EXHIBIT (g)
CUSTODIAN AGREEMENT
BETWEEN
ATLAS FUNDS
AND
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
Page
1. Bank Appointed Custodian...........................................2
2. Definitions........................................................2
2.1 Authorized Person......................................2
2.2 Security...............................................2
2.3 Portfolio Security.....................................2
2.4 Officers' Certificate..................................3
2.5 Book-Entry System......................................3
2.6 Depository.............................................3
2.7 Proper Instructions....................................3
3. Separate Accounts..................................................3
4. Certification as to Authorized Persons.............................4
5. Custody of Cash....................................................4
5.1 Purchase of Securities................................4
5.2 Redemptions............................................4
5.3 Distributions and Expenses of Fund.....................5
5.4 Payment in Respect of Securities.......................5
5.5 Repayment of Loans.....................................5
5.6 Repayment of Cash......................................5
5.7 Foreign Exchange Transactions..........................5
5.8 Other Authorized Payments..............................5
5.9 Termination............................................5
6. Securities.........................................................5
6.1 Segregation and Registration...........................5
6.2 Voting and Proxies.....................................5
6.3 Book-Entry System......................................5
6.4 Use of a Depository....................................6
6.5 Use of Book-Entry System for Commercial Paper..........7
6.6 Use of Immobilization Programs.........................8
6.7 Eurodollar CDs.........................................8
6.8 Options and Futures Transactions.......................9
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.....................9
(b) Puts, Calls and Futures Traded
on Commodities Exchanges.......................9
Page
6.9 Segregated Account.....................................10
6.10 Interest Bearing Call or Time Deposits.................11
6.11 Transfer of Securities.................................11
7. Redemptions........................................................13
8. Merger, Dissolution, etc. of Fund..................................13
9. Actions of Bank Without Prior Authorization........................13
10. Collections and Defaults...........................................14
11. Maintenance of Records and Accounting Services.....................14
12. Fund Evaluation....................................................15
13. Concerning the Bank................................................15
13.1 Performance of Duties and Standard of Care.............15
13.2 Agents and Subcustodians with Respect to Property
of the Fund Held in the United States...............16
13.3 Duties of the Bank with Respect to Property
of the Fund Held Outside of the United States.......17
13.4 Insurance..............................................20
13.5 Fees and Expenses of the Bank..........................20
13.6 Advances by Bank.......................................20
14. Termination........................................................21
15. Confidentiality....................................................22
16. Notices............................................................22
17. Amendments.........................................................22
18. Parties............................................................22
19. Governing Law......................................................22
20. Counterparts.......................................................22
CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of November, 1995, between ATLAS ASSETS,
INC., a Maryland corporation (the "Company") and INVESTORS BANK & TRUST COMPANY
(the "Bank").
The Company, an open-end management investment company, desires to place
and maintain all of the portfolio securities and cash of its separate series
(each series referred to herein as a "Fund" or collectively as the "Funds") in
the custody of the Bank. The Bank has at least the minimum qualifications
required by Section 17(f) (1) of the Investment Company Act of 1940 (the "1940
Act") to act as custodian of the portfolio securities and cash of the Company,
and has indicated its willingness to so act, subject to the terms and conditions
of this Agreement.
NOW, THEREFORE, in consideration of the premises of the mutual agreements
contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Company hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have the
following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Company by appropriate resolution of its Board of Directors (the
"Board"), and set forth in a certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any Security
owned by a Fund of the Company.
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2.4 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Company.
2.5 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.7 Proper Instructions. Proper Instructions shall mean (i)
instructions (which may be continuing instructions) regarding the purchase or
sale of Portfolio Securities, and payments and deliveries in connection
therewith, given by and Authorized Person as shall have been designated in an
Officers' Certificate, such instructions to be given in such form and manner as
the Bank and the Company shall agree upon from time to time, and (ii)
instructions (which may be continuing instructions) regarding other matters
signed or initialed by such one or more persons from time to time designated in
an Officers' Certificate as having been authorized by the Board. Oral
instructions will be considered Proper Instructions if the Bank reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Company shall cause
all oral instructions to be promptly confirmed in writing. The Bank shall act
upon and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Company. The Company shall be responsible, at the
Company's expense, for taking any action, including and reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act the Company shall give the Bank specific Proper Instructions as
to the action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Company, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate safeguards
for the Company's assets.
3. Separate Accounts. If the Company has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which the Agreement relates into a separate account for each series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon). Unless the context otherwise requires, any reference in this Agreement
to any actions to be taken by the Company shall be deemed to refer to the
Company acting on behalf of one or more of its series, any reference in this
Agreement to any assets of the Company, including, without limitation, any
Portfolio Securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Company shall be deemed to refer to duties and obligations with
respect to the individual series, and any obligation or liability of the Company
hereunder shall be binding only with respect to the individual series, and shall
be discharged only out of the assets of such series.
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4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Bank, his
or her certification to the Bank, in such form as may be acceptable to the Bank,
of (i) the names and signatures of the Authorized Persons and (ii) the names of
the members of the Board, it being understood that upon the occurrence of any
change in the information set forth in the most recent certification on file
(including without limitation any person named in the most recent certification
who is no longer an Authorized Person as designated therein), the Secretary or
Assistant Secretary of the Company, will sign a new or amended certification
setting forth the change and the new, additional or omitted names or signatures.
The Bank will be entitled to rely and act upon any Officers' Certificate given
to it by the Company which has been signed by Authorized Persons named in the
most recent certification.
5. Custody of Cash. As custodian for the Company, the Bank will open and
maintain a separate account or accounts in the name of the Company or in the
name of the Bank, as Custodian of the Company, and will deposit to the account
of the Company all of the cash of the Company, except for cash held by a
subcustodian appointed pursuant to Section 13.2 or 13.3 hereof, including
borrowed funds, delivered to the Bank, subject only to draft or order by the
Bank acting pursuant to the terms of this agreement. Upon receipt by the Bank of
Proper Instructions (which may be continuing instructions) or in the case of
payments for redemptions and repurchases of outstanding shares of common stock
of the Company, notification from the Company's transfer agent as provided in
Section 7, requesting such payment, designating the payee or the account or
accounts to which the Bank will release funds for deposit, and stating that it
is for a purpose permitted under the terms of this Section 5, specifying the
applicable subsection, the Bank will make payments of cash held for the accounts
of the Company, insofar as funds are available for that purpose, only as
permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Company, against contemporaneous receipt of such securities by the Bank or,
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in which
the transaction occurs, registered in the name of the Company or in the name of,
or properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper) of
purchase of the securities received by the Bank before such payment is made, as
confirmed in the Proper Instructions received by the Bank before such payment is
made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Company offered for the
repurchase or redemption in accordance with Section 7 of this Agreement.
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5.3 Distributions and Expenses of Fund. For the payment on the
account of the Company of dividends or other distributions to shareholders as
may from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services hereunder
and reimbursement of the expenses and liabilities of the Bank as provided
hereunder, fees of any transfer agent, fees for legal, accounting, and auditing
services, or other operating expenses of the Company.
5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Company held or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Company,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Company
for the purpose of collateralizing the obligation to return to the Company
certificates borrowed from the Company representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf of
the Company upon the receipt of Proper Instructions, such Proper Instructions to
specify the currency broker or banking institution (which may be the Bank, or
any other subcustodian or agent hereunder, acting as principal) with which the
contract or option is made, and the Bank shall have no duty with respect to the
selection of such currency brokers or banking institutions with which the
Company deals or for their failure to comply with the terms of any contract or
option.
5.8 Other Authorized Payments. For other authorized transactions of
the Company, or other obligations of the Company incurred for proper Company
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Company,
or specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
5.9 Termination: upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Section 13.2 hereof, the Bank as custodian, will receive and hold
pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
portfolio Securities which may now or hereafter be delivered to it by or for the
account of the Company. All such Portfolio Securities will be held or disposed
of by the Bank for, and subject at all times to , the instructions of the
Company pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not physically held
by the Bank, the Bank will register all Portfolio Securities (unless otherwise
directed by Proper Instructions or an Officers' Certificate), in the name of a
registered nominee of the Bank as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or regulations or under the laws of any state.
The Company will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Company.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to the Company all notices,
proxies and proxy soliciting materials with respect to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Company), but without indicating
the manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Company assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following subapproval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect
to the Company's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry Portfolio Securities which are included
with other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Company. Where securities
are transferred to the Company's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Company a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
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(c) The Bank (or its agent) shall pay for Portfolio Securities
purchased for the account of the Company or shall pay cash collateral against
the return of Portfolio Securities loaned by the Company upon (i) receipt of
advice from the Book-Entry System that such Portfolio Securities have been
transferred to the Account, and (ii) the making of an entry on the records of
the Bank (or its agent) to reflect such payment and transfer for the account of
the company. The Bank (or its agent) shall transfer securities sold or loaned
for the account of the Company upon
(i) receipt of advice from the Book-Entry System that payment
for securities sold or payment of the initial cash collateral against the
delivery of Portfolio Securities loaned by the Company has been transferred to
the Account; and
(ii) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the Company.
Copies of all advices from the Book-Entry System of transfers of Securities for
the account of the Company shall identify the Company, be maintained for the
Company by the Bank and shall be provided to the Company at its request. The
Bank shall send the Company a confirmation, as defined by Rule 17f-4 under the
1940 Act, of any transfers to or from the account of the Company;
(d) The Bank will promptly provide the Company with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System; and
(e) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of the Book-Entry System by reason of
any negligence, willful misfeasance or bad faith of the Bank or any of its
agents or of any of its or their employees or from any reckless disregard by the
Bank or any such agent of its duty to use its best efforts to enforce such
rights as it may have against the Book-Entry System; at the election of the
Company, it shall be entitled to be substituted for the Bank in any claim
against the Book-Entry System or any other person which the Bank or its agent
may have as a consequence of any such loss or damage if and to the extent that
the Company has not been made whole for any loss or damage;
6.4 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Company all income and other payments thereon and
to take all steps necessary and proper in connection with the collection
thereof;
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(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Purchase Securities,
payment will be made only upon delivery of the securities to or for the account
of the Company and the Company shall pay cash collateral against the return of
Portfolio Securities loaned by the Company only upon delivery of the Portfolio
Securities to or for the account of the Company; and upon any sale of Portfolio
Securities, delivery of the securities will be made only against payment
therefor or, in the event Portfolio Securities are loaned, delivery of Portfolio
Securities will be made only against receipt of the initial cash collateral to
or for the account of the Company; and
(d) The Bank shall be liable to the Company for any loss or
damage to the Company resulting from use of a Depository by reason of any
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any reckless disregard by the Bank of its duty to use its best efforts to
enforce such rights as it may have against a Depository. In this connection, the
Bank shall use its best efforts to ensure that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with respect
to Portfolio Securities deposited with such Depository are forwarded immediately
to the Bank for transmittal to the Company;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Company's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Company to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the Company all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Company may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Company has purchased such Issuer's
Book-entry Paper, the Bank shall issue and hold in book-entry form, on behalf of
the Company, commercial paper issued by issuers with whom the Bank has entered
into a book-entry agreement (the "Issuers"). In maintaining its Book-entry Paper
System, the Bank agrees that:
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(a) the Bank will maintain all Book-Entry Paper held by the
Company in an account of the Bank that includes only assets held by it for
customers;
(b) the records of the Bank with respect to the Company's
purchase of Book-entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging to the Company which is included in the Book-entry
Paper System and shall at all times during the regular business hours of the
Bank be open for inspection by duly authorized officers, employees or agents of
the Company;
(c) the Bank shall pay for Book-Entry Paper purchased for the
account of the Company upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the making
of an entry on the records of the Bank to reflect such payment and transfer for
the account of the Company;
(d) the Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to the Company, and (ii)
the making of an entry on the records of the Bank to reflect such payment for
the account of the Company;
(e) the Bank shall transmit to the Company a transaction
journal confirming each transaction in Book-Entry Paper for the account of the
Company on the next business day following the transaction; and
(f) the Bank will send to the Company such reports on its
system of internal accounting control with respect to the Book-Entry Paper
System as the Company may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Company and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Company, and shall have no liability to the
Company or its shareholders with respect to the actions, inactions, whether
negligent or otherwise of such European Branch in connection with such
Eurodollar CDs, except for any loss or damage to the Company resulting from the
Bank's own negligence, willful misfeasance or bad faith in the performance of
its duties hereunder.
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6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Company regarding
escrow or other arrangements (i) in accordance with the provisions of any
agreement entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Company relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Company has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Company.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Company, the proprietary of any such purchase
or sale, or the adequacy of any collateral delivered to a broker in connection
with an option or deposited to or withdrawn from a Segregated Account (as
defined in subsection 6.9 below). The Bank specifically, but not by way of
limitation, shall not be under any duty or obligation to: (i) periodically check
or notify the Company that the amount of such collateral held by a broker or
held in a Segregated Account is sufficient to protect such broker of the Company
against any loss; (ii) effect the return of any collateral delivered to a
broker; or (iii) advise the Company that any options it holds, has or is about
to expire. Such duties or obligations shall be the sole responsibility of the
Company.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Company in accordance with the
provisions of any agreement among the Company, the Bank 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 Company.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subpapragraph (a)(2) of this Section 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.
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6.9 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Company.
1. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be transferred into the Segregated Account or Accounts:
(a) in accordance with the provisions of any agreement among
the Company, the Bank and a broker-dealer registered under the Exchange 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 organizations regarding escrow or other arrangements in connection
with transactions by the Company;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Company or commodity futures
purchased or written by the Company;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Company's
then outstanding forward commitment or "when issued" agreements relating to the
purchase of Portfolio Securities and all the Company's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;
(d) for the deposit of any Portfolio Securities which the
Company has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
(e) for the purposes of compliance by the Company with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies; or
(f) for other proper corporate purposes, but only, in the case
of this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Company and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of such Segregated
Account and declaring such purposes to be proper corporate purposes.
2. Upon receipt of Proper Instructions cash and/or Portfolio
Securities may be withdrawn from the Segregated Account or Accounts.
10
(a) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(b) for sale or delivery to meet the Company's obligations
under outstanding firm commitment or when-issued agreements for the
purchase of Portfolio Securities and under reverse repurchase
agreements;
(c) for exchange for other liquid assets of equal or greater
value deposited in the Segregated Account;
(d) to the extent that the Company's outstanding forward
commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other
parties or the Company's obligations thereunder are met from assets
of the Company other than those in the Segregated Account; or
(e) for delivery upon settlement of a forward commitment
agreement for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Company of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Company appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Company and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Company.
6.11 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section the Bank will receive
Proper Instructions requesting such transfer, exchange or delivery stating that
it is for a purpose permitted under the terms of this Section 6.11, specifying
the applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only:
(a) upon sales of Portfolio Securities for the account of the
Company, against contemporaneous receipt by the Bank of payment therefor in
full, or, against payment to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale of the Portfolio Securities received by
the Bank before such transfer is made, as confirmed in the Proper Instructions
received by the Bank before such transfer is made;
11
(b) in exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided however that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at lease two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Company
upon authorization from the Company;
(e) in case of option contracts owned by the Company, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Company
by any bank, including the Bank; provided, however, that such Portfolio
Securities will be released only upon payment to the Bank for the account of the
Company of the moneys borrowed, except that in cases where additional collateral
is required to secure a borrowing already made, and such fact is made to appear
in the Proper Instructions, further Portfolio Securities may be released for
that purpose without any such payment. In the event that any such pledged
Portfolio Securities are held by the Bank, they will be so held for the account
of the lender, and after notice to the Company from the lender in accordance
with the normal procedures of the lender, that an event of deficiency or default
on the loan has occurred, the Bank may deliver such pledged Portfolio Securities
to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the
Company to a bank or broker dealer, but only against receipt in accordance with
street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Company and the Bank, and
upon receipt of payment in connection with any repurchase agreement relating to
such securities entered into by the Company;
(j) for other authorized transactions of the Company or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed by
an authorized officer of the Company (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Company or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made; and
12
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and 14 of this Agreement. As to any deliveries made
by the Bank pursuant to subsections (a), (b), (c), (e), (f), (g), (h) and (i)
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of the Company held by
the Bank in connection with redemptions and repurchases by the Company of
outstanding common shares, the Bank will rely on notification by the Company's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles and By-laws of the Company, from assets
available for said purpose.
8. Merger, Dissolution, etc. of Fund. In case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Company into or the consolidation of the Company with another investment company
where the Company is not the surviving entity, the sale by the Company of all,
or substantially all, of its assets to another investment company, or the
liquidation or dissolution of the Company and distribution of its assets, the
Bank will deliver the Portfolio Securities held by it under this Agreement and
disburse cash only upon the order of the Company set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such delivery
and disbursement and the payment of the fees, disbursements and expenses of the
Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization. Notwithstanding anything
herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, it will without prior authorization or instruction
of the Company or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name
of the Company all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Company and hold for the account of the Company all income,
dividends, interest and other payments or distribution of cash with respect to
the Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Company which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Company;
9.3 Receive and hold for the account of the Company all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder;
13
9.4 Execute as agent on behalf of the Company all necessary
ownership and other certificates and affidavits required by the Internal Revenue
Code or the regulations of the Treasury Department issued thereunder, or by the
laws of any state, now or hereafter in effect, inserting the Company's name on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so and as may be required to obtain payment in respect
thereof. The Bank will execute and deliver such certificates in connection with
Portfolio Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, or under the laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Company; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Company notice actually received by it of any call for
redemption, offer exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which such
income is payable are in default or payment is refused after due demand or
presentation, the Bank will notify the Company in writing of any default or
refusal to pay within the business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the
Company a written report once each month showing any income on any Portfolio
Security held by it which is more than ten days overdue on the date of such
report and which has not previously been reported.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Company
daily with a statement of condition of the Company. The Bank will furnish to the
Company at the end of every month, and at the close of each quarter of the
Company's fiscal year, a list of the Portfolio Securities and the aggregate
amount of cash held by it for the Company. The books and records of the Bank
pertaining to its actions under this Agreement and reports by the Bank or its
independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Company and will be preserved by the Bank in the manner and in accordance
with the applicable rules and regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Company.
14
The Bank shall assist generally in preparation of reports to shareholders
and others, audit of accounts, and other ministerial matters of like nature.
The books and records maintained by the Bank on behalf of the Company are
the property of the Company and will be surrendered upon request in accordance
with Section 14.
12. Fund Evaluation. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading and
as of such other hours, if any, as may be authorized by the Board the net asset
value and the public offering price of a share of capital stock of the Company,
such determination to be made in accordance with the provisions of the Articles
and By-laws of the Company and Prospectus and Statement of Additional
Information relating to the Company, as they may from time to time be amended,
and any applicable resolutions of the Board at the time in force and applicable;
and promptly to notify the Company, the proper exchange and the NASD or such
other persons as the Company may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon the information furnished to it by any Authorized Person in
respect of (i) the manner of accrual of the liabilities of the Company and in
respect of liabilities of the Company not appearing on its books of account kept
by the Bank, (ii) reserves, if any, authorized by the Board or that no reserves
have been authorized, (iii) the source of the quotations to be used in computing
the net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
13. Concerning the Bank.
13.1 Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Company, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice. In the
performance of its duties hereunder, the Bank will be protected and not be
liable, and will be indemnified and held harmless for any action taken or
omitted to be taken by it in good faith reliance upon the terms of this
Agreement, any Officers' Certificate, Proper Instructions, resolution of the
Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Company except
in the case of its negligence, willful misfeasance or bad faith in the
performance of its duties or reckless disregard of its obligations and duties
hereunder.
The Bank will be under no duty or obligation to inquire into and will not
be liable for:
15
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Company, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for the Company or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of
the Company or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Company or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the
Company or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; and
(f) any property or moneys of the Company unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Company are such as may properly be held by the Company under the
provisions of its Articles, By-laws, any federal or state statutes or any rule
or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts
of God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events except
as results from the Bank's own negligence; or
(b) for special, punitive or consequential damages arising
from the provision of services hereunder, even if the Bank has been advised of
the possibility of such damages.
13.2 Agents and Subcustodians with Respect to Property of the Fund
Held in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as custodian
of the Company's assets with respect to property of the Company held in the
United States. The Bank shall have no liability to the Company or any other
person by reason of any act or omission of such subcustodian and the Company
shall indemnify the Bank and hold it harmless from and against any and all
actions, suits and claims, arising directly or indirectly out of the performance
of such subcustodian. Upon request of the Bank, the Company shall assume the
entire defense of any action, suit, or claim subject to the foregoing indemnity.
The Company shall pay all fees and expenses of such subcustodian.
16
13.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Company hereby
authorizes and instructs the Bank to employ as sub-custodians for the Company's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Company's Board of Directors, the Bank and Company may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Company may instruct the Bank to cease the employment of any
one or more such selected Foreign Sub-Custodians for maintaining custody of the
Company's assets, and the Bank shall so cease to employ such sub-custodian as
soon as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Bank and the Company, assets of the Company shall
be maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Company, the Company authorizes
the deposit in Euro-clear, the securities clearance and depository facilities
operated by Xxxxxx Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit therein and to utilize such
securities depository in connection with settlements of purchases and sales of
securities and deliveries and returns of securities, until notified to the
contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its books
as belonging to the Company the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account, Foreign
Portfolio Securities and other assets of the Company, and, in the event that
such institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
17
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Company (each, a "Foreign Sub-Custodian Agreement") shall be substantially in
the form previously made available to the Company and shall provide that: (a)
the Company's assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Company's assets will be freely transferable without the payment of money or
value other than for custody or administration (including, without limitation,
any fees or taxes payable upon transfers or reregistraion of securities); (c)
adequate records will be maintained identifying the assets as belonging to Bank;
(d) officers of or auditors employed by, or other representatives of the Bank,
including to the extent permitted under applicable law, the independent public
accountants for the Company, will be given access to the books and records of
the foreign banking institution relating to its actions under its agreement with
the Bank; and (e) assets of the Company held by the Selected Foreign
Sub-Custodian will be subject only to the instructions of the Bank or its
agents.
(e) Access of Independent Accountants of the Fund. Upon request of
the Company, the Bank will use its best efforts to arrange for the independent
accountants of the Company to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Company from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Company held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Portfolio Securities and other assets of the Company.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Company held by Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Company to the Bank
and shall be effected in accordance with the applicable Foreign Sub-Custodian
Agreement. If at any time any Foreign Portfolio Securities shall be registered
in the name of the nominee of the Selected Foreign Sub- Custodian, the Company
agrees to hold any such nominee harmless from any liability be reason of the
registration of such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the account
of the Company and delivery of Foreign Portfolio Securities maintained for the
account of the Company may be effected in accordance with the customary
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer.
18
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation, the
exercise of any voting rights, subscription rights, redemption rights, exchange
rights, conversion rights or tender rights, or any other action in connection
with any other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Company
such information in connection therewith as is made available to the Bank by the
Foreign Sub-Custodian, and shall promptly forward to the applicable Foreign
Sub-Custodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Company pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Company is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Company or
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Company from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund acknowledges
that the Bank, as a participant in Euro-clear, is subject to the Terms and
Conditions Governing the Euro-Clear System, a copy of which has been made
available to the Fund. The Fund acknowledges that pursuant to such Terms and
Conditions, Xxxxxx Guaranty Brussels shall have the sole right to exercise or
assert any and all rights or claims in respect of actions or omissions of, or
the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) Liability of Bank. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any such
Selected Foreign Sub-Custodian employed hereunder than any such Selected Foreign
Sub-Custodian has to the Bank and, without limiting the foregoing, the Bank
shall not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or acts of
war or terrorism, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or armed
hostilities) other losses due to Acts of God, nuclear incident or any loss where
the Selected Foreign Sub-Custodian has otherwise exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish annually to
the Company, information concerning the Selected Foreign Sub-Custodians employed
hereunder for use by the Fund in evaluating such selected Foreign Sub-Custodians
to ensure compliance with the requirements of Rule 17f-5 of the Act. In
addition, the Bank will promptly inform the Fund in the event that the Bank is
notified by a Selected Foreign Sub-Custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles) or any other capital adequacy
test applicable to it by exemptive order, or if the Bank has actual knowledge of
any material loss of the assets of the Fund held by a Foreign Sub-Custodian.
19
(k) Tax Law. The Bank shall have no responsibility or liability for
any obligations now or hereafter imposed on the Company or the Bank as custodian
of the Fund by the tax laws of any jurisdiction, and it shall by the
responsibility of the Fund to notify the Bank of the obligations imposed on the
Fund or the Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
13.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Company held by it as it
uses in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Company.
13.5. Fees and Expenses of the Bank. The Company will pay or
reimburse the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on Schedule A)
including any indemnities for any loss, liabilities or expense to the Bank as
provided above. For the services rendered by the Bank hereunder, the Company
will pay to the Bank such compensation or fees at such rate and at such times as
shall be agreed upon in writing by the parties from time to time. The Bank will
also be entitled to reimbursement by the Company for all reasonable expenses
incurred in conjunction with termination of this Agreement by the Company.
13.6 Advances by Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Company to make any payment permitted by this Agreement
upon receipt of any proper authorization required by this Agreement for such
payments by the Company. Should such a payment or payments, with advanced funds,
result in an overdraft (due to insufficiencies of the Company's account with the
Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtness, a loan made by the Bank to the Company payable on demand and
bearing interest at the current rate charged by the Bank for such loans unless
the Company shall provide the Bank with agreed upon compensation balances. The
Company agrees that the Bank shall have a continuing lien and security interest
to the extent of any overdraft or indebtness, in and to any property at any time
held by it for the Company's benefit or in which the Company has an interest and
which is then in the Bank's possession or control (or in the possession or
control of any third party acting on the Bank's behalf). The Company authorizes
the Bank, in its sole discretion, at any time to charge any overdraft or
indebtness, together with interest due thereon against any balance of account
standing to the credit of the Company on the Bank's books.
20
14. Termination.
14.1 This Agreement may be terminated at any time without penalty
upon sixty days written notice delivered by either party to the other by means
of registered mail, and upon the expiration of such sixty days this Agreement
will terminate; provided, however, that the effective date of such termination
may be postponed to a date not more than ninety days from the date of delivery
of such notice (i) by the Bank in order to prepare for the transfer by the Bank
of all of the assets of the Company held hereunder, and (ii) by the Company in
order to give the Company an opportunity to make suitable arrangements for a
successor custodian. At any time after the termination of this Agreement, the
Company will, at its request, have access to the records of the Bank relating to
the performance of its duties as custodian. Notwithstanding the foregoing, this
Agreement may not be terminated prior to November 1, 1998 except for cause after
written notice and a reasonable opportunity to cure.
14.2 In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Company. The obligation of the Bank to deliver and transfer over assets of the
Company held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Company does not select a successor custodian within ninety (90) days from
the date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (14.3), deliver the Portfolio Securities and cash of
the Company held by the Bank to a bank or trust company of its own selection
which meets requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Company under terms similar to those on which
they were held by the Bank, whereupon such bank or trust company so selected by
the Bank will become the successor custodian of such assets of the Company with
the same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Company may furnish the Bank with an order of
the Company advising that a successor custodian cannot be found willing and able
to act upon reasonable and customary terms and that there has been submitted to
the shareholders of the Company the question of whether the Company will be
liquidated or will function without a custodian for the assets of the Company
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of the Company held by it, subject as aforesaid, in accordance with one
of such alternatives which may be approved by the requisite vote of
shareholders, upon receipt by the Bank of a copy of the minutes of the meeting
of shareholders at which action was taken, certified by the Company's Secretary
and an opinion of counsel to the Company in form and content satisfactory to the
Bank.
21
15. Confidentiality. Both parties hereto agree that any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Company to: Atlas Assets, Inc. 0000
Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Counsel
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended, except by an
instrument in writing, executed by both parties, and in the case of the Company,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall insure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Company
without the written consent of the Bank or by the Bank without written consent
of the Company, authorized and approved by its Board; and provided further that
termination proceedings pursuant to Section 14 hereof will not be deemed to be
an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
Atlas Funds
By: /s/ Xxxxx X. XxXxxxx
--------------------------------
Xxxxx X. XxXxxxx
Group Senior Vice President
ATTEST:
/s/ Xxxxx Xxxx
------------------------------------
Investors Bank & Trust Company
By: /s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
Director, Client Management
ATTEST:
/s/ Xxxxxxx Xxxxxxx
------------------------------------
DATE: 10/18/95
------------------------------------
23
SCHEDULE A
ATLAS FUNDS
FEE SCHEDULE*
FOR TWELVE MUTUAL FUNDS
NOVEMBER 1, 1995
================================================================================
CUSTODY, FUND ACCOUNTING, CALCULATION OF N.A.V.
================================================================================
A. DOMESTIC CUSTODY, FUND ACCOUNTING, CALCULATION OF N.A.V.
The following basis point fee is based on all assets for which we are
custodian and fund accountant. This amount does not include transactions.
See Standard Transaction Costs (B). Fees are calculated as of the 20th of
the month.
ANNUAL FEE
----------------
First $500 million in assets 8.0 BASIS POINTS
Next $500 million in assets 2.5 BASIS POINTS
Assets in excess of $1 Billion 1.0 BASIS POINT
There will be a monthly minimum fee for each new Atlas fund as follows:
Each month $1,250 per fund
B. TRANSACTION COSTS
o DTC/Fed Book Entry $10
o Physical Securities 35
o Options and Futures 18
o GNMA Securities 30
o Principal Paydown 5
o Foreign Currency 18**
o Cross Border 50
o Outgoing Wires 7
o Incoming Wires 5***
**There are no transaction charges for F/X contracts executed by Investors Bank
***Fees will not apply to incoming wires that are net from the Transfer Agent.
C.FOREIGN SUBCUSTODIAN FEES
o The following incremental basis point fees are based on all foreign
assets for which we are Custodian. The following asset based fees
and transaction fees vary by country, based upon the attached
International Custody Bands. These amounts are calculated monthly as
of the 20th of the month. Local duties, script fees, registration
and exchange fees are out-of-pocket.
o Investors Bank will require the fund to hold all assets that are
eligible with Euroclear and to submit all assets that are Euroclear
petitionable to an eligibility review.
Country Annual Fee Transactions
------- ---------- ------------
Band II 6 Basis Points $ 20****
Band III 13 Basis Points 60
Band IV 18 Basis Points 60
Band V 25 Basis Points 100
Band VI 29 Basis Points 110
Band VII 41 Basis Points 120
Band VIII 44 Basis Points 120
Band IX 50 Basis Points 100
**** Transactions in Italy are billed at $40, in New Zealand, $60, and
Australia, $65.
================================================================================
MISCELLANEOUS
================================================================================
A. OUT-OF-POCKET
o These charges consist of:
-Pricing & Verification Services
-Legal Expenses -Forms and Supplies(1)
-Printing, Delivery & Postage -Non-Standard Transmissions
-Third Party Review -Customized Reporting
(1) The charge for Forms and Supplies will be waived until $1.5 billion in
assets. When assets reach $1.5 billion, the yearly Forms and Supplies fee
will be capped at $15,000.
B. DOMESTIC BALANCE CREDIT
o We allow use of balance credit against fees (excluding out-of-pocket
charges) for fund balances arising out of the custody relationship. The
credit is based on collected balances reduced by balances required to
support the activity charges of the accounts. The monthly earnings
allowance is equal to 75% of the 90-day T-xxxx rate.
C. SECURITIES LENDING
o The assumption was made that Investors Bank would perform securities
lending for the portfolios. Revenue is split with the funds and Investors
Bank on a 60/40% basis: 60% going to the funds.
D. SYSTEMS
o The above fee schedule includes the necessary systems work in order to
provide Atlas and the sub-advisors with the information that they are
getting now:
-extract to The Boston Company
-extract to Xxxxxxxxxxx
-extract to Atlas for use in the Portfolio Positions Report
-setting up remote inquiry terminal
-setting up report printing capabilities
The detaIls of any other systems work will be determined after a thorough
business analysis. Any additional systems work will be billed on a time
and material basis.
E. PAYMENT
o The above fees will be charged against the fund's custodian checking
account five business days after the invoice is mailed
* This fee schedule assumes the execution of our standard contractual
agreements for a minimum of three years.
