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Exhibit 8(a)
CUSTODY AGREEMENT
DATED OCTOBER 21ST, 1997
BETWEEN
UMB BANK, N. A.
AND
BUILDERS PROLOAN FUND, INC.
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TABLE OF CONTENTS
Page
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1. APPOINTMENT OF CUSTODIAN. 1
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2. DEFINITIONS 1
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(a) Securities 1
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(b) Assets 1
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(c)(1) Instructions and Special Instructions 1
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3. DELIVERY OF CORPORATE DOCUMENTS 2
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4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN 3
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(a) Safekeeping 3
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(b) Manner of Holding Securities 4
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(c) Free Delivery of Assets 6
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(d) Exchange of Securities 6
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(e) Purchases of Assets 6
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(f) Sales of Assets 7
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(g) Options 7
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(h) Futures Contracts 8
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(i) Segregated Accounts 9
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(j) Depositary Receipts 9
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(k) Corporate Actions, Put Bonds, Called Bonds, Etc 9
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(l) Interest Bearing Deposits 10
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(m) Pledges or Loans of Securities 11
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(n) Stock Dividends, Rights, Etc 12
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(o) Routine Dealings 12
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(p) Collections 12
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(q) Bank Accounts 13
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(r) Dividends, Distributions and Redemptions 13
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(s) Proceeds from Shares Sold 13
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(t) Proxies and Notices; Compliance with the
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Shareholders Communication Act of 1985 13
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(u) Books and Records 14
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(v) Opinion of Fund's Independent Certified Public
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Accountants 14
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(w) Reports by Independent Certified Public Accountants 14
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(x) Bills and Other Disbursements 14
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(y) Valuation of Commitments to Acquire Mortgage-
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Backed Securities 15
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5. SUBCUSTODIANS 15
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(a) Domestic Subcustodians 15
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(b) Special Subcustodians 16
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(c) Termination of a Subcustodian 17
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(d) Certification Regarding Foreign Subcustodians 17
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6. STANDARD OF CARE 17
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(a) General Standard of Care 17
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(b) Actions Prohibited by Applicable Law, Events Beyond
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Custodian's Control, Sovereign Risk, Etc. 17
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(c) Liability for Past Records 18
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(d) Advice of Counsel 18
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(e) Advice of the Fund and Others 18
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(f) Instructions Appearing to be Genuine 18
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(g) Exceptions from Liability 19
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7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS 19
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(a) Domestic Subcustodians 19
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(b) Securities Systems, Special Subcustodians,
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Securities Depositories and Clearing Agencies 20
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(c) Defaults or Insolvencies of Brokers, Banks, Etc 20
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(d) Reimbursement of Expenses 20
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8. INDEMNIFICATION 20
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(a) Indemnification by Fund 20
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(b) Indemnification by Custodian 21
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9. ADVANCE 21
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10. LIENS 21
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11. COMPENSATION 22
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12. POWERS OF ATTORNEY 22
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13. TERMINATION AND ASSIGNMENT 22
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14. NOTICES 23
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15. MISCELLANEOUS 23
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CUSTODY AGREEMENT
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This agreement made as of this ----- day of October, 1997,
between Builders ProLoan Fund, Inc., a Maryland corporation with its
principal place of business located at 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000 and UMB Bank, N.A., a national banking association
with its principal place of business located at Kansas City, Missouri
(hereinafter "Custodian").
WITNESSETH:
WHEREAS, The Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as amended; and
WHEREAS, The Fund desires to appoint Custodian as its custodian
for the custody of Assets (as hereinafter defined) owned by the Fund which
Assets are to be held in such accounts as the Fund may establish from time to
time; and
WHEREAS, Custodian is willing to accept such appointment on the
terms and conditions hereof.
NOW, THEREFORE, In consideration of the mutual promises
contained herein, the parties hereto, intending to be legally bound, mutually
covenant and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
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The Fund hereby constitutes and appoints the Custodian as
custodian of Assets belonging to the Fund which have been or may be from time
to time deposited with the Custodian. Custodian accepts such appointment as
a custodian and agrees to perform the duties and responsibilities of
Custodian as set forth herein on the conditions set forth herein.
2. DEFINITIONS.
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For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Fund" as used herein shall mean each and all series
in existence as of the date hereof and, if mutually agreed by the Fund and
the Custodian at such time, each such series hereafter designated by the
Fund.
(a) "Security" or "Securities" shall mean stocks, bonds,
bills, rights, scrip, warrants, interim certificates and all negotiable or
nonnegotiable paper commonly known as Securities and other instruments or
obligations.
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(b) "Assets" shall mean Securities, monies and other
property held by the Custodian for the benefit of the Fund.
(c)(1) "Instructions," as used herein, shall mean: (i)
a tested telex, a written (including, without limitation, facsimile
transmission) request, direction, instruction or certification signed or
initialed by or on behalf of the Fund by an Authorized Person; (ii) a
telephonic or other oral communication from a person the Custodian reasonably
believes to be an Authorized Person; or (iii) a communication effected
directly between an electro-mechanical or electronic device or system
(including, without limitation, computers) on behalf of the Fund.
Instructions in the form of oral communications shall be confirmed by the
Fund by tested telex or in writing in the manner set forth in clause (i)
above, but the lack of such confirmation shall in no way affect any action
taken by the Custodian in reliance upon such oral Instructions prior to the
Custodian's receipt of such confirmation. The Fund authorizes the Custodian
to record any and all telephonic or other oral Instructions communicated to
the Custodian.
(c)(2) "Special Instructions", as used herein, shall mean
Instructions countersigned or confirmed in writing by the Secretary or any
Assistant Treasurer of the Fund or any other person designated by the
Secretary of the Fund in writing, which countersignature or confirmation
shall be included on the same instrument containing the Instructions or on a
separate instrument relating thereto.
(c)(3) Instructions and Special Instructions shall be
delivered to the Custodian at the address and/or telephone, facsimile
transmission or telex number agreed upon from time to time by the Custodian
and the Fund.
(c)(4) Where appropriate, Instructions and Special
Instructions shall be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
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Each of the parties to this Agreement represents that its
execution does not violate any of the provisions of its respective charter,
articles of incorporation, articles of association or bylaws and all required
corporate action to authorize the execution and delivery of this Agreement
has been taken.
The Fund has furnished the Custodian with copies, properly
certified or authenticated, with all amendments or supplements thereto, of
the following documents:
(a) Certificate of Incorporation (or equivalent document)
of the Fund as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
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(c) Resolutions of the Board of Directors of the Fund
appointing the Custodian and approving the form of this
Agreement; and
(d) The Fund's current prospectus and statement of
additional information.
The Fund shall promptly furnish the Custodian with copies of any updates,
amendments or supplements to the foregoing documents.
In addition, the Fund has delivered or will promptly deliver to
the Custodian, copies of the Resolution(s) of its Board of Directors and all
amendments or supplements thereto, properly certified or authenticated,
designating certain officers or employees of the Fund who will have
continuing authority to certify to the Custodian: (a) the names, titles,
signatures and scope of authority of all persons authorized to give
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund, and (b) the names, titles
and signatures of those persons authorized to countersign or confirm Special
Instructions on behalf of the Fund (in both cases collectively, the
"Authorized Persons" and individually, an "Authorized Person"). Such
Resolutions and certificates may be accepted and relied upon by the Custodian
as conclusive evidence of the facts set forth therein and shall be considered
to be in full force and effect until delivery to the Custodian of a similar
Resolution or certificate to the contrary. Upon delivery of a certificate
which deletes or does not include the name(s) of a person previously
authorized to give Instructions or to countersign or confirm Special
Instructions, such persons shall no longer be considered an Authorized Person
authorized to give Instructions or to countersign or confirm Special
Instructions. Unless the certificate specifically requires that the approval
of anyone else will first have been obtained, the Custodian will be under no
obligation to inquire into the right of the person giving such Instructions
or Special Instructions to do so. Notwithstanding any of the foregoing, no
Instructions or Special Instructions received by the Custodian from the Fund
will be deemed to authorize or permit any director, trustee, officer,
employee, or agent of the Fund to withdraw any of the Assets of the Fund upon
the mere receipt of such authorization, Special Instructions or Instructions
from such director, trustee, officer, employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
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Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant
to Section 5(a).
(a) Safekeeping.
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The Custodian will keep safely the Assets of the Fund which
are delivered to it from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not delivered to
the Custodian.
(b) Manner of Holding Securities.
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(1) The Custodian shall at all times hold Securities
of the Fund either: (i) by physical possession of the share certificates or
other instruments representing such Securities in registered or bearer form;
or (ii) in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio
Securities which have been delivered to it in physical form, by registering
the same in the name of the Fund or its nominee, or in the name of the
Custodian or its nominee, for whose actions the Fund and Custodian,
respectively, shall be fully responsible. Upon the receipt of Instructions,
the Custodian shall hold such Securities in street certificate form, so
called, with or without any indication of fiduciary capacity. However,
unless it receives Instructions to the contrary, the Custodian will register
all such portfolio Securities in the name of the Custodian's authorized
nominee. All such Securities shall be held in an account of the Custodian
containing only assets of the Fund or only assets held by the Custodian as a
fiduciary, provided that the records of the Custodian shall indicate at all
times the Fund or other customer for which such Securities are held in such
accounts and the respective interests therein.
(3) The Custodian may deposit and/or maintain
domestic Securities owned by the Fund in, and the Fund hereby approves use
of: (a) The Depository Trust Company; (b) The Participants Trust Company; and
(c) any book-entry system as provided in (i) Subpart 0 of Treasury Circular
Xx. 000, 00 XXX 306.115, (ii) Subpart B of Treasury Circular Public Debt
Series Xx. 00-00, 00 XXX 350.2, or (iii) the book-entry regulations of
federal agencies substantially in the form of 31 CFR 306.115. Upon the
receipt of Special Instructions, the Custodian may deposit and/or maintain
domestic Securities owned by the Fund in any other domestic clearing agency
registered with the Securities and Exchange Commission ("SEC") under Section
17A of the Securities Exchange Act of 1934 (or as may otherwise be authorized
by the SEC to serve in the capacity of depository or clearing agent for the
Securities or other assets of investment companies) which acts as a
Securities depository. Each of the foregoing shall be referred to in this
Agreement as a "Securities System," and all such Securities Systems shall be
listed on the attached Appendix A. Use of a Securities System shall be in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(i) The Custodian may deposit the Securities
directly or through one or more agents or
Subcustodians which are also qualified to act as
custodians for investment companies.
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(ii) The Custodian shall deposit and/or maintain the
Securities in a Securities System, provided that
such Securities are represented in an account
("Account") of the Custodian in the Securities
System that includes only assets held by the
Custodian as a fiduciary, custodian or otherwise
for customers.
(iii) The books and records of the Custodian shall at
all times identify those Securities belonging to
the Fund which are maintained in a Securities
System.
(iv) The Custodian shall pay for Securities purchased
for the account of the Fund only upon (a) receipt
of advice from the Securities System that such
Securities have been transferred to the Account
of the Custodian in accordance with the rules of
the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect
such payment and transfer for the account of the
Fund. The Custodian shall transfer Securities sold
for the account of the Fund only upon (a) receipt of
advice from the Securities System that payment for
such Securities has been transferred to the Account
of the Custodian in accordance with the rules of
the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect
such transfer and payment for the account of the
Fund. Copies of all advices from the Securities
System relating to transfers of Securities for the
account of the Fund shall be maintained for the Fund
by the Custodian. The Custodian shall deliver to
the Fund on the next succeeding business day daily
transaction reports which shall include each day's
transactions in the Securities System for the
account of the Fund. Such transaction reports shall
be delivered to the Fund or any agent designated by
the Fund pursuant to Instructions, by computer or
in such other manner as the Fund and Custodian may
agree.
(v) The Custodian shall, if requested by the Fund
pursuant to Instructions, provide the Fund with
reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's
accounting system, internal accounting control and
procedures for safeguarding Securities deposited in
the Securities System.
(vi) Upon receipt of Special Instructions, the Custodian
shall terminate the use of any Securities System on
behalf of the Fund as promptly as practicable and
shall take all actions reasonably
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practicable to safeguard the Securities of the Fund
maintained with such Securities System.
(c) Free Delivery of Assets.
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Notwithstanding any other provision of this Agreement and
except as provided in Section 3 hereof, the Custodian, upon receipt of
Special Instructions, will undertake to make free delivery of Assets,
provided such Assets are on hand and available, in connection with the Fund's
transactions and to transfer such Assets to such broker, dealer,
Subcustodian, bank, agent, Securities System or otherwise as specified in
such Special Instructions.
(d) Exchange of Securities.
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Upon receipt of Instructions, the Custodian will exchange
portfolio Securities held by it for the Fund for other Securities or cash
paid in connection with any reorganization, recapitalization, merger,
consolidation, or conversion of convertible Securities, and will deposit any
such Securities in accordance with the terms of any reorganization or
protective plan.
Without Instructions, the Custodian is authorized to
exchange Securities held by it in temporary form for Securities in definitive
form, to surrender Securities for transfer into a name or nominee name as
permitted in Section 4(b)(2), to effect an exchange of shares in a stock
split or when the par value of the stock is changed, to sell any fractional
shares, and, upon receiving payment therefor, to surrender bonds or other
Securities held by it at maturity or call.
(e) Purchases of Assets.
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(1) Securities Purchases. In accordance with
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Instructions, the Custodian shall, with respect to a purchase of Securities,
pay for such Securities out of monies held for the Fund's account for which
the purchase was made, but only insofar as monies are available therein for
such purpose, and receive the portfolio Securities so purchased. Unless the
Custodian has received Special Instructions to the contrary, such payment
will be made only upon receipt of Securities by the Custodian, a clearing
corporation of a national Securities exchange of which the Custodian is a
member, or a Securities System in accordance with the provisions of Section
4(b)(3) hereof. Notwithstanding the foregoing, upon receipt of Instructions:
(i) in connection with a repurchase agreement, the Custodian may release
funds to a Securities System prior to the receipt of advice from the
Securities System that the Securities underlying such repurchase agreement
have been transferred by book-entry into the Account maintained with such
Securities System by the Custodian, provided that the Custodian's
instructions to the Securities System require that the Securities System may
make payment of such funds to the other party to the repurchase agreement
only upon transfer by book-entry of the Securities underlying the repurchase
agreement into such Account; (ii) in the case of Interest Bearing
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Deposits, currency deposits, and other deposits, foreign exchange transactions,
futures contracts or options, pursuant to Sections 4(g), 4(h), 4(l), and 4(m)
hereof, the Custodian may make payment therefor before receipt of an advice of
transaction; and (iii) in the case of Securities as to which payment for the
Security and receipt of the instrument evidencing the Security are under
generally accepted trade practice or the terms of the instrument representing
the Security expected to take place in different locations or through
separate parties, such as commercial paper which is indexed to foreign
currency exchange rates, derivatives and similar Securities, the Custodian
may make payment for such Securities prior to delivery thereof in accordance
with such generally accepted trade practice or the terms of the instrument
representing such Security.
(2) Other Assets Purchased. Upon receipt of
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Instructions and except as otherwise provided herein, the Custodian shall pay
for and receive other Assets for the account of the Fund as provided in
Instructions.
(f) Sales of Assets.
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(1) Securities Sold. In accordance with
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Instructions, the Custodian will, with respect to a sale, deliver or cause to
be delivered the Securities thus designated as sold to the broker or other
person specified in the Instructions relating to such sale. Unless the
Custodian has received Special Instructions to the contrary, such delivery
shall be made only upon receipt of payment therefor in the form of: (a) cash,
certified check, bank cashier's check, bank credit, or bank wire transfer;
(b) credit to the account of the Custodian with a clearing corporation of a
national Securities exchange of which the Custodian is a member; or (c)
credit to the Account of the Custodian with a Securities System, in
accordance with the provisions of Section 4(b)(3) hereof. Notwithstanding
the foregoing, Securities held in physical form may be delivered and paid for
in accordance with "street delivery custom" to a broker or its clearing
agent, against delivery to the Custodian of a receipt for such Securities,
provided that the Custodian shall have taken reasonable steps to ensure
prompt collection of the payment for, or return of, such Securities by the
broker or its clearing agent, and provided further that the Custodian shall
not be responsible for the selection of or the failure or inability to
perform of such broker or its clearing agent or for any related loss arising
from delivery or custody of such Securities prior to receiving payment
therefor.
(2) Other Assets Sold. Upon receipt of Instructions
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and except as otherwise provided herein, the Custodian shall receive payment
for and deliver other Assets for the account of the Fund as provided in
Instructions.
(g) Options.
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(1) Upon receipt of Instructions relating to the
purchase of an option or sale of a covered call option, the Custodian shall:
(a) receive and retain confirmations or other documents, if any, evidencing
the purchase or writing of the option by the Fund; (b) if
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the transaction involves the sale of a covered call option, deposit and
maintain in a segregated account the Securities (either physically or by
book-entry in a Securities System) subject to the covered call option written
on behalf of the Fund; and (c) pay, release and/or transfer such Securities,
cash or other Assets in accordance with any notices or other communications
evidencing the expiration, termination or exercise of such options which are
furnished to the Custodian by the Options Clearing Corporation (the "OCC"), the
securities or options exchanges on which such options were traded, or such
other organization as may be responsible for handling such option transactions.
(2) Upon receipt of Instructions relating to the
sale of a naked option (including stock index and commodity options), the
Custodian, the Fund and the broker-dealer shall enter into an agreement to
comply with the rules of the OCC or of any registered national securities
exchange or similar organizations(s). Pursuant to that agreement and the
Fund's Instructions, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the writing of the
option; (b) deposit and maintain in a segregated account, Securities (either
physically or by book-entry in a Securities System), cash and/or other
Assets; and (c) pay, release and/or transfer such Securities, cash or other
Assets in accordance with any such agreement and with any notices or other
communications evidencing the expiration, termination or exercise of such
option which are furnished to the Custodian by the OCC, the securities or
options exchanges on which such options were traded, or such other
organization as may be responsible for handling such option transactions.
The Fund and the broker-dealer shall be responsible for determining the
quality and quantity of assets held in any segregated account established in
compliance with applicable margin maintenance requirements and the
performance of other terms of any option contract.
(h) Futures Contracts.
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Upon receipt of Instructions, the Custodian shall enter into
a futures margin procedural agreement among the Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain confirmations,
if any, evidencing the purchase or sale of a futures contract or an option on a
futures contract by the Fund; (b) deposit and maintain in a segregated account
cash, Securities and/or other Assets designated as initial, maintenance or
variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold, or any options on
futures contracts written by the Fund, in accordance with the provisions of any
Procedural Agreement designed to comply with the provisions of the Commodity
Futures Trading Commission and/or any commodity exchange or contract market
(such as the Chicago Board of Trade), or any similar organizations), regarding
such margin deposits; and (c) release Assets from and/or transfer Assets into
such margin accounts only in accordance with any such Procedural Agreements.
The Fund and such futures commission merchant shall be responsible for
determining the type and amount of Assets held in the segregated account or
paid to the broker-dealer in compliance with applicable margin maintenance
requirements and the
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performance of any futures contract or option on a futures contract in
accordance with its terms.
(i) Segregated Accounts.
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Upon receipt of Instructions, the Custodian shall establish
and maintain on its books a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred Assets of the
Fund, including Securities maintained by the Custodian in a Securities System
pursuant to Paragraph (b)(3) of this Section 4, said account or accounts to
be maintained (i) for the purposes set forth in Sections 4(g), 4(h) and 4(n)
and (ii) for the purpose of compliance by the Fund with the procedures
required by the SEC Investment Company Act Release Number 10666 or any
subsequent release or releases relating to the maintenance of segregated
accounts by registered investment companies, or (iii) for such other purposes
as may be set forth, from time to time, in Special Instructions. The
Custodian shall not be responsible for the determination of the type or
amount of Assets to be held in any segregated account referred to in this
paragraph, or for compliance by the Fund with required procedures noted in
(ii) above.
(j) Depositary Receipts.
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Upon receipt of Instructions, the Custodian shall surrender
or cause to be surrendered Securities to the depositary used for such
Securities by an issuer of American Depositary Receipts or International
Depositary Receipts (hereinafter referred to, collectively, as "ADRs"),
against a written receipt therefor adequately describing such Securities and
written evidence satisfactory to the organization surrendering the same that
the depositary has acknowledged receipt of instructions to issue ADRs with
respect to such Securities in the name of the Custodian or a nominee of the
Custodian, for delivery in accordance with such instructions.
Upon receipt of Instructions, the Custodian shall surrender
or cause to be surrendered ADRs to the issuer thereof, against a written
receipt therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the organization surrendering the same that the
issuer of the ADRs has acknowledged receipt of instructions to cause its
depository to deliver the Securities underlying such ADRs in accordance with
such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
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Upon receipt of Instructions, the Custodian shall: (a)
deliver warrants, puts, calls, rights or similar Securities to the issuer or
trustee thereof (or to the agent of such issuer or trustee) for the purpose
of exercise or sale, provided that the new Securities, cash or other Assets,
if any, acquired as a result of such actions are to be delivered to the
Custodian; and (b) deposit Securities upon invitations for tenders thereof,
provided that the
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consideration for such Securities is to be paid or delivered to the Custodian,
or the tendered Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the
contrary, the Custodian shall take all necessary action, unless otherwise
directed to the contrary in Instructions, to comply with the terms of all
mandatory or compulsory exchanges, calls, tenders, redemptions, or similar
rights of security ownership, and shall notify the Fund of such action in
writing by facsimile transmission or in such other manner as the Fund and
Custodian may agree in writing.
The Fund agrees that if it gives an Instruction for the
performance of an act on the last permissible date of a period established by
any optional offer or on the last permissible date for the performance of
such act, the Fund shall hold the Bank harmless from any adverse consequences
in connection with acting upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
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Upon receipt of Instructions directing the Custodian to
purchase interest bearing fixed term and call deposits (hereinafter referred
to, collectively, as "Interest Bearing Deposits") for the account of the
Fund, the Custodian shall purchase such Interest Bearing Deposits in the name
of the Fund with such banks or trust companies, including the Custodian, any
Subcustodian or any subsidiary or affiliate of the Custodian (hereinafter
referred to as "Banking Institutions"), and in such amounts as the Fund may
direct pursuant to Instructions. Such Interest Bearing Deposits may be
denominated in U.S. Dollars or other currencies, as the Fund may determine
and direct pursuant to Instructions. The responsibilities of the Custodian to
the Fund for Interest Bearing Deposits issued by the Custodian shall be that
of a U.S. bank for a similar deposit. With respect to Interest Bearing
Deposits other than those issued by the Custodian, (a) the Custodian shall be
responsible for the collection of income and the transmission of cash to and
from such accounts; and (b) the Custodian shall have no duty with respect to
the selection of the Banking Institution or for the failure of such Banking
Institution to pay upon demand.
(m) Pledges or Loans of Securities.
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(1) Upon receipt of Instructions from the Fund, the
Custodian will release or cause to be released Securities held in custody to
the pledgees designated in such Instructions by way of pledge or
hypothecation to secure loans incurred by the Fund with various lenders
including but not limited to UMB Bank, N.A.; provided, however, that the
Securities shall be released only upon payment to the Custodian of the monies
borrowed, except that in cases where additional collateral is required to
secure existing borrowings, further Securities may be released or delivered,
or caused to be released or delivered for that purpose upon receipt of
Instructions. Upon receipt of Instructions, the Custodian will pay, but only
from funds available for such purpose, any such loan upon re-delivery to it
of the
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Securities pledged or hypothecated therefor and upon surrender of the
note or notes evidencing such loan. In lieu of delivering collateral to a
pledgee, the Custodian, on the receipt of Instructions, shall transfer the
pledged Securities to a segregated account for the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and
execution of a separate Securities Lending Agreement, the Custodian will
release Securities held in custody to the borrower designated in such
Instructions and may, except as otherwise provided below, deliver such
Securities prior to the receipt of collateral, if any, for such borrowing,
provided that, in case of loans of Securities held by a Securities System
that are secured by cash collateral, the Custodian's instructions to the
Securities System shall require that the Securities System deliver the
Securities of the Fund to the borrower thereof only upon receipt of the
collateral for such borrowing. The Custodian shall have no responsibility or
liability for any loss arising from the delivery of Securities prior to the
receipt of collateral. Upon receipt of Instructions and the loaned
Securities, the Custodian will release the collateral to the borrower.
(n) Stock Dividends, Rights, Etc.
----------------------------
The Custodian shall receive and collect all stock dividends,
rights, and other items of like nature and, upon receipt of Instructions,
take action with respect to the same as directed in such Instructions.
(o) Routine Dealings.
----------------
The Custodian will, in general, attend to all routine and
mechanical matters in accordance with industry standards in connection with
the sale, exchange, substitution, purchase, transfer, or other dealings with
Securities or other property of the Fund except as may be otherwise provided
in this Agreement or directed from time to time by Instructions from the
Fund. The Custodian may also make payments to itself or others from the
Assets for disbursements and out-of-pocket expenses incidental to handling
Securities or other similar items relating to its duties under this
Agreement, provided that all such payments shall be accounted for to the
Fund.
(p) Collections.
-----------
The Custodian shall (a) collect amounts due and payable to
the Fund with respect to portfolio Securities and other Assets; (b) promptly
credit to the account of the Fund all income and other payments relating to
portfolio Securities and other Assets held by the Custodian hereunder upon
Custodian's receipt of such income or payments or as otherwise agreed in
writing by the Custodian and the Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other
payments with respect to portfolio Securities and
11
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other Assets, or in connection with the transfer of such Securities or other
Assets; provided, however, that with respect to portfolio Securities registered
in so-called street name, or physical Securities with variable interest rates,
the Custodian shall use its best efforts to collect amounts due and payable to
the Fund. The Custodian shall notify the Fund in writing by facsimile
transmission or in such other manner as the Fund and Custodian may agree in
writing if any amount payable with respect to portfolio Securities or other
Assets is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect to
portfolio Securities or other Assets that are in default.
(q) Bank Accounts.
-------------
Upon Instructions, the Custodian shall open and operate a
bank account or accounts on the books of the Custodian; provided that such
bank account(s) shall be in the name of the Custodian or a nominee thereof,
for the account of the Fund, and shall be subject only to draft or order of
the Custodian. The responsibilities of the Custodian to the Fund for
deposits accepted on the Custodian's books shall be that of a U.S. bank for a
similar deposit.
(r) Dividends, Distributions and Redemptions.
----------------------------------------
To enable the Fund to pay dividends or other distributions
to shareholders of the Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of the Fund (collectively,
the "Shares"), the Custodian shall release cash or Securities insofar as
available. In the case of cash, the Custodian shall, upon the receipt of
Instructions, transfer such funds by check or wire transfer to any account at
any bank or trust company designated by the Fund in such Instructions. In
the case of Securities, the Custodian shall, upon the receipt of Special
Instructions, make such transfer to any entity or account designated by the
Fund in such Special Instructions.
(s) Proceeds from Shares Sold.
-------------------------
The Custodian shall receive funds representing cash payments
received for shares issued or sold from time to time by the Fund, and shall
credit such funds to the account of the Fund. The Custodian shall notify the
Fund of Custodian's receipt of cash in payment for shares issued by the Fund
by facsimile transmission or in such other manner as the Fund and the
Custodian shall agree. Upon receipt of Instructions, the Custodian shall:
(a) deliver all federal funds received by the Custodian in payment for shares
as may be set forth in such Instructions and at a time agreed upon between
the Custodian and the Fund; and (b) make federal funds available to the Fund
as of specified times agreed upon from time to time by the Fund and the
Custodian, in the amount of checks received in payment for shares which are
deposited to the accounts of the Fund.
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(t) Proxies and Notices; Compliance with the Shareholders
-----------------------------------------------------
Communication Act of 1985.
-------------------------
The Custodian shall deliver or cause to be delivered to the
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by the Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of
them, and, upon receipt of Instructions, the Custodian shall execute and
deliver, or cause such Subcustodian or nominee to execute and deliver, such
proxies or other authorizations as may be required. Except as directed
pursuant to Instructions, neither the Custodian nor any Subcustodian or
nominee shall vote upon any such Securities, or execute any proxy to vote
thereon, or give any consent or take any other action with respect thereto.
The Custodian will not release the identity of the Fund to an
issuer which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct communications
between such issuer and the Fund unless the Fund directs the Custodian
otherwise in writing.
(u) Books and Records.
-----------------
The Custodian shall maintain such records relating to its
activities under this Agreement as are required to be maintained by Rule
31a-1 under the Investment Company Act of 1940 ("xxx 0000 Xxx") and to
preserve them for the periods prescribed in Rule 31a-2 under the 1940 Act.
These records shall be open for inspection by duly authorized officers,
employees or agents (including independent public accountants) of the Fund
during normal business hours of the Custodian.
The Custodian shall provide accountings relating to its
activities under this Agreement as shall be agreed upon by the Fund and the
Custodian.
(v) Opinion of Fund's Independent Certified Public
----------------------------------------------
Accountants.
-----------
The Custodian shall take all reasonable action as the Fund
may request to obtain from year to year favorable opinions from the Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder and in connection with the preparation of the Fund's
periodic reports to the SEC and with respect to any other requirements of the
SEC.
(w) Reports by Independent Certified Public Accountants.
---------------------------------------------------
At the request of the Fund, the Custodian shall deliver to
the Fund a written report prepared by the Custodian's independent certified
public accountants with respect to the services provided by the Custodian
under this Agreement, including, without limitation, the Custodian's
accounting system, internal accounting control and procedures for
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safeguarding cash, Securities and other Assets, including cash, Securities
and other Assets deposited and/or maintained in a Securities System or with a
Subcustodian. Such report shall be of sufficient scope and in sufficient
detail as may reasonably be required by the Fund and as may reasonably be
obtained by the Custodian.
(x) Bills and Other Disbursements.
-----------------------------
Upon receipt of Instructions, the Custodian shall pay, or
cause to be paid, all bills, statements, or other obligations of the Fund.
(y) Valuation of Commitments to Acquire Mortgage-
---------------------------------------------
Backed Securities
-----------------
The Custodian shall be responsible for valuing the Fund's
commitments to acquire mortgage-backed securities secured by Qualified
Mortgage Loans ("QMLs") (as defined in the Fund's current prospectus and
statement of additional information) in accordance with the formula set forth
in Appendix B attached hereto, which Appendix may be amended from time to time
by the Fund as it deems necessary. The Custodian shall value each commitment
on each day on which the Custodian and the New York Stock Exchange are open
for business ("Business Day") by no later than 4:00 p.m. Eastern Standard
Time. The Fund's manager, Capital Mortgage Management, Inc. (the "Manager"),
will provide to the Custodian the price at which the Fund committed to
acquire the outstanding mortgage-backed securities, the dollar amount of
outstanding commitments and the weighted average coupon rate of those
commitments by no later than 3:00 p.m. Eastern Standard Time each Business Day.
The Custodian also shall transmit on each Business Day, via facsimile or via
computer modem, to the Fund's investment manager, Capital Mortgage Management,
Inc. of St. Louis, Missouri, and its investment subadviser, Commerce Bank, N.A.
of St. Louis, Missouri, the Custodian's valuation of the Fund's portfolio
securities and net asset value for that Business Day.
5. SUBCUSTODIANS.
-------------
From time to time, in accordance with the relevant provisions of
this Agreement, the Custodian may appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Special Subcustodians, or Interim Subcustodians (as
each are hereinafter defined) to act on behalf of the Fund. A Domestic
Subcustodian, in accordance with the provisions of this Agreement, may also
appoint a Foreign Subcustodian, Special Subcustodian, or Interim Subcustodian
to act on behalf of the Fund. For purposes of this Agreement, all Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians."
(a) Domestic Subcustodians.
----------------------
The Custodian may, at any time and from time to time,
appoint any bank as defined in Section 2(a)(5) of the 1940 Act or any trust
company or other entity, any of which meet the requirements of a custodian
under Section 17(f) of the 1940 Act and the rules and regulations thereunder,
to act for the Custodian on behalf of the Fund as a subcustodian for
14
20
purposes of holding Assets of the Fund and performing other functions of the
Custodian within the United States (a "Domestic Subcustodian"). The Fund shall
approve in writing the appointment of the proposed Domestic Subcustodian; and
the Custodian's appointment of any such Domestic Subcustodian shall not be
effective without such prior written approval of the Fund. Each such duly
approved Domestic Subcustodian shall be listed on Exhibit B attached hereto,
as it may be amended, from time to time.
(b) Special Subcustodians.
---------------------
Upon receipt of Special Instructions, the Custodian shall,
on behalf of the Fund, appoint one or more banks, trust companies or other
entities designated in such Special Instructions to act for the Custodian on
behalf of the Fund as a subcustodian for purposes of: (i) effecting
third-party repurchase transactions with banks, brokers, dealers or other
entities through the use of a common custodian or subcustodian; (ii)
providing depository and clearing agency services with respect to certain
variable rate demand note Securities, (iii) providing depository and clearing
agency services with respect to dollar denominated Securities, and (iv)
effecting any other transactions designated by the Fund in such Special
Instructions. Each such designated subcustodian (hereinafter referred to as
a "Special Subcustodian") shall be listed on Appendix A attached hereto, as
it may be amended from time to time. In connection with the appointment of
any Special Subcustodian, the Custodian shall enter into a subcustodian
agreement with the Special Subcustodian in form and substance approved by the
Fund in Special Instructions. The Custodian shall not amend any subcustodian
agreement entered into with a Special Subcustodian, or waive any rights under
such agreement, except upon prior approval pursuant to Special Instructions.
(c) Termination of a Subcustodian.
-----------------------------
The Custodian may, at any time in its discretion upon
notification to the Fund, terminate any Subcustodian of the Fund in
accordance with the termination provisions under the applicable subcustodian
agreement, and upon the receipt of Special Instructions, the Custodian will
terminate any Subcustodian in accordance with the termination provisions
under the applicable subcustodian agreement.
6. STANDARD OF CARE.
----------------
(a) General Standard of Care.
------------------------
The Custodian shall be liable to the Fund for all losses,
damages and reasonable costs and expenses suffered or incurred by the Fund
resulting from the negligence or willful misfeasance of the Custodian;
provided, however, in no event shall the Custodian be liable for special,
indirect or consequential damages arising under or in connection with this
Agreement.
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(b) Actions Prohibited by Applicable Law, Events Beyond
---------------------------------------------------
Custodian's Control, Sovereign Risk, Etc.
----------------------------------------
In no event shall the Custodian or any Domestic Subcustodian
incur liability hereunder (i) if the Custodian or any Subcustodian or
Securities System, or any subcustodian, Securities System, Securities
Depository or Clearing Agency utilized by the Custodian or any such
Subcustodian, or any nominee of the Custodian or any Subcustodian
(individually, a "Person") is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed, by reason of: (a) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or
political subdivision thereof or of any court of competent jurisdiction (and
neither the Custodian nor any other Person shall be obligated to take any
action contrary thereto); or (b) any event beyond the control of the
Custodian or other Person such as armed conflict, riots, strikes, lockouts,
labor disputes, equipment or transmission failures, natural disasters, or
failure of the mails, transportation, communications or power supply; or (ii)
for any loss, damage, cost or expense resulting from "Sovereign Risk." A
"Sovereign Risk" shall mean nationalization, expropriation, currency
devaluation, revaluation or fluctuation, confiscation, seizure, cancellation,
destruction or similar action by any governmental authority, de facto or de
jure; or enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's Assets; or acts of armed
conflict, terrorism, insurrection or revolution; or any other act or event
beyond the Custodian's or such other Person's control.
(c) Liability for Past Records.
--------------------------
Neither the Custodian nor any Domestic Subcustodian shall
have any liability in respect of any loss, damage or expense suffered by the
Fund, insofar as such loss, damage or expense arises from the performance of
the custodian or any Domestic Subcustodian in reliance upon records that were
maintained for the Fund by entities other than the Custodian or any Domestic
Subcustodian prior to the Custodian's employment hereunder.
(d) Advice of Counsel.
-----------------
The Custodian and all Domestic Subcustodians shall be
entitled to receive and act upon advice of counsel of its own choosing on all
matters. The Custodian and all Domestic Subcustodians shall be without
liability for any actions taken or omitted in good faith pursuant to the
advice of counsel.
(e) Advice of the Fund and Others.
-----------------------------
The Custodian and any Domestic Subcustodian may rely upon
the advice of the Fund and upon statements of the Fund's accountants and
other persons believed by it in good faith to be expert in matters upon which
they are consulted, and neither the Custodian
16
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nor any Domestic Subcustodian shall be liable for any actions taken or omitted,
in good faith, pursuant to such advice or statements.
(f) Instructions Appearing to be Genuine.
------------------------------------
The Custodian and all Domestic Subcustodians shall be fully
protected and indemnified in acting as a custodian hereunder upon any
Resolutions of the Board of Directors or Trustees, Instructions, Special
Instructions, advice, notice, request, consent, certificate, instrument or
paper appearing to it to be genuine and to have been properly executed and
shall, unless otherwise specifically provided herein, be entitled to receive
as conclusive proof of any fact or matter required to be ascertained from the
Fund hereunder a certificate signed by any officer of the Fund authorized to
countersign or confirm Special Instructions.
(g) Exceptions from Liability.
-------------------------
Without limiting the generality of any other provisions
hereof, neither the Custodian nor any Domestic Subcustodian shall be under
any duty or obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities
purchased by or for the Fund, the legality of the purchase thereof or
evidence of ownership required to be received by the Fund, or the propriety
of the decision to purchase or amount paid therefor;
(ii) the legality of the sale of any Securities by or
for the Fund, or the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of
Securities, borrowings or similar actions with respect to the Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of the Fund's Declaration of Trust, Partnership
Agreement, Articles of Incorporation or By-Laws or votes or proceedings of
the shareholders, trustees, partners or directors of the Fund, or the Fund's
currently effective Registration Statement on file with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
------------------------------------------------
(a) Domestic Subcustodians.
----------------------
The Custodian shall be liable for the acts or omissions of
any Domestic Subcustodian to the same extent as if such actions or omissions
were performed by the Custodian itself.
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(b) Securities Systems, Special Subcustodians, Securities
-----------------------------------------------------
Depositories and Clearing Agencies.
----------------------------------
The Custodian shall not be liable to the Fund for any loss,
damage or expense suffered or incurred by the Fund resulting from or
occasioned by the actions or omissions of a Securities System, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian.
(c) Defaults or Insolvencies of Brokers, Banks, Etc.
-----------------------------------------------
The Custodian shall not be liable for any loss, damage or
expense suffered or incurred by the Fund resulting from or occasioned by the
actions, omissions, neglects, defaults or insolvency of any broker, bank,
trust company or any other person with whom the Custodian may deal (other
than any of such entities acting as a Subcustodian, Securities System or
Securities Depository and Clearing Agency, for whose actions the liability of
the Custodian is set out elsewhere in this Agreement) unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian.
(d) Reimbursement of Expenses.
-------------------------
The Fund agrees to reimburse the Custodian for all
out-of-pocket expenses incurred by the Custodian in connection with this
Agreement, but excluding salaries and usual overhead expenses.
8. INDEMNIFICATION.
---------------
(a) Indemnification by Fund.
-----------------------
Subject to the limitations set forth in this Agreement, the
Fund agrees to indemnify and hold harmless the Custodian and its nominees
from all losses, damages and expenses (including attorneys' fees) suffered or
incurred by the Custodian or its nominee caused by or arising from actions
taken by the Custodian, its employees or agents in the performance of its
duties and obligations under this Agreement, including, but not limited to,
any indemnification obligations undertaken by the Custodian under any
relevant subcustodian agreement; provided, however, that such indemnity shall
not apply to the extent the Custodian is liable under Sections 6 or 7 hereof.
If the Fund requires the Custodian to take any action with
respect to Securities, which action involves the payment of money or which
may, in the opinion of the Custodian, result in the Custodian or its nominee
assigned to the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
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(b) Indemnification by Custodian.
----------------------------
Subject to the limitations set forth in this Agreement and
in addition to the obligations provided in Sections 6 and 7, the Custodian
agrees to indemnify and hold harmless the Fund from all losses, damages and
expenses suffered or incurred by the Fund caused by the negligence or willful
misfeasance of the Custodian.
9. ADVANCES.
---------
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each
of which for purposes of this Section 9 shall be referred to as "Custodian"),
makes any payment or transfer of funds on behalf of the Fund as to which
there would be, at the close of business on the date of such payment or
transfer, insufficient funds held by the Custodian on behalf of the Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to the Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of the Fund
as to which it is subsequently determined that the Fund has overdrawn its
cash account with the Custodian as of the close of business on the date of
such payment or transfer, said overdraft shall constitute an Advance. Any
Advance shall be payable by the Fund on demand by Custodian, unless otherwise
agreed by the Fund and the Custodian, and shall accrue interest from the date
of the Advance to the date of payment by the Fund to the Custodian at a rate
agreed upon in writing from time to time by the Custodian and the Fund. It
is understood that any transaction in respect of which the Custodian shall
have made an Advance, including but not limited to a foreign exchange
contract or transaction in respect of which the Custodian is not acting as a
principal, is for the account of and at the risk of the Fund, and not, by
reason of such Advance, deemed to be a transaction undertaken by the
Custodian for its own account and risk. The Custodian and the Fund
acknowledge that the purpose of Advances is to finance temporarily the
purchase or sale of Securities for prompt delivery in accordance with the
settlement terms of such transactions or to meet emergency expenses not
reasonably foreseeable by the Fund. The Custodian shall promptly notify the
Fund of any Advance. Such notification shall be sent by facsimile
transmission or in such other manner as the Fund and the Custodian may agree.
10. LIENS.
-----
The Bank shall have a lien on the Property in the Custody Account
to secure payment of fees and expenses for the services rendered under this
Agreement. If the Bank advances cash or securities to the Fund for any
purpose or in the event that the Bank or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of its duties hereunder, except such as may
arise from its or its nominee's negligent action, negligent failure to act or
willful misconduct, any Property at
19
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any time held for the Custody Account shall be security therefor and the Fund
hereby grants a security interest therein to the Bank. The Fund shall promptly
reimburse the Bank for any such advance of cash or securities or any such
taxes, charges, expenses, assessments, claims or liabilities upon request for
payment, but should the Fund fail to so reimburse the Bank, the Bank shall be
entitled to dispose of such Property to the extent necessary to obtain
reimbursement. The Bank shall be entitled to debit any account of the Fund
with the Bank including, without limitation, the Custody Account, in connection
with any such advance and any interest on such advance as the Bank deems
reasonable.
11. COMPENSATION.
-------------
The Fund will pay to the Custodian such compensation as is agreed
to in writing by the Custodian and the Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to the Fund and
paid in cash to the Custodian.
12. POWERS OF ATTORNEY.
-------------------
Upon request, the Fund shall deliver to the Custodian such
proxies, powers of attorney or other instruments as may be reasonable and
necessary or desirable in connection with the performance by the Custodian or
any Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
---------------------------
The Fund or the Custodian may terminate this Agreement by notice
in writing, delivered or mailed, postage prepaid (certified mail, return
receipt requested) to the other not less than 90 days prior to the date upon
which such termination shall take effect. Upon termination of this
Agreement, the Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the Fund or as otherwise designated by the Fund by Special
Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective
date of termination.
This Agreement may not be assigned by the Custodian or the Fund
without the respective consent of the other, duly authorized by a resolution
by its Board of Directors or Trustees.
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26
14. NOTICES.
--------
All notices, requests, instructions or other writings which may be
or are required to be given by either the Fund or Custodian under this
Agreement shall be properly given only if made in writing (except as
expressly provided to the contrary in this Agreement) and sent by: (a) hand
delivery, (b) electronic transfer device with telephone or other confirmation
or receipt (confirmed in writing by sender within one (1) business day), or
(c) a nationally recognized overnight delivery service (such as Federal
Express, UPS Next Day Air, Purolator Courier or Airborne Express), with all
delivery charges paid by the sender and addressed to the recipient as
follows, or at such other address as each may request in writing. Such
notices shall be deemed received (1) if delivered by hand or overnight
delivery service on the date of delivery or (2) if sent by electronic
transfer on the date of transmission. The refusal to accept delivery shall
constitute acceptance and, in such event, the date of delivery shall be the
date on which delivery was refused. Said addresses for notices are to be as
follows:
IF TO THE FUND:
Builders ProLoan Fund, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, President
IF TO THE CUSTODIAN:
UMB Bank, N.A., Attn: Securities Administration Department
000 Xxxxx Xxxx.
Xxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx
15. MISCELLANEOUS.
--------------
(a) This Agreement is executed and delivered in the State
of Missouri and shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement
shall be binding upon, and inure to the benefit of, and be enforceable by the
respective successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended,
modified or waived, in any manner except in writing, properly executed by
both parties hereto; provided, however, Appendix A may be amended from time
to time as Domestic Subcustodians,
21
27
Special Subcustodians, and Securities Depositories and Clearing Agencies are
approved or terminated according to the terms of this Agreement.
(d) The captions in this Agreement are included for
convenience of reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of
execution hereof.
(f) This Agreement may be executed simultaneously in two
or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
(g) The following terms are defined terms within the
meaning of this Agreement, and the definitions thereof are found in the
following sections of the Agreement:
Term Section
Account 4(b)(3)(ii)
ADRs 4(j)
Advance 9
Assets 2
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Instruction 2(c)(1)
Interest Bearing Deposit 4(1)
Liens 10
OCC 4(g)(1)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories 5(b)
and Clearing Agencies
Securities System 4(b)(3)
Shares 4(5)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(d)
Subcustodian 5
1940 Act 4(v)
22
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(h) If any part, term or provision of this Agreement is
held to be illegal, in conflict with any law or otherwise invalid by any
court of competent jurisdiction, the remaining portion or portions shall be
considered severable and shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(i) This Agreement constitutes the entire understanding
and agreement of the parties hereto with respect to the subject matter
hereof, and accordingly supersedes, as of the effective date of this
Agreement, any custodian agreement heretofore in effect between the Fund and
the Custodian.
IN WITNESS WHEREOF, The parties hereto have caused this
Custody Agreement to be executed by their duly respective authorized
officers.
Builders ProLoan Fund, Inc.
ATTEST:
By: /s/ Xxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxxxxx
----------------------------- ----------------------------------
Xxxxx X. Xxxxxxxxxx, Name: Xxxx X. Xxxxxxx
Treasurer --------------------------------
Title: President
-------------------------------
Date: October 21, 1997
--------------------------------
UMB Bank, N.A.
ATTEST:
By: /s/ Xxxxx X. Xxxxxxx
------------------------------ ----------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------
Title: Senior Vice President
-------------------------------
Date: October 21, 1997
--------------------------------
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29
UMB BANK, N.A.
DOMESTIC CUSTODY FEE SCHEDULE
-----------------------------
NET ASSET VALUE FEES
-------------------------------------------------------------------------------
To be computed as of month-end on the average net asset value of each
portfolio at the annual rate of:
1.00 basis point on the first $100,000,000 of each portfolio's
net assets; plus
.75 basis points on the next $100,000,000 of each portfolio's net
assets; plus
.50 basis points on each portfolio's net assets in excess of
$200,000,000; subject to a $250.00 per month minimum per
portfolio.
PORTFOLIO TRANSACTION FEES
-------------------------------------------------------------------------------
DTC $ 6.00
PTC 12.00
Fed Book Entry 8.00
Physical 20.00
Principal & Interest Payments 5.00
Options/Futures 25.00
Corporate Actions/Calls/Reorgs 25.00
Third-Party VRDN (Bank Book Entry) 15.00
UMB Repurchase Agreements 5.00
Tri-Party Repurchase Agreements 15.00
Checks Issued (Non-Settlement Related) 8.00
Wires In/Out (Non-Settlement Related 8.00
A transaction includes buys, sells, maturities, or free security movements.
OUT-OF-POCKET EXPENSES
-------------------------------------------------------------------------------
Includes, but is not limited to, security transfer fees, certificate fees,
shipping/courier fees or charges, FDIC insurance premiums, specialized
programming charges, and system access/connect charges.
This fee schedule pertains to custody of U.S. Domestic assets only. Fees for
services not contemplated by this schedule are negotiated on a case-by-case
basis.
24
30
APPENDIX A
DOMESTIC SUBCUSTODIANS:
United Missouri Bank Trust Company of New York
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
Builders ProLoan Fund, Inc. UMB Bank, N.A.
By: /s/ Xxxx X. Xxxxxxx By:
-------------------------------- -------------------------------------
Name: Xxxx X. Xxxxxxx Name:
------------------------------ -----------------------------------
Title: President Title:
----------------------------- ----------------------------------
Date: October __, 1997 Date:
------------------------------- -----------------------------------
25
00
XXXXXXXX X
VALUATION METHOD
FOR
COMMITMENTS TO ACQUIRE MORTGAGE-BACKED SECURITIES
Commitments to acquire mortgage-backed securities secured by
Qualified Mortgage Loans ("QMLs") generated through the ProLoan program and
entered into by the Builders ProLoan Fund, Inc. ("Fund") shall be valued at an
amount equal to the principal amount of the underlying QMLs multiplied by any
positive difference between the price at which the Fund committed to acquire
the mortgage-backed securities and the six-month forward to-be-announced
("TBA") price of Xxxxxx Mae mortgage-backed securities with the one-half
percent (1/2%) coupon rate increment nearest to, but not greater than, the
weighted average yield for all such QMLs, minus 0.625% (the approximate amount
that would be spent by the Fund for servicing, guarantee fees and
securitization costs had such QMLs been securitized).
The Custodian will value the Fund's commitments to acquire ProLoan
mortgage-backed securities at the above price, as long as this price is
considered by the Fund's Manager, Capital Mortgage Management, Inc., to be no
more than the fair market value of the commitments. The Manager will notify the
Custodian promptly if it considers the above price to represent more than the
fair market value of the commitments.
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