Exhibit (g)(1)
CUSTODY AGREEMENT
This AGREEMENT, dated as of November 1, 2001, by and between the AHA
Investment Funds, Inc. (the "Corporation"), a corporation organized under the
laws of the state of Maryland, and FIRSTAR BANK, N.A., a national banking
association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Corporation is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the"1940 Act");
and
WHEREAS, the Corporation is authorized to create separate series, each with
its own separate investment portfolio; and
WHEREAS, the Corporation desires to retain Firstar Bank, N.A. to act as
Custodian for each series of the Corporation listed on Exhibit C attached
hereto, (each hereinafter referred to as a "Fund" and collectively the "Funds"),
as may be amended from time to time.
WHEREAS, the Corporation desires that each Fund's Securities and cash be
held and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(1) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Corporation and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly authorized
by resolution of the Board of Directors to give Oral Instructions and
Written Instructions on behalf of a Fund and named in Exhibit A hereto
or in such resolutions of the Board of Directors, certified by an
Officer, as may be received by the Custodian from time to time.
1.2 "Board of Directors" shall mean the Directors from time to time
serving under the Corporation's Articles of Incorporation, as from
time to time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular Xx. 000, 00 XXX 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies
as are substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the
Corporation computes the net asset value of Shares of a Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name of
the Corporation, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "Officer" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Corporation.
1.8 "Oral Instructions" shall mean instructions that set forth the
specific transaction or type of transaction involved, orally
transmitted to and accepted by the Custodian because such instructions
are: (i) in good faith, reasonably believed by the Custodian to have
been given by an Authorized Person, (ii) recorded and kept among the
records of the Custodian made in the ordinary course of business and
(iii) orally confirmed by the Custodian. The Corporation shall cause
all Oral Instructions to be confirmed by Written Instructions prior to
the end of the next Business Day. If such Written Instructions
confirming Oral Instructions are not received by the Custodian prior
to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Corporation. If Oral
Instructions vary from the Written Instructions that purport to
confirm them, the Custodian shall promptly notify the Corporation of
such variance but such Oral Instructions will govern unless the
Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written
Instructions when deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of
the Board of Directors, certified by an Officer, specifically
approving the use of such clearing agency as a depository for a Fund)
any other clearing agency registered with the Securities and Exchange
Commission (the "SEC") under Section 17A of the Securities and
Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of
any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed
securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to
receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and
to service.
1.12 "Shares" shall mean, with respect to a Fund, the units of beneficial
interest issued by the Corporation on account of a Fund.
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii)
any "Eligible Foreign Custodian," as that term is defined in Rule
17f-5 under the 1940 Act, having a contract with the Custodian which
the Custodian has determined will provide reasonable care of assets of
each Fund based on the standards specified in Section 3.3 below. Such
contract shall include provisions that provide: (i) for
indemnification or insurance arrangements (or any combination of the
foregoing) such that each Fund will be adequately protected against
the risk of loss of assets held in accordance with such contract; (ii)
that each Fund's assets will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their
safe custody or administration, in the case of cash deposits, liens or
rights in favor of creditors of the Sub-Custodian arising under
bankruptcy, insolvency, or similar laws; (iii) that beneficial
ownership for each Fund's assets will be freely transferable without
the payment of money or value other than for safe custody or
administration; (iv) that adequate records will be maintained
identifying the assets as belonging to each Fund or as being held by a
third party for the benefit of each Fund; (v) that the Corporation's
independent public accountants will be given access to those records
or confirmation of the contents of those records; and (vi) that each
Fund will receive periodic reports with respect to the safekeeping of
its assets, including, but not limited to, notification of any
transfer to or from the Fund's account or a third party account
containing assets held for the benefit of the Fund. Such contract may
contain, in lieu of any or all of the provisions specified above, such
other provisions that the Custodian determines will provide, in their
entirety, the same or a greater level of care and protection for Fund
assets as the specified provisions, in their entirety.
1.14 "Written Instructions" shall mean (i) written communications actually
received by the Custodian and signed by one or more Authorized
Persons, or (ii) communications by telex or any other such system from
one or more persons reasonably believed in good faith by the Custodian
to be Authorized Persons, or (iii) communications between
electro-mechanical or electronic devices provided that the use of such
devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Directors, a copy of which,
certified by an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Corporation hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the
possession of each Fund at any time during the period of this
Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the
execution of the Agreement to the Custodian by the Corporation:
a. A copy of the Articles of Incorporation certified by the
Secretary;
b. A copy of the Bylaws of the Corporation certified by the
Secretary;
c. A copy of the resolution of the Board of Directors of the
Corporation appointing the Custodian, certified by the
Secretary;
d. A copy of the then current Prospectus of each Fund; and
e. A certification of the Chairman and Secretary of the
Corporation setting forth the names and signatures of the
current Officers of the Corporation and other Authorized
Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Corporation
agrees to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer
Agent of a Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of each Fund (other than Securities
maintained in a Securities Depository or Book-Entry System pursuant to
Section 3.3) shall be physically segregated from other Securities and
non-cash property in the possession of the Custodian (including the
Securities and non-cash property of the other series of the
Corporation) and shall be identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the
Corporation coupled with the name of each Fund, subject only to draft
or order of the Custodian acting in accordance with this Agreement, in
which the Custodian shall enter and carry all Securities subject to
the provisions of this Agreement, cash and other assets of such Fund
which are delivered to it.
3.3 Compliance with SEC Rule 17f-5 and Rule 17f-7. (a) The Corporation, by
resolution adopted by its Board of Directors, hereby delegates to the
Custodian, with respect to the Funds, subject to Section (b) of Rule
17f-5 of the 1940 Act, the responsibilities set forth in this Section
3.3 with respect to any of a Fund's investments for which the primary
market is outside the United States and such cash and cash equivalents
as are reasonably necessary to effect such Fund's transactions in such
investments. The Custodian hereby accepts such delegation, and in
connection with such delegation shall appoint one or more agents to
act as a Sub-Custodian on behalf of each Fund, provided however, that
the appointment of any Sub-Custodian shall be subject to the approval
of the Corporation's Board of Directors, shall be at the Custodian's
expense and shall not relieve the Custodian of any of its obligations
or duties under this Agreement.
(b) If, after the Board of Directors' initial approval of the
Sub-Custodian appointed in connection with this Agreement, the
Custodian wishes to appoint another Sub-Custodian on behalf of
the Corporation, the Custodian will so notify the Corporation and
provide it with information reasonably necessary to determine (i)
such Sub-Custodian's eligibility under Rule 17f-5 and (ii) the
eligibility of each "Eligible Securities Depository" (as defined
in Rule 17f-7(b)(1)), intended to be used by such Sub-Custodian.
The information to be provided shall include, but shall not be
limited to, a copy of the proposed agreement with such
Sub-Custodian, to which the Custodian and Corporation shall be
parties and an analysis of the custody risks associated with
maintaining a Fund's investments with each Eligible Securities
Depository to be used by such Sub-Custodian. The Board of
Directors shall at the meeting next following the Corporation's
receipt of such notice and information give an approval or
disapproval of the proposed Sub-Custodian.
(c) The Custodian shall establish a system to monitor (i) the
appropriateness of maintaining a Fund's assets with a particular
Sub-Custodian, and (ii) the contract governing the arrangements
with such Sub-Custodian. At the end of each calendar quarter, or
at such times as the Board of Directors deems reasonable or
appropriate, the Custodian shall provide written reports
notifying the Board of Directors of the placement of the
Securities and cash of each Fund with each Sub-Custodian and of
any material change in a foreign custody arrangement. In the
event the Custodian determines that the custody arrangements with
the Sub-Custodian are no longer appropriate, the Custodian shall
notify the Board and shall promptly take such steps as may be
required to withdraw assets of any Fund from any Sub-Custodian
that has ceased to meet the requirements of Rule 17f-5.
(d) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Corporation that it agrees to
exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of property of each
Fund. The Custodian further warrants that a Fund's assets will be
subject to reasonable care, based on the standards applicable to
custodians in the relevant market, if maintained with each
Sub-Custodian, after considering all factors relevant to the
safekeeping of such assets, including, without limitation: (i)
the Sub-Custodian's practices, procedures, and internal controls,
for certificated securities (if applicable), the method of
keeping custodial records, and the security and data protection
practices; (ii) whether the Sub-Custodian has the requisite
financial strength to provide reasonable care for Fund assets;
(iii) the Sub-Custodian's general reputation and standing and, in
the case of an Eligible Securities Depository, the Eligible
Securities Depository's operating history and number of
participants; and (iv) whether the Fund will have jurisdiction
over and be able to enforce judgments against the Sub-Custodian,
such as by virtue of the existence of any offices of the
Sub-Custodian in the United States or the Sub-Custodian's consent
to service of process in the United States.
3.4 Delivery of Assets to Custodian. The Corporation shall deliver, or
cause to be delivered, to the Custodian all of a Fund's Securities,
cash and other assets, including (a) all payments of income, payments
of principal and capital distributions received by such Fund with
respect to such Securities, cash or other assets owned by such Fund at
any time during the period of this Agreement, and (b) all cash
received by such Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of a Fund in a Securities
Depository or in a Book-Entry System in accordance with applicable
Federal Reserve Board and SEC rules and regulations, subject to the
following provisions:
(a) Prior to a deposit of Securities of a Fund in any Securities
Depository or Book-Entry System, the Corporation shall deliver to
the Custodian a resolution of the Board of Directors, certified
by an Officer, authorizing and instructing the Custodian on an
on-going basis to deposit in such Securities Depository or
Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to
the extent possible and practical in connection with its
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of collateral
consisting of Securities.
(b) Securities of a Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository shall,
by book-entry, identify such Securities as belonging to such
Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that such Securities have been
transferred to the Depository Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of such Fund. If Securities sold by a
Fund are held in a Book-Entry System or Securities Depository,
the Custodian shall transfer such Securities upon (i) receipt of
advice from the Book-Entry System or Securities Depository that
payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of such Fund. Upon request, the Custodian shall
provide the Corporation on behalf of a Fund, confirmation of each
transfer to or from the Fund's account in the form of a written
advice or notice and shall provide the Corporation on a Fund's
behalf, copies of daily transaction sheets reflecting each day's
transactions in the Book-Entry System or Securities Depository
for the Fund.
(e) The Custodian shall provide the Corporation with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of a Fund are kept) on
the accounting system, internal accounting controls and
procedures for safeguarding Securities deposited in such
Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Corporation for any loss or
damage to a Fund resulting (i) from the use of a Book-Entry
System or Securities Depository by reason of any bad faith,
negligence or willful misconduct on the part of Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above or any of
its or their employees, or (ii) from failure of Custodian or any
such Sub-Custodian to enforce effectively such rights as it may
have against a Book-Entry System or Securities Depository. At its
election, the Corporation shall be subrogated to the rights of
the Custodian with respect to any claim against a Book-Entry
System or Securities Depository or any other person from any loss
or damage to a Fund arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that such
Fund has not been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from a Fund
Custody Account but only in the following cases:
(a) For the purchase of Securities for a Fund but only in accordance
with Section 4.1 of this Agreement and only (i) in the case of
Securities (other than options on Securities, futures contracts
and options on futures contracts), against the delivery to the
Custodian (or any Sub-Custodian appointed pursuant to Section 3.3
above) of such Securities registered as provided in Section 3.9
below or in proper form for transfer, or if the purchase of such
Securities is effected through a Book-Entry System or Securities
Depository, in accordance with the conditions set forth in
Section 3.5 above; (ii) in the case of options on Securities,
against delivery to the Custodian (or such Sub-Custodian) of such
receipts as are required by the customs prevailing among dealers
in such options; (iii) in the case of futures contracts and
options on futures contracts, against delivery to the Custodian
(or such Sub-Custodian) of evidence of title thereto in favor of
such Fund or any nominee referred to in Section 3.9 below; and
(iv) in the case of repurchase or reverse repurchase agreements
entered into between the Corporation on behalf of a Fund and a
bank which is a member of the Federal Reserve System or between
the Corporation on behalf of a Fund and a primary dealer in U.S.
Government securities, against delivery of the purchased
Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by a Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Corporation to be paid by a Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of such Fund: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian,
director and legal fees; and other operating expenses of the
Fund; in all cases, whether or not such expenses are to be in
whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Corporation, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD, relating
to compliance with rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by a Fund;
(g) For transfer in accordance with the provision of any agreement
among the Corporation, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by a Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Directors, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver
Securities from a Fund Custody Account but only in the following
cases:
(a) Upon the sale of Securities for the account of such Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such case,
the new Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the
Corporation shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any borrowings by a
Fund requiring a pledge of assets by the Corporation on behalf of
such Fund, but only against receipt by the Custodian of the
amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Corporation or a
Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Corporation on behalf of a Fund, the Custodian and a
broker-dealer registered under the 1934 Act and a member of the
NASD, relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Corporation, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
(n) Upon receipt of instructions from a Fund's transfer agent, for
delivery to such transfer agent or to the holders of shares in
connection with distributions in kind as may be described from
time to time in such Fund's currently effective prospectus and
statement of additional information, in satisfaction of requests
for repurchase or redemption; or
(o) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Directors, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise instructed
by the Corporation, the Custodian shall with respect to all Securities
held for a Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by
law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Corporation at such time, in such
manner and containing such information as is prescribed by the
IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions or as directed by the Board of Directors, attend to
all non-discretionary details in connection with the sale,
exchange, substitution, purchase, transfer and other dealings
with Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by
the Custodian in that form, provided that any such Securities shall be
held in a Book-Entry System if eligible therefor. All other Securities
held for a Fund may be registered in the name of the Fund, the
Custodian, or any Sub-Custodian appointed pursuant to Section 3.3
above, or in the name of any nominee of any of them, or in the name of
a Book-Entry System, Securities Depository or any nominee of either
thereof. The Corporation shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form
for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or
Securities Depository, any Securities registered in the name of the
Fund.
3.10 Records.
(a) The Custodian shall maintain, for each Fund, complete and
accurate records with respect to Securities, cash or other
property held for such Fund, including (i) journals or other
records of original entry containing an itemized daily record in
detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other
records) reflecting (A) Securities in transfer, (B) Securities in
physical possession, (C) monies and Securities borrowed and
monies and Securities loaned (together with a record of the
collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and
interest receivable; and (iii) canceled checks and bank records
related thereto. The Custodian shall keep such other books and
records of each Fund as the Corporation shall reasonably request,
or as may be required by the 1940 Act, including, but not limited
to, Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall (i)
be maintained in a form acceptable to the Corporation and in
compliance with rules and regulations of the SEC, (ii) be the
property of the Corporation and at all times during the regular
business hours of the Custodian be made available upon request
for inspection by duly authorized officers, employees or agents
of the Corporation and employees or agents of the SEC, and (iii)
if required to be maintained by Rule 31a-1 under the 1940 Act, be
preserved for the periods prescribed in Rule 31a-2 under the 0000
Xxx.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Corporation
with a daily activity statement and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At
least monthly or as may reasonably be requested, the Custodian shall
furnish the Corporation with a detailed statement of the Securities
and moneys held by the Custodian and the Sub-Custodians for each Fund
under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the
Corporation with such reports, as the Corporation may reasonably
request from time to time, on the internal accounting controls and
procedures for safeguarding Securities, which are employed by the
Custodian or any Sub-Custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of a Fund,
to be promptly executed by the registered holder of such Securities,
without indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Corporation such proxies, all
proxy soliciting materials and all notices relating to such
Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly deliver
to the Corporation all information received by the Custodian
pertaining to Securities being held by a Fund with respect to optional
tender or exchange offers, calls for redemption or purchase, or
expiration of rights as described in the Standards of Service Guide
attached as Exhibit B. If the Corporation desires to take action with
respect to any tender offer, exchange offer or other similar
transaction, the Corporation shall notify the Custodian at least five
Business Days prior to the date on which the Custodian is to take such
action. The Corporation will provide or cause to be provided to the
Custodian all relevant information for any Security which has unique
put/option provisions at least five Business Days prior to the
beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF A FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities for
a Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities,
and the title or other description thereof, (b) the number of shares,
principal amount (and accrued interest, if any) or other units
purchased, (c) the date of purchase and settlement, (d) the purchase
price per unit, (e) the total amount payable upon such purchase, and
(f) the name of the person to whom such amount is payable. The
Custodian shall upon receipt of such Securities purchased by the Fund
pay out of the moneys held for the account of the Fund the total
amount specified in such Written Instructions to the person named
therein. The Custodian shall not be under any obligation to pay out
moneys to cover the cost of a purchase of Securities for the Fund, if
in the Fund Custody Account there is insufficient cash available to
the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for the purchase of Securities for
a Fund is made by the Custodian in advance of receipt of the
Securities purchased but in the absence of specified Written
Instructions to so pay in advance, the Custodian shall be liable to
the Fund for such Securities to the same extent as if the Securities
had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a Fund,
Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title
or other description thereof, (b) the number of shares, principal
amount (and accrued interest, if any), or other units sold, (c) the
date of sale and settlement, (d) the sale price per unit, (e) the
total amount payable upon such sale, and (f) the person to whom such
Securities are to be delivered. Upon receipt of the total amount
payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in
such Written Instructions and provide timely notice to the Fund and
the transfer agent of any receipt by it of payments for shares of such
Fund. Subject to the foregoing, the Custodian may accept payment in
such form as mutually agreed upon from time to time by the Corporation
and the Custodian, and may deliver Securities and arrange for payment
in accordance with the customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, upon receipt of
Proper Instructions to deliver Securities against payment, shall be
entitled, if in accordance with generally accepted market practice, to
deliver such Securities prior to actual receipt of final payment
therefor. In any such case, the Fund shall bear the risk that final
payment for such Securities may not be made or that such Securities
may be returned or otherwise held or disposed of by or through the
person to whom they were delivered, and absent any bad faith,
negligence or willful misconduct, the Custodian shall have no
liability for any for the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from time
to time, the Custodian may credit a Fund Custody Account, prior to
actual receipt of final payment thereof, with (i) proceeds from the
sale of Securities which it has been instructed to deliver against
payment, (ii) proceeds from the redemption of Securities or other
assets of the Fund, and (iii) income from cash, Securities or other
assets of the Fund. Any such credit shall be conditional upon actual
receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. The Custodian may, in its
sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt
of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt
of all final payments in anticipation of which funds were credited to
the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its sole
discretion and from time to time, advance funds to the Corporation to
facilitate the settlement of a Fund's transactions in such Fund's
Custody Account. Any such advance shall be repayable immediately upon
demand made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the purpose
in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares
of a Fund, the Custodian shall wire each amount specified in such
Proper Instructions to or through such bank as the Corporation may
designate with respect to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount
paid by the Custodian to such bank in accordance with such Proper
Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of each Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Corporation, the Custodian and a broker-dealer registered under
the 1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased, sold or written by a Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by a Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by a Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase
agreements and when-issued, delayed delivery and firm commitment
transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Directors, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for one Fund only. All Proper Instructions relating
to a segregated account shall specify the Fund.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of good
faith and reasonable care in carrying out its obligations under this
Agreement, and shall be without liability to the Corporation or any
Fund for any loss, damage, cost, expense (including attorneys' fees
and disbursements), liability or claim unless such loss, damage, cost,
expense, liability or claim arises from negligence, bad faith or
willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters,
and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. The Custodian shall promptly notify
the Corporation of any action taken or omitted by the Custodian
pursuant to advice of counsel. The Custodian shall not be under any
obligation at any time to ascertain whether the Corporation or the
Fund is in compliance with the provisions of the Corporation's charter
documents or by-laws, or its investment objectives and policies as
then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Fund or any
money represented by a check, draft or other instrument for the
payment of money, until the Custodian or its agents actually receive
such cash or collect on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that it
is in the exercise of good faith and reasonable care, the Custodian
shall not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received or delivered by it
pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or
property due and payable with respect to Securities held for a Fund if
such Securities are in default or payment is not made after due demand
or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in
writing received by it and reasonably believed by it to be genuine.
The Custodian shall be entitled to rely upon any Oral Instructions and
any Written Instructions actually received by it and reasonably
believed to be genuine pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set
forth in this Agreement, and no covenant or obligation shall be
implied in this Agreement against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Corporation to
keep the books of account of each Fund and/or compute the value of the
assets of each Fund. The Custodian shall take all such reasonable
actions as the Corporation may from time to time request to enable the
Corporation to obtain, from year to year, favorable opinions from the
Corporation's independent accountants with respect to the Custodian's
activities hereunder in connection with (a) the preparation of the
Corporation's reports on Form N-1A and Form N-SAR and any other
reports required by the SEC, and (b) the fulfillment by the
Corporation of any other requirements of the SEC.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Corporation. The Corporation shall indemnify and
hold harmless the Custodian and any Sub-Custodian appointed pursuant
to Section 3.3 above, and any nominee of the Custodian or of such
Sub-Custodian, from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including,
without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities
and/or banking laws) or claim arising directly or indirectly (a) from
the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the
advice of the Corporation, or (ii) upon Proper Instructions, or (c)
generally, from the performance of its obligations under this
Agreement or any sub-custody agreement with a Sub-Custodian appointed
pursuant to Section 3.3 above, provided that neither the Custodian nor
any such Sub-Custodian shall be indemnified and held harmless from and
against any such loss, damage, cost, expense, liability or claim
arising from the Custodian's or such Sub-Custodian's negligence, bad
faith or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify and hold
harmless the Corporation, its officers, directors and agents from and
against any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including without limitation, liability
arising under the Securities Act of 1933, the 1934 Act, the 1940 Act,
and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the
Custodian or any Sub-Custodian appointed pursuant to Section 3.3
above, or any nominee of the Custodian or of such Sub-Custodian.
8.3 Indemnity to be Provided. If the Corporation requests the Custodian to
take any action with respect to Securities, which may, in the opinion
of the Custodian, result in the Custodian or its nominee becoming
liable for the payment of money or incurring liability of some other
form, the Custodian shall not be required to take such action until
the Corporation shall have provided indemnity therefor to the
Custodian in an amount and form satisfactory to the Custodian.
8.4 Security. If the Custodian advances cash or Securities to a Fund for
any purpose, either at the Corporation's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or
its nominee incurs, in connection with its performance under this
Agreement, any loss, damage, cost, expense (including attorneys' fees
and disbursements), liability or claim (except such as may arise from
its or its nominee's negligence, bad faith or willful misconduct),
then, in any such event, any property at any time held for the account
of a Fund shall be security therefor, and should the Fund fail
promptly to repay or indemnify the Custodian, the Custodian shall be
entitled to utilize available cash of such Fund and to dispose of
other assets of such Fund to the extent necessary to obtain
reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Corporation shall be liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against a Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated
as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than sixty (60) days after
the date of the giving of such notice. If a successor custodian shall
have been appointed by the Board of Directors, the Custodian shall,
upon receipt of a notice of acceptance by the successor custodian, on
such specified date of termination (a) deliver directly to the
successor custodian all Securities (other than Securities held in a
Book-Entry System or Securities Depository) and cash then owned by
each Fund and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an
account of or for the benefit of each Fund at the successor custodian,
provided that the Corporation shall have paid to the Custodian all
fees, expenses and other amounts to the payment or reimbursement of
which it shall then be entitled. Upon such delivery and transfer, the
Custodian shall be relieved of all obligations under this Agreement.
The Corporation may at any time immediately terminate this Agreement
in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Additionally, the Corporation may remove
certain Funds as parties to this Agreement upon such Funds' conversion
to a feeder fund in a master/feeder fund structure; and the Custodian
hereby waives the sixty (60) day notice requirement pursuant to this
Section; however, the Corporation shall provide reasonable notice of
the anticipated conversion date. All representations in Section 14.9
of this Agreement shall survive the termination of this Agreement.
10.3 Failure to Appoint Successor Custodian. If a successor custodian is
not designated by the Corporation on or before the date of termination
specified pursuant to Section 10.1 above, then the Custodian shall
have the right to deliver to a bank or corporation company of its own
selection, which (a) is a "bank" as defined in the 1940 Act and (b)
has aggregate capital, surplus and undivided profits as shown on its
then most recent published report of not less than $25 million, all
Securities, cash and other property held by Custodian under this
Agreement and to transfer to an account of or for each Fund at such
bank or trust company all Securities of the Fund held in a Book-Entry
System or Securities Depository. Upon such delivery and transfer, such
bank or trust company shall be the successor custodian under this
Agreement and the Custodian shall be relieved of all obligations under
this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Corporation and the Custodian. The fees and other charges in effect
on the date hereof and applicable to each Fund are set forth in Exhibit D
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Corporation hereunder
shall not be binding upon any of the Directors, shareholders, nominees,
officers, agents or employees of the Corporation personally, but shall bind only
the property of the Corporation. The execution and delivery of this Agreement
have been authorized by the Directors, and this Agreement has been signed and
delivered by an authorized officer of the Corporation, acting as such, and
neither such authorization by the Directors nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
corporation property of the Corporation.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Corporation:
----------------------
AHA Investment Funds, Inc.
000 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
To Custodian:
--------------------
Firstar Bank, N.A.
000 Xxxxxx Xxxxxx, X.X. XX-XX-00XX
Xxxxxxxxxx, Xxxx 00000
Attention: Mutual Fund Custody Services
Telephone: (513) 632_____
Facsimile: (000) 000-0000
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Corporation shall not circulate any
printed matter which contains any reference to Custodian without the
prior written approval of Custodian, excepting printed matter
contained in the prospectus or statement of additional information for
a Fund and such other printed matter as merely identifies Custodian as
custodian for a Fund. The Corporation shall submit printed matter
requiring approval to Custodian in draft form, allowing sufficient
time for review by Custodian and its counsel prior to any deadline for
printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right
hereunder shall not preclude the exercise of any other right, and the
remedies provided herein are cumulative and not exclusive of any
remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each
of which shall be deemed an original but all of which together shall
constitute but one and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions
shall not be affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall
not be assignable by either party hereto without the written consent
of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or
construction of any provision of this Agreement.
14.9 Confidentiality. Neither the Custodian nor the Corporation shall
disclose or use nonpublic personal information (as defined by Rule
3(t) of Regulation S-P under the federal securities laws) provided by
the other party, except as necessary to carry out the purposes for
which such information is provided, including information that is used
in accordance with Rules 14 and 15 of Regulation S-P in the ordinary
course of business.
14.10Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supercedes any prior agreement with
respect to the subject matter hereof, whether oral or written.
14.11Additional Funds. In the event the Corporation establishes additional
series or classes of shares than those listed on the attached Exhibit
C, and the Corporation desires to have Custodian act as custodian to
such series or class under the terms hereof, the Corporation shall so
notify Custodian in writing and if Custodian agrees in writing to
provide such services, such series or class shall be covered by this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST:
/s/ Xxxxxxxx Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
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Secretary
ATTEST: FIRSTAR BANK, N.A.
By: /s/ Xxx Xxxxxxx
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