ASSIGNMENT AND ASSUMPTION
WHEREAS, Guinness Flight Investment Funds, Inc., a Maryland
corporation (the "Company") and Investors Bank & Trust Company, a Massachusetts
trust company (the "Bank") have entered into a Custodian Agreement, dated the
1st day of July 1994 (the "Agreement"); and
WHEREAS, pursuant to the terms of an Agreement and Plan of Conversion
and Termination, the Company is converting to a Delaware business trust
("Guinness Flight Investment Funds" or the "Trust"); and
WHEREAS, the Company desires to obtain, and the undersigned desires to
grant, the undersigned's consent to the assignment of the Agreement.
NOW THEREFORE, the Bank, in consideration of and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound by the terms of this Assignment and
Assumption, hereby: (i) consents to the assignment of all rights and obligations
under the Agreement to the Trust by the Company, to become effective on April
28, 1997; and (ii) agrees that the Agreement by and between the Company is in
full force and effect, and that it is not aware of any default or event which,
after notice or the passage of time or both, could become a default under the
Agreement.
By signing this Agreement, the Trust acknowledges (i) that the
Agreement is in full force and effect, and that it is not aware of any default
or event which, after notice or the passage of time, or both, could become a
default under the Agreement, and (ii) hereby agrees to assume all of the rights,
duties and obligations of the Company under the Agreement effective April 28,
1997.
Dated: As of April 28, 1997 INVESTORS BANK & TRUST COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/ Xxxxxx X. Paggiole
----------------------
Name: Xxxxxx X. Paggiole
Title: Secretary
(4/94)
CUSTODIAN AGREEMENT
Between
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
Page
1. Bank Appointed Custodian............................................... 1
2. Definitions............................................................ 1
2.1 Authorized Person............................................. 1
2.2 Security...................................................... 1
2.3 Portfolio Security............................................ 1
2.4 Officers' Certificate......................................... 2
2.5 Book-Entry System............................................. 2
2.6 Depository.................................................... 2
2.7 Proper Instructions........................................... 2
3. Separate Accounts...................................................... 2
4. Certification as to Authorized Persons................................. 2
5. Custody of Cash........................................................ 3
5.1 Purchase of Securities........................................ 3
5.2 Redemptions................................................... 3
5.3 Distributions and Expenses of Fund............................ 3
5.4 Payment in Respect of Securities.............................. 3
5.5 Repayment of Loans............................................ 4
5.6 Repayment of Cash............................................. 4
5.7 Foreign Exchange Transactions................................. 4
5.8 Other Authorized Payments..................................... 4
5.9 Termination................................................... 4
6. Securities............................................................. 4
6.1 Segregation and Registration.................................. 4
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.............................. 8
6.9 Segregated Account............................................ 9
6.10 Interest Bearing Call or Time Deposits........................ 11
6.11 Transfer of Securities........................................ 11
7. Redemptions............................................................ 13
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Page
8. Merger, Dissolution, etc. of Fund....................................... 13
9. Actions of Bank Without Prior Authorization............................. 13
10. Collection and Defaults................................................. 14
11. Maintenance of Records and Accounting Services.......................... 14
12. Fund Evaluation......................................................... 14
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............................................. 16
13.4 Insurance......................................................... 19
13.5 Fees and Expenses of Bank......................................... 19
13.6 Advances by Bank.................................................. 20
14. Termination............................................................. 20
15. Confidentiality......................................................... 21
16. Notices................................................................. 21
17. Amendments.............................................................. 22
18. Parties................................................................. 22
19. Governing Law........................................................... 22
20. Counterparts............................................................ 22
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CUSTODIAN AGREEMENT
AGREEMENT made as of this [1st] day of [July], 1994, between GUINNESS
FLIGHT INVESTMENT FUNDS, INC., a Maryland corporation (the "Fund") and INVESTORS
BANK & TRUST COMPANY (the "Bank")
The Fund, an open-end management investment company consisting of two
portfolios, Guinness Flight Hong Kong Fund and Guinness Flight Global Government
Bond Fund, desires to place and maintain all of its portfolio securities and
cash 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 Fund, and has indicated its willingness to so act, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund 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 Fund 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 the Fund.
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 Fund.
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 United States or foreign 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 regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an 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 Fund shall agree upon from
time to time, and (ii) instructions (which may be continuing instructions)
regarding other matters signed or initiated 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 Fund 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 Fund. The Fund shall be responsible, at the Fund's
expense, for taking any action, including any reprocessing, necessary to correct
any such discrepancy or error, and to the extent such action requires the Bank
to act the Fund 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 Fund, 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 Fund's assets.
3. Separate Accounts. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon).
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in
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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 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 Fund, 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 Fund which as been signed by
Authorized Persons named in the most recent certification.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 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 Fund, notification from
the Fund'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 Fund, 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 Fund, against a contemporaneous receipt of such securities by the Bank
registered in the name of the Fund 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 Fund offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the
account of the Fund 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 liability of the Bank, as provided
hereunder, fees of any transfer agent, fees for legal, accounting, and auditing
services, or other operating expenses of the Fund.
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 Fund held by or to be delivered to the Bank.
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5.5 Repayment of Loans. To repay loans of money made to the Fund,
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 Fund
for the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Fund 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 Fund 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 Fund 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 Fund, or other obligations of the Fund incurred for proper Fund 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 Fund, 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 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 Fund. All such Portfolio Securities will be held or disposed of
by the Bank for, and subject at all times to, the instructions of the Fund
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 Bank will use its best
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efforts to the end that the specific Portfolio Securities held by it thereunder
will be at all times identifiable.
The Fund 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 Fund.
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 Fund 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 Fund), 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
Fund assets in the Book-Entry System, 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 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 Fund'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 Fund. Where
securities are transferred to the Fund's account, the Bank shall also, by book
entry or otherwise, identify as belonging to the Fund 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;
(c) The Bank (or its agent) shall pay for securities
purchased for the account of the Fund or shall pay cash collateral against the
return of Portfolio Securities loaned by the Fund upon (i) receipt of advice
from the Book-Entry System that such 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 Fund. The
Bank (or its agent) shall transfer securities sold or loaned for the account of
the Fund upon
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(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 securities loaned by the Fund 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 Fund. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Fund shall identify the Fund, be maintained
for the Fund by the Bank and shall be provided to the Fund at its request. The
Bank shall send the Fund a confirmation, as defined by Rule 17f-4 of the 1940
Act, of any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund 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;
(e) The Bank shall be liable to the Fund for any loss
or damage to the Fund resulting from use of the Book-Entry System by reason of
any gross 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
Fund, it shall be entitled to be subrogated 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 Fund
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 Fund all income and other payments
thereon and to take all steps necessary and proper in connection with the
collection thereof;
(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 Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Fund and the Fund shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund only upon delivery of the Securities to
or for the account of the Fund; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment thereof or, in the
event Portfolio Securities are loaned, delivery
- 6 -
of Securities will be made only against receipt of the initial cash collateral
to or for the account of the Fund; and
(d) The Bank shall be liable to the Fund for any loss
or damage to the Fund resulting from use of a Depository by reason of any gross
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 prompt transmittal to the Fund;
(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 Fund'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 Fund to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank and
the Fund all internal accounting control reports, whether or not audited by an
independent public accountant, as well as such other reports as the Fund 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 Fund has purchased such Issuer's Book-Entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
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:
(a) the Bank will maintain all Book-Entry Paper held by
the Fund 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 Fund's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
Commercial Paper belonging
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to the Fund 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 Fund;
(c) The Bank shall pay for Book-Entry Paper purchased
for the account of the Fund 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 Fund;
(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 Fund, and
(ii) the making of an entry on the records of the Bank to reflect such payment
for the account of the Fund;
(e) the Bank shall transmit to the Fund a transaction
journal confirming each transaction in Book-Entry Paper for the account of the
Fund on the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its
system of internal accounting control with respect to the Book-Entry Paper
System as the Fund 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 Fund 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 Fund, and shall have no liability to the Fund 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 Fund resulting from the Bank's own gross
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.
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1. The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
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
Fund 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 Fund 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 Fund. The Bank shall have no responsibility for the legality of any put or
call purchased or sold on behalf of the Fund, the propriety 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 Fund that the amount of such collateral held by a broker or held
in a Segregated Account is sufficient to protect such broker of the Fund against
any loss; (ii) effect the return of any collateral delivered to a broker; or
(iii) advise the Fund that any option it holds, has or is about to expire. Such
duties or obligations shall be the sole responsibility of the Fund.
(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 Fund in accordance with
the provisions of any agreement among the Fund, 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 Fund.
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 subparagraph (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.
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 Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities;
(a) in accordance with the provisions of any agreement
among the Fund, 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,
- 9 -
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
Fund;
(b) for the purpose of segregating cash or securities
in connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(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 Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities which
the Fund 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 Fund 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;
(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 Fund 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.
(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any
agreements referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's
obligations under outstanding firm commitment or
when-issued agreements for the purchase of Portfolio
Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding
forward commitment or when-issued agreements for the
purchase of portfolio securities or
- 10 -
reverse repurchase agreements are sold to other parties
or the Fund's obligations thereunder are met from assets
of the Fund other than those in the Segregated Account;
or
(v) 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 Fund 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 Fund 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 Fund 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 Fund.
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 Fund, against contemporaneous receipt by the Bank of payment therefor in
full, 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 payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made;
(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 least 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;
- 11 -
(d) for the purpose of redeeming in kind shares of the
Fund upon authorization from the Fund;
(e) in the case of option contracts owned by the Fund,
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 Fund 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
Fund 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 Fund 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 Fund 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 Fund and the Bank, and upon
receipt of payment in connection with any repurchase agreement relating to such
securities entered into by the Fund;
(j) for other authorized transactions of the Fund 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 Fund (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 Fund 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
(k) upon termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 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.
- 12 -
7. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issue, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles and By-laws of the Fund, from assets
available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund 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 Fund 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 Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the
name of the Fund 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 Fund and hold for the account of the Fund 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 Fund which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund 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;
9.4 Execute as agent on behalf of the Fund 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 Fund'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;
- 13 -
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 Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collection 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 Fund notice actually received by it of any call for redemption,
offer of 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 Fund in writing of any default or refusal to pay within
two business days from the date on which it receives knowledge of such default
or refusal. In addition, the Bank will send the Fund 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 Fund
daily with a statement of condition of the Fund. The Bank will furnish to the
Fund at the end of every month, and at the close of each quarter of the Fund's
fiscal year, a list of the Portfolio Securities and the aggregate amount of cash
held by it for the Fund. 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 Fund 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 Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
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 Fund, such determination to be made in accordance with the provisions of the
Articles and By-laws of the Fund and Prospectus and Statement of Additional
Information relating to the Fund, 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 Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such
- 14 -
computation and determination. In computing the net asset value hereunder, the
Bank may rely in good faith upon information furnished to it by any Authorized
Person in respect of (i) the manner of accrual of the liabilities of the Fund
and in respect of liabilities of the Fund not appearing on its books of account
kept by the Bank, (ii) reserves, if any, authorized by the Board or that no such
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 Fund, 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 Fund except in
the case of its gross 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:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, 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 Fund 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
Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund
or the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; and
- 15 -
(f) any property or moneys of the Fund 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 Fund are such as may properly be held by the Fund
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, currently
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 gross 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
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 a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other person
by reason of any act or omission of any subcustodian and the Fund 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 any
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity. The Fund shall
pay all fees and expenses of any subcustodian.
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 Fund hereby
authorizes and instructs the Bank to employ as sub-custodians for the Fund'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
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign
- 16 -
banking institutions and foreign securities depositories to act as Selected
Foreign Sub-Custodians hereunder. Upon the receipt of Proper Instructions, the
Fund may instruct the Bank to cease the employment of any one or more such
Selected Foreign Sub-Custodians for maintaining custody of the Fund'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 Fund, assets of the Fund 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 Fund, the Fund 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 Fund 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 Fund, 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.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub- Custodian Agreement") shall be substantially in the
form previously made available to the Fund and shall provide that: (a) the
Fund'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
Fund'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 reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to the
Fund; (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 Fund, 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 Fund 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 Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund
- 17 -
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 Fund from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund 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 Fund.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian shall
be effected pursuant to Proper Instructions from the Fund 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 Fund agrees to hold
any such nominee harmless from any liability by 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 Fund and delivery of Foreign Portfolio Securities maintained for the
account of the Fund 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.
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 Fund 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 Fund 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 Fund 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 Fund or by the
applicable Foreign Sub-Custodian will comply with all applicable terms and
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
- 18 -
Fund 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 of omissions of any 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 Fund, 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.
(k) Tax Law. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be 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 Fund 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 Fund.
13.5 Fees and Expenses of Bank. The Fund will pay or reimburse
the Bank from time to time for any transfer taxes payable upon transfer of
Portfolio Securities made
- 19 -
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 any Schedule hereto, if any) including any indemnities for any
loss, liabilities or expense to the Bank as provided above. For the services
rendered by the Bank hereunder, the Fund 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 Fund for all reasonable expenses incurred in conjunction with termination of
this Agreement by the Fund.
13.6 Advances by Bank. The Bank may, in its sole discretion,
advance funds on behalf of the Fund to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by the Fund. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of the Fund's account with
the Bank, or for any other reason) this Agreement deems any such overdraft or
related indebtedness, a loan made by the Bank to the Fund payable on demand and
bearing interest at the current rate charged by the Bank for such loans unless
the Fund shall provide the Bank with agreed upon compensating balances. The Fund
agrees that the Bank shall have a continuing lien and security interest to the
extent of any overdraft or indebtedness, in and to any property at any time held
by it for the Fund's benefit or in which the Fund 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 Fund authorizes the Bank, in its
sole discretion, at any time to charge any overdraft or indebtedness, together
with interest due thereon against any balance of account standing to the credit
of the Fund on the Bank's books.
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 Fund held hereunder, and (ii) by the Fund in order
to give the Fund an opportunity to make suitable arrangements for a successor
custodian. At any time after the termination of this Agreement, the Fund will,
at its request, have access to the records of the Bank relating to the
performance of its duties as custodian.
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
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund 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 Fund 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 Fund held by the Bank to a bank or trust company of its own selection
- 20 -
which meets the 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 Fund 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
Fund 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 Fund may furnish the Bank with an order of the
Fund 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 Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund 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 Fund's Secretary and an opinion of
counsel tot he Fund in form and content satisfactory to the Bank.
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 Fund to
Guinness Flight Investment Funds, Inc.
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx X. Xxxxxxxxx
(b) In the case of notices sent to the Bank to
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx
or at such other place as such party may from time to time designate in
writing.
- 21 -
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 Fund,
such alteration or amendment will be authorized and approved by its Board.
18. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, 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.
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.
Guinness Flight Investment Funds, Inc.
By: /s/Xxxx Xxxxxxx
---------------------------
Name: Xxxx Xxxxxxx
Title: Treasurer
ATTEST:/s/
-----------------------------
Investors Bank & Trust Company
By: /s/Xxxxx X. Xxxxx
---------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
ATTEST:
-----------------------------
Date______
- 22 -
AMENDMENT AGREEMENT
between
GUINNESS FLIGHT INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
AMENDMENT AGREEMENT
AGREEMENT, dated as of September 5, 1997, by and between GUINNESS
FLIGHT INVESTMENT FUNDS, a Delaware business trust (the "Fund") and INVESTORS
BANK & TRUST COMPANY, a Massachusetts trust company (the "Bank").
WHEREAS, the Fund and the Bank entered into a Custodian Agreement dated
as of July 1, 1994 (the "Custodian Agreement"); and
WHEREAS, the Fund and the Bank desire to amend the Custodian Agreement
pursuant to Section 17 (Amendments) of the Custodian Agreement as set forth
below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendment of the Custodian Agreement.
(A) The document attached as Appendix A to this Amendment Agreement
shall constitute the Appendix A to the Custodian Agreement.
(B) Paragraph 13.5, Fees and Expenses of the Bank; is hereby amended as
follows:
(i) Beginning in line 7, replace "shall be" with "defined in
Appendix B hereto, and as"
(C) The document attached as Appendix B to this Amendment Agreement
shall constitute the Appendix B to the Custodian Agreement.
(The remainder of this page intentionally left blank)
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer, as the case may be, as of the date and
year first above written.
INVESTORS BANK & TRUST COMPANY
By: /s/Xxxxxxxx X. X'Xxxxxx
------------------------
Name: Xxxxxxxx X. X'Xxxxxx
Title: Director
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Treasurer
APPENDIX A
The portfolios covered by this Agreement as of September 6, 1997:
o Guinness Flight Asia Blue Chip Fund
o Guinness Flight Asia Small Cap Fund
o Guinness Flight China and Hong Kong Fund
o Guinness Flight Global Government Bond Fund
o Guinness Flight Mainland China Fund
Acknowledged: /s/ Xxxxxxxx X. X'Xxxxxx Date: 1/20/98
------------------------ -------------
For the Bank
/s/Xxxx X. Xxxxxxx Date: 1/26/98
------------------ -------------
For the Fund
APPENDIX A
TO CUSTODIAN AGREEMENT
The portfolios covered by this Agreement as of August , 1998
Guinness Flight Asia Blue Chip Fund
Guinness Flight Asia Small Cap Fund
Guinness Flight China & Hong Kong Fund
Guinness Flight Global Government Bond Fund
Guinness Flight Mainland China Fund
Guinness Flight New Europe Fund
Guinness Flight Index Fund
Acknowledged: ___________________________ Date: ____________
For the Bank
___________________________ Date: ____________
For the Funds
AMENDMENT AGREEMENT
between
GUINNESS FLIGHT INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
AMENDMENT AGREEMENT
AGREEMENT, dated as of February 4, 1998, by and between GUINNESS FLIGHT
INVESTMENT FUNDS, a Delaware business trust (the "Fund") and INVESTORS BANK &
TRUST COMPANY, a Massachusetts trust company (the "Bank").
WHEREAS, the Fund and the Bank entered into a Custodian Agreement dated
as of July 1, 1994 (the "Custodian Agreement"); and
WHEREAS, the Fund and the Bank desire to amend the Custodian Agreement
pursuant to Section 17 (Amendments) of the Custodian Agreement as set forth
below.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein set forth, the parties hereto agree as follows:
1. Amendment of the Custodian Agreement.
(A) The document attached as Appendix B to this Amendment Agreement supersedes
any and all existing fee schedules previously agreed to between the Bank and the
Fund and shall constitute the Appendix B to the Custodian Agreement effective
December 1, 1997.
(The remainder of this page intentionally left blank)
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized officer, as the case may be, as of the date and
year first above written.
INVESTORS BANK & TRUST COMPANY
By: /s/Xxxxxxxx X. X'Xxxxxx
------------------------
Name: Xxxxxxxx X. X'Xxxxxx
Title: Director
GUINNESS FLIGHT INVESTMENT FUNDS
By: /s/Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Treasurer
APPENDIX B
GUINNESS FLIGHT INVESTMENT FUNDS, INC.
FEE SCHEDULE EFFECTIVE DECEMBER 1, 1997
FUND ACCOUNTING, CALCULATION OF N.A.V., & CUSTODY
A. FUND ACCOUNTING, CALCULATION OF N.A.V.
o There will be an annual per fund fee for Fund Accounting and
Calculation of NAV as follows:
First year or up to $25 million in assets $30,000 per fund
Second year or up to $50 million in assets $40,000 per fund
Third year and beyond, or over $50 million in assets $50,000 per fund
This Fee Schedule shall apply to any new fund sponsored by Guinness Flight.
B. DOMESTIC CUSTODY
o The following basis point fees are based on all domestic assets for
which the Bank is custodian. This amount does not include
transactions. See Standard Transaction Costs (D).
ANNUAL FEE
All US. Domestic Assets 3.0 BASIS POINTS
C. FOREIGN SUBCUSTODIAN FEES
o Incremental basis point and transaction fees will be charged for all
foreign assets for which the Bank is custodian. The asset based fees
and transaction fees vary by country, based upon the attached global
custody fee schedule. Local duties, script fees, registration,
exchange fees, and other market charges are out-of-pocket.
o Investors Bank will require the fund to hold all international assets
at the subcustodian of our choice.
D. TRANSACTION COSTS
o DTC/Fed Book Entry $12
o Physical Securities 35
o options and Futures 18
o GNMA Securities 40
o Principal Paydown 5
o Foreign Currency 18**
o Outgoing Wires 8
o Incoming Wires 6
**There are no transaction charges for F/X contracts executed by Investors Bank.
MISCELLANEOUS
A. OUT-OF-POCKET
o These charges will consist of actual and reasonable expenses incurred
by the Bank associated with:
-Pricing and Verification Services -Legal Costs
-Printing, Delivery & Postage -Third Party Review
-Telecommunications -Forms & Supplies
-Extraordinary Travel Expenses -Customized Development
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. SYSTEMS
o The details of any systems work will be determined after a thorough
business analysis. Systems work will be billed on a time and material
basis.
D. PAYMENT
o The above fees will be charged against the fund's custodian checking
account five business days after the invoice is mailed.
E. SECURITIES LENDING AND FOREIGN EXCHANGE
o The assumption is made that the Bank will perform securities lending,
foreign exchange and cash management for the portfolios. Securities
lending revenue is split with the funds and the Bank on a 60/40%
basis: 60% going to the funds.
(The remainder of this page intentionally left blank)
APPENDIX B (CONT'D)
GLOBAL CUSTODY FEE SCHEDULE FOR GUINNESS FLIGHT INVESTMENT FUNDS
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Argentina* 22.00 $75.00
Australia 5.00 60.00
Austria 7.00 60.00
Bangladesh (n) 41.00 150.00
Belgium 7.00 60.00
Bahrain (n) 41.00 140.00
Botswana (n) 50.00 175.00
Brazil** 29.00 80.00
Canada 5.00 30.00
Chile** 24.00 100.00
China 18.00 60.00
Colombia*** 24.00 100.00
Croatia (n) 45.00 125.00
Cyprus (n) 50.00 150.00
Czech Republic (n) 20.00 75.00
Denmark 5.00 55.00
Ecuador (n) 45.00 100.00
Egypt (n) 41.00 100.00
Estonia (n) 30.00 125.00
Euroclear - Internal 5.00 20.00
Euroclear - Cross Border 5.00 60.00
Finland 7.00 70.00
France 5.00 60.00
Germany 5.00 30.00
Ghana (n) 50.00 200.00
Greece 31.00 110.00
Hong Kong 8.00 60.00
Hungary 42.00 120.00
India**** 45.00 50BP
Indonesia 13.00 60.00
Ireland (n) 7.00 60.00
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Israel (n) 20.00 60.00
Italy 5.00 50.00
Japan 5.00 20.00
Jordan 41.00 120.00
Kenya(n) 50.00 200.00
Korea 13.00 60.00
Latvia (n) 30.00 125.00
Lebanon (n) 41.00 140.00
Lithuania (n) 20.00 75.00
Lithuanian T-Bills (n) 25.00 75.00
Luxembourg 7.00 60.00
Malaysia 10.00 70.00
Mauritius (n) 41.00 140.00
Mexico 10.00 40.00
Morocco (n) 40.00 150.00
Namibia (n) 50.00 200.00
Netherlands 5.00 40.00
New Zealand 5.00 60.00
Norway 7.00 90.00
Oman (n) 41.00 140.00
Pakistan 41.00 120.00
Peru 45.00 120.00
Philippines 13.00 60.00
Poland (n) 50.00 150.00
Poland T-Bills (n) 29.00 110.00
Portugal 8.00 125.00
Romania(n) 45.00 125.00
Russia - Equities (n) 41.00 250.00
Russia - Min Fins (n) 35.00 140.00
Singapore 10.00 65.00
Slovakia (n) 20.00 75.00
Slovenia (n) 41.00 100.00
South Africa (n) 7.00 40.00
Spain - Equity & Corp Debt 5.00 55.00
COUNTRY BP CHARGE TRANSACTION CHARGE
(POINTS) ($$)
Spain - Gov't Debt 5.00 55.00
Sri Lanka 13.00 60.00
Swaziland (n) 50.00 200.00
Sweden 5.00 40.00
Switzerland 5.00 60.00
Taiwan 13.00 60.00
Thailand 10.00 60.00
Turkey 15.00 100.00
UK 5.00 50.00
Uruguay (n) 50.00 150.00
Venezuela** 24.00 100.00
Zambia (n) 50.00 200.00
Zimbabwe (n) 50.00 175.00
* Bonds Billed at Residual Value
** Local Administration Fee Included in Custody Fee
*** 20 BP Local Administration Charge Applied to Trades
**** Trades Billed at 50 BP
(n) = New Country not Listed on Old Fee Schedule
Out-of-Pocket charges are passed through as actuals in all markets.
