Trust desires to take
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action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian by no later than the stated
response due date on the published corporate action notice, or any reasonable
time frame therein. The Trust will provide orcause 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 a Fund, Proper Instructions shall be delivered to the Custodian,
specifying (a) the Fund for which the purchase was made, (b) the name of the
issuer or writer of such Securities, and the title or other description
thereof, (c) the number of shares, principal amount (and accrued interest, if
any) or other units purchased, (d) the date of purchase and settlement, (e)
the purchase price per unit, (f) the total amount payable upon such purchase,
and (g) the name of the person to whom such amount is payable. The Custodian
shall upon receipt of such Securities purchased by a Fund pay out of the
moneys held for the account of such Fund the total amount specified in such
Proper 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 a Fund, if in the relevant Fund Custody Account there is
insufficient cash available to the Fund for which such purchase was made.
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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 a Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Proper Instructions to so pay in
advance, the Custodian shall be liable to the Fund 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 a
Fund, Proper Instructions shall be delivered to the Custodian, specifying (a)
the Fund for which the sale was made, (b) the name of the issuer or writer of
such Securities, and the title or other description thereof, (c) the number of
shares, principal amount (and accrued interest, if any), or other units sold,
(d) the date of sale and settlement, (e) the sale price per unit, (f) the
total amount payable upon such sale, and (g) the person to whom such
Securities are to be delivered. Upon receipt of the total amount payable to
the Fund as specified in such Proper Instructions, the Custodian shall deliver
such Securities to the person specified in such Proper 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,
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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 Fund for which such Securities were delivered 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 the relevant Fund 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 Fund,
and (iii) income from cash, Securities or other assets of the Fund. 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 a Fund to
use funds so credited to its Fund Custody Account 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 Account.
4.6 Advances by Custodian for Settlement. The Custodian may,
in its sole discretion and from time to time, advance funds to the
Trust to facilitate the settlement of a Fund's transactions in its
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Fund Custody Account. 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 a
Fund, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank as the Trust 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 a Fund,
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 Trust, the Custodian and a broker-dealer registered
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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
Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or
in connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by
the Fund,
(d) for purposes of compliance by the Fund 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 Trustees, certified by an
Officer, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be
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proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
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 the Trust 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 or bad faith 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 the Trust 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 the Trust or a
Fund is in compliance with the 1940 Act, the regulations thereunder, the
provisions of the Trust'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
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to a Fund 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 a Fund 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 Proper 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, by Fund, to the entity or entities appointed
by the Trust 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
- 25 -
such reasonable actions as the Trust may from time to time request to enable
the Trust to obtain, from year to year, favorable opinions from the Trust's
independent accountants with respect to the Custodian's activities hereunder
in connection with (a) the preparation of the Trust's reports on Form N-1A and
Form N-SAR and any other reports required by the Securities and Exchange
Commission, and (b) the fulfillment by the Trust of any other requirements of
the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Trust. The Trust shall indemnify 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
the Trust, 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 and held harmless from and
- 26 -
against any such loss, damage, cost, expense, liability or claim arising from
the Custodian's or such Sub-Custodian's negligence or bad faith.
8.2 Indemnification by Custodian. The Custodian shall indemnify and
hold harmless the Trust 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 or bad faith 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 the Trust 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 the Trust 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 a Fund
for any purpose, either at the Trust'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
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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 such Fund
shall be security therefor, and should such Fund 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 nor the Trust shall be liable for any failure
or delay in performance of its 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
- 28 -
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 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 the Trust 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. The Trust may at any time immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for the Custodian by regulatory
- 29 -
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 the Trust 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 trust 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 Trust shall compensate the Custodian as agreed upon from time to
time by the parties. The fees and other charges in effect on the date hereof
and applicable to the Funds are set forth in Exhibit B attached hereto.
ARTICLE XII
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LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust personally, but shall bind only the
trust property of the Trust as provided in the Trust's Agreement and
Declaration of Trust, as from time to time amended. The execution and delivery
of this Agreement have been authorized by the Trustees, and this Agreement has
been signed and delivered by an authorized officer of the Trust, acting as
such, and neither such authorization by the Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in the above-mentioned
Agreement and Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices,
instructions, and other communications to be given hereunder shall be in
writing and shall be sent or delivered to the recipient at the address set
forth after its name hereinbelow:
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To the Trust:
The Gannett Welsh & Kotler Funds
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: X. Xxxxxxxx Xxxxxxx, III
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Custodian:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Telephone: (000) 000-0000
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 XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of
Massachusetts.
14.2 References to Custodian. The Trust 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 a Fund and such other
printed matter as merely identifies Custodian as custodian for one or more
Funds. The Trust shall submit printed
- 32 -
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
- 33 -
for convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: THE GANNETT WELSH & KOTLER FUNDS
______________________________ By:_____________________________
Secretary President
ATTEST: INVESTORS BANK & TRUST COMPANY
______________________________ By:_____________________________
President
- 34 -
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
Name Signature
Xxxxxxxx X. Xxxxxxx ______________________________
Xxxxxx X. Xxxxxx ______________________________
Xxxx X. Xxxxx ______________________________
M. Xxxxxxxx Xxxxxxx ______________________________
Xxxx X. Xxxxxxx ______________________________
Xxxx X. Xxxxxx ______________________________
- 35 -
EXHIBIT B
------------------------------------------------------------------------------
MASTER CUSTODY FEE SCHEDULE
------------------------------------------------------------------------------
Annual Master Custody Fees
for
The GW&K Government Securities Fund
The GW&K Equity Fund
Fees will be assessed quarterly, in arrears based on
the quarter-end market value plus any applicable
transaction fees or unit charges.
-----------------------------------------------------------------------------
Market Value Fee
.05% of Aggregate Market Value
------------------------------------------------------------------------------
No additional fees would be charged for trade settlement, income
collection, wires or statement rendering. Additional fees would apply for
global custody, overdrafts, principal paydowns, foreign wires or trades
executed through Investors (other than through an outside broker).
In the event of an unusual level of activity or service rendered, additional
fees may apply, but no such fee will be charged without written prior approval.
- 36 -
