EXHIBIT g
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
THE XXXXXXX/XXXXXX INVESTMENT GROUP
JUNE __, 2002
TABLE OF CONTENTS
SECTION PAGE
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DEFINITION...................................................................................2
ARTICLE I - CUSTODY..........................................................................5
1. Appointment of Custodian............................................................5
2. Custody of Cash and Securities......................................................5
3. Settlement of Fund Transactions....................................................10
4. Lending of Securities..............................................................11
5. Persons Having Access to Assets of the Fund........................................11
6. Standard of Care; Scope of Custodial Responsibilities...............................11
7. Appointment of Subcustodians.......................................................13
8. Overdraft Facility and Security for Payment.........................................13
9. Tax Obligations ....................................................................14
ARTICLE II - FOREIGN CUSTODY MANAGER SERVICES...............................................14
1. Delegation..........................................................................14
2. Changes to Appendix C...............................................................15
3. Reports to Board....................................................................15
4. Monitoring System...................................................................15
5. Standard of Care....................................................................15
6. Use of Securities Depositories......................................................15
ARTICLE III - INFORMATION SERVICES..........................................................15
1. Risk Analysis.......................................................................15
2. Monitoring of Securities Depositories...............................................15
3. Use of Agents.......................................................................16
4. Exercise of Reasonable Care.........................................................16
5. Liabilities and Warranties..........................................................16
ARTICLE IV - GENERAL PROVISIONS.............................................................16
1. Compensation........................................................................16
2. Insolvency of Foreign Custodians....................................................17
3. Liability for Depositories..........................................................17
4. Damages.............................................................................17
5. Indemnification; Liability of the Fund..............................................17
6. Force Majeure.......................................................................17
7. Termination.........................................................................17
8. Inspection of Books and Records.....................................................18
9. Confidentiality.....................................................................18
10. Cooperation with Accountants........................................................18
11. Disaster Recovery...................................................................19
12. Enforcement of Obligations..........................................................19
13. Miscellaneous.......................................................................19
APPENDIX A.....Authorized Persons...........................................................22
APPENDIX B.....Fund Officers................................................................23
APPENDIX C.....Selected Countries...........................................................24
APPENDIX D.....The Xxxxxx & Rygel Investment Group Mutual Funds.............................25
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
This MUTUAL FUND CUSTODY AND SERVICES AGREEMENT is effective as of June
__, 2002, and is between THE XXXXXXX/XXXXXX INVESTMENT GROUP (the "Fund"), a
business trust organized under the laws of the Commonwealth of Massachusetts,
having its principal office and place of business at 000 Xxxxx Xxxxx Xxxxxx, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, and BOSTON SAFE DEPOSIT AND TRUST COMPANY, (the
"Custodian") a Massachusetts trust company with its principal place of business
at Xxx Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Fund and the Custodian desire to set forth their agreement
with respect to the custody of the Fund's Securities and cash and the processing
of Securities transactions;
WHEREAS, the Board desires to delegate certain of its responsibilities for
performing the services set forth in paragraphs (c)(1), (c)(2) and (c)(3) of
Rule 17f-5 to the Custodian as a Foreign Custody Manager; and
WHEREAS, the Custodian agrees to accept such delegation with respect to
Assets, including those held by Foreign Custodians in the Selected Countries as
set forth in jurisdictions listed on Appendix C as set forth in Article II;
WHEREAS, the Custodian agrees to perform the function of a Primary
Custodian under Rule 17f-7;
NOW THEREFORE, the Fund and the Custodian agree as follows:
DEFINITIONS
The following words and phrases, unless the context requires otherwise, shall
have the following meanings:
1. "ACT": the Investment Company Act of 1940 and the Rules and
Regulations thereunder, all as amended from time to time.
2. "AGREEMENT": this Mutual Fund Custody and Services Agreement and any
amendments thereto.
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3. "ASSETS": any of the Fund's investments, including foreign
currencies and investments for which the primary market is outside
the United States, and such cash and cash equivalents as are
reasonably necessary to effect the Fund's transactions in such
investments.
4. "AUTHORIZED PERSON": the Chairman of the Fund's Board, its
President, and any Vice President, Secretary, Treasurer or any other
person, whether or not any such person is an officer or employee of
the Fund, duly authorized by the Board to add or delete
jurisdictions pursuant to Article II and to give Written
Instructions or Oral Instructions on behalf of the Fund who is
listed in the Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to time.
5. "BOARD": the Board of Trustees of the Fund.
6. "BOOK-ENTRY SYSTEM": the Federal Reserve/Treasury book-entry system
for United States and federal agency Securities, its successor or
successors and its nominee or nominees.
7. "BUSINESS DAY": any day on which the Fund, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are open
for business.
8. "CERTIFICATE": any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to the
Custodian, which is actually received by the Custodian and signed on
behalf of the Fund by an Authorized Persons or Persons designated by
the Board to issue a Certificate.
9. "COUNTRY RISK": all factors reasonably related to the systemic risk
of holding assets in a particular country including, but not limited
to, such country's financial infrastructure (including Securities
Depositories), prevailing or developing custody and settlement
practices and laws applicable to the safekeeping and recovery of
Assets held in custody.
10. "ELIGIBLE SECURITIES DEPOSITORY": the meaning of the term set forth
in Rule 17f-7(b)(1).
11. "FOREIGN CUSTODIAN": (a) a banking institution or trust company
incorporated or organized under the laws of a country other than the
United States, that is regulated as such by the country's government
or an agency of the country's government; (b) a majority-owned
direct or indirect subsidiary of a U.S. Bank or bank-holding
company; or (c) any entity other than a Securities Depository with
respect to which exemptive or no-action relief has been granted by
the Securities and Exchange Commission. For the avoidance of doubt,
the term "Foreign Custodian" shall not include Euroclear,
Clearstream, Bank One or any other transnational system for the
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central handling of securities or equivalent book-entries regardless
of whether or not such entities or their service providers are
acting in a custodial capacity with respect to Assets, Securities or
other property of the Fund.
12. "FUND": shall include the portfolios listed in Appendix D hereto, as
amended from time to time pursuant to Article IV, Section 9(d), of
which the Fund is the sponsor.
13. "MASTER TRUST AGREEMENT": the Declaration of Trust of the Fund,
dated May __, 2002, as the same may be amended from time to
time.
14. "ORAL INSTRUCTIONS": verbal instructions actually received by the
Custodian from a person reasonably believed by the Custodian to be
an Authorized Person.
15. "PRIMARY CUSTODIAN": the meaning set forth in Rule 17f-7(b)(2).
16. "PROSPECTUS": the Fund's current prospectus and statement of
additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
17. "RISK ANALYSIS": the analysis required under Rule 17f-7(a)(i)(1)(A).
18. "RULES 17f-4, 17f-5 AND 17f-7": such Rules as promulgated under
Section 17(f) of the Act, as such rules (and any successor rules or
regulations) may be amended from time to time.
19. "SECURITY" or "SECURITIES": bonds, debentures, notes, stocks,
shares, evidences of indebtedness, and other securities,
commodities, interests and investments from time to time owned by
the Fund.
20. "SECURITIES DEPOSITORY": a system for the central handling of
securities as defined in Rule 17f-4.
21. "SELECTED COUNTRIES": the jurisdictions listed on Appendix C as such
may be amended from time to time in accordance with Article II.
22. "SHARES": shares of each of the portfolios of the Fund, however
designated.
23. "TRANSFER AGENT": the person which performs the transfer agent
functions for the Fund.
24. "WRITTEN INSTRUCTIONS": directions and instructions to the Custodian
from an Authorized Person in writing by facsimile or electronic
transmission subject to the Custodian's practices or any other
method specifically agreed upon.
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ARTICLE I
CUSTODY PROVISIONS
1. APPOINTMENT OF CUSTODIAN. The Board appoints, and the Custodian accepts
appointment as custodian of all the Securities and monies at the time owned by
or in the possession of the Fund during the period of this Agreement.
2. CUSTODY OF CASH AND SECURITIES.
(a) Receipt and Holding of Assets. The Fund will deliver or cause to
be delivered to the Custodian all Securities and monies owned by
it at any time during the period of this Agreement, including
without limitation monies received by the Fund in payment for
Shares sold by it and monies received by it as a consequence of
the Fund exercising its right to borrow money under any lending
arrangement it may have with any bank. The Custodian will not be
responsible for such Securities and monies until actually
received. The Board specifically authorizes the Custodian to hold
Securities, Assets or other property of the Fund with any
domestic subcustodian, or Securities Depository; and Foreign
Custodians or Eligible Securities Depositories in the Selected
Countries as provided in Article II. Securities and monies of the
Fund deposited in a Securities Depository or Eligible Securities
Depositories will be reflected in an account or accounts which
include only assets held by the Custodian or a Foreign Custodian
for its customers. In the case of a domestic subcustodian other
than an affiliate of the Custodian, use of such entity shall be
subject to Fund approval, which shall not be unreasonably
withheld.
(b) Accounts, Disbursements of Cash and Delivery of Securities. The
Custodian shall establish and maintain a separate account for the
Fund and shall credit to the separate account all Assets received
by it for the account of the Fund. The Custodian shall disburse
cash or deliver out Securities only for the purposes listed
below. Written Instructions must specify or evidence the purpose
for which any transaction is to be made and the Fund shall be
solely responsible to assure that Written Instructions are in
accord with any limitations or restrictions applicable to the
Fund. If, in order to meet an applicable time deadline, the Fund
determines there is insufficient time to issue Written
Instructions on a matter set forth below, the Fund may issue Oral
Instructions and the Custodian may rely on such Oral
Instructions.
(1) In payment for Securities purchased for the Fund;
(2) In payment of dividends or distributions with respect to
Shares;
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(3) In payment for Shares which have been redeemed by the Fund;
(4) In payment of taxes;
(5) In repayment of any monies borrowed pursuant to any lending
arrangement the Fund may have with any bank;
(6) When Securities are called, redeemed, retired, or otherwise
become payable;
(7) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan or
merger, consolidation, reorganization, recapitalization or
readjustment;
(8) Upon conversion of Securities pursuant to their terms into
other securities;
(9) Upon exercise of subscription, purchase or other similar
rights represented by Securities;
(10) For the payment of interest, management or supervisory fees,
distributions or operating expenses;
(11) In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund;
(12) In connection with any borrowings by the Fund requiring a
pledge of Securities, but only against receipt of amounts
borrowed;
(13) In connection with short sales by the Fund of Securities for
which the Fund owns the stock or owns preferred stocks or
debt securities convertible or exchangeable, without payment
or further consideration, into shares of the Securities sold
short;
(14) In connection with any loans of Securities made by the Fund,
but only against receipt of adequate collateral as specified
in Written Instructions which shall reflect any restrictions
applicable to the Fund;
(15) For the purpose of redeeming Shares of the Fund and the
delivery to, or the crediting to the account of, the
Custodian or the Transfer Agent, of such Shares to be
purchased or redeemed;
(16) For the purpose of redeeming in kind Shares of the Fund and
the delivery to, or the crediting to the account of, the
Custodian or Transfer Agent, of such shares to be so
redeemed;
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(17) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("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. The Custodian will act only in accordance with Written
Instructions in the delivery of Securities to be held in
escrow, and will have no responsibility or liability for any
such Securities which are not returned promptly when due,
other than to make proper requests for such return;
(18) For spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from
Securities or related transactions;
(19) To Exchange any Securities held for the Fund for other
Securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(20) To deliver any Securities held for the Fund to any
protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets
of any corporation, and receive and hold under the terms of
this Agreement such certificates of deposit, interim
receipts or other instruments or documents as may be issued
to it to evidence such delivery;
(21) To make or cause to be made such transfers or exchanges of
the assets specifically allocated to the Fund and take such
other steps as shall be stated in Written Instructions to be
for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
(22) Deliver Securities for any purpose expressly permitted by or
in accordance with procedures described in the Fund's
prospectus;
(23) Execute and deliver or cause to be executed and delivered to
such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner
of any Securities may be exercised;
(24) Upon the termination of this Agreement; and
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(25) For other proper purposes as may be specified in Written
Instructions issued by an officer of the Fund which shall
include a statement of the purpose for which the delivery or
payment is to be made, the amount of the payment or specific
Securities to be delivered, the name and address of the
person or persons to whom delivery or payment is to be made,
and a Certificate stating that the purpose is a proper
purpose under the instruments governing the Fund.
(c) Actions Which May be Taken Without Written Instructions or Oral
Instructions. Unless a Written or Oral Instruction to the
contrary is received, the Custodian shall:
(1) Collect all income due or payable, provided that the
Custodian shall not be responsible for the failure to
receive payment of (or late payment of) distributions or
other payments with respect to Securities or other property
held in the account;
(2) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired
or otherwise become payable. Notwithstanding the foregoing,
the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds or similar
instruments where such dates are not published in sources
routinely used by the Custodian which are owned by the Fund
and held by the Custodian or its nominees. Nor shall the
Custodian have any responsibility or liability to the Fund
for any loss by the Fund for any missed payments or other
defaults resulting therefrom, unless the Custodian received
timely notification from the Fund specifying the time, place
and manner for the presentment of any such put bond owned by
the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability
for the accuracy or completeness of any notification the
Custodian may furnish to the Fund with respect to put bonds
or similar instrument;
(3) Surrender Securities in temporary form for definitive
Securities;
(4) Hold directly, or through a Securities Depository with
respect to Securities therein deposited, for the account of
the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder
for the Fund;
(5) Submit or cause to be submitted to Fund or its investment
advisor as designated by Fund information actually received
by the Custodian regarding ownership rights pertaining to
property held for the Fund;
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(6) Deliver or cause to be delivered any Securities held for the
Fund in exchange for other Securities or cash issued or paid
in connection with a non-discretionary liquidation,
reorganization, refinancing, merger, consolidation,
conversion or recapitalization of any corporation;
(7) Deliver or cause to be delivered any Securities held for the
Fund to any protective committee, reorganization committee
or other person in connection with the reorganization,
refinancing, merger, consolidation or recapitalization or
sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of
deposit, interim receipts or other instruments or documents
as may be issued to it to evidence such delivery, where such
act is ministerial;
(8) Deliver Securities upon the receipt of payment in connection
with any repurchase agreement related to such Securities
entered into by the Fund; and
(9) Deliver Securities owned by the Fund to the issuer thereof
or its agent when such Securities are called, redeemed,
retired or otherwise become payable; provided, however, that
in any such case the cash or other consideration is to be
delivered to the Custodian. Notwithstanding the foregoing,
the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or
retirement dates with respect to the put bonds or similar
instruments where such dates are not published in sources
routinely used by the Custodian which are owned by the Fund
and held by the Custodian or its nominee. Nor shall the
Custodian have any responsibility or liability to the Fund
for any loss by the Fund for any missed payment or other
default resulting therefrom unless the Custodian received
timely notification from the Fund specifying the time, place
and manner for the presentment of any such put bond owned by
the Fund and held by the Custodian or its nominee. The
Custodian shall not be responsible and assumes no liability
to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with
respect to put bonds or similar investments.
(10) Endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the
account of the Fund.
(11) In connection with any matter covered by this Section 2(c),
execute any and all documents, agreements or other
instruments as may be necessary or desirable for the
accomplishment of the purposes of this Agreement;
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(d) Confirmation and Statements. Promptly after the close of business
on each day, the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from the
account of the Fund during the day. Where securities purchased by
the Fund are in a fungible bulk of securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of a Securities Depository, the
Custodian shall by book-entry or otherwise identify the quantity
of those securities belonging to the Fund. At least monthly, the
Custodian shall furnish the Fund with a detailed statement of the
Securities and monies held for the Fund under this Custody
Agreement.
(e) Registration of Securities. The Custodian is authorized to hold
all Securities, Assets, or other property of the Fund in nominee
name, in bearer form or in book-entry form. The Custodian may
register any Securities, Assets or other property of the Fund in
the name of the Fund, in the name of the Custodian, any domestic
subcustodian, or Foreign Custodian, in the name of any duly
appointed registered nominee of such entity, or in the name of a
Securities Depository or its successor or successors, or its
nominee or nominees. The Fund agrees to 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 its registered nominee or in the name of a Securities
Depository, any Securities which it may hold for the account of
the Fund and which may from time to time be registered in the
name of the Fund. The Custodian shall hold all such Securities
specifically allocated to the Fund which are not held in a
Securities Depository in a separate account so as to be at all
times identified as belonging to the Fund.
(f) Segregated Accounts. Upon receipt of Written Instruction, the
Custodian will, from time to time establish segregated accounts
on behalf of the Fund to hold and deal with specified assets as
shall be directed.
3. SETTLEMENT OF FUND TRANSACTIONS.
(a) Customary Practices. Settlement of transactions may be effected
in accordance with trading and processing practices customary in
the jurisdiction or market where the transaction occurs. The Fund
acknowledges that this may, in certain circumstances, require the
delivery of cash or Securities (or other property) without the
concurrent receipt of Securities (or other property) or cash. In
such circumstances, the Custodian shall have no responsibility
for nonreceipt of payments (or late payment) or nondelivery of
Securities or other property (or late delivery) by the
counterparty.
(b) Contractual Income. Unless the parties agree to the contrary, the
Custodian shall credit the Fund, in accordance with the
Custodian's standard operating procedure, with income and
maturity proceeds on securities on contractual payment date net
of any taxes or upon actual receipt. To the extent the Custodian
credits income on contractual payment date, the Custodian may
reverse such accounting entries with
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back value to the contractual payment date if the Custodian
reasonably believes that such amount will not be received.
(c) Contractual Settlement. Unless the parties agree to the contrary,
the Custodian will attend to the settlement of securities
transactions in accordance with the Custodian's standard
operating procedure, on the basis of either contractual
settlement date accounting or actual settlement date accounting.
To the extent the Custodian settles certain securities
transactions on the basis of contractual settlement date
accounting, the Custodian may reverse with back value to the
contractual settlement date any entry relating to such
contractual settlement if the Custodian reasonably believes that
such amount will not be received.
4. LENDING OF SECURITIES. The Custodian may lend the assets of the Fund in
accordance with the terms and conditions of a separate securities lending
agreement.
5. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
(a) No trustee or agent of the Fund, and no officer, director,
employee or agent of the Fund's investment adviser, of any
sub-investment adviser of the Fund, or of the Fund's
administrator, shall have physical access to the assets of the
Fund held by the Custodian or be authorized or permitted to
withdraw any investments of the Fund, nor shall the Custodian
deliver any assets of the Fund to any such person.
No officer, director, employee or agent of the Custodian who
holds any similar position with the Fund's investment adviser,
with any sub-investment adviser of the Fund or with the Fund's
administrator shall have access to the assets of the Fund.
(b) Nothing in this Section 5 shall prohibit any duly authorized
officer, employee or agent of the Fund, or any duly authorized
officer, director, employee or agent of the investment adviser,
of any sub-investment adviser of the Fund or of the Fund's
administrator, from giving Written Instructions or Oral
Instructions to the Custodian or executing a Certificate so long
as it does not result in delivery of or access to assets of the
Fund prohibited by paragraph (a) of this Section 5.
6. STANDARD OF CARE; SCOPE OF CUSTODIAL RESPONSIBILITIES.
(a) Standard of Care. Custodian shall be required to exercise
reasonable care with respect to its duties under this Agreement
unless otherwise provided.
(1) Notwithstanding any other provision of this Custody
Agreement, the Custodian shall not be liable for any loss
or damage, including counsel fees, resulting from its
action or omission to act or otherwise, except for any such
loss or damage arising out of the negligence or willful
misconduct of the Custodian.
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(2) The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the
Fund or of its own counsel, at the expense of the Fund, and
shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with such advice
or opinion.
(b) Scope of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
(1) The acts or omissions of any agent appointed pursuant to
Written Instructions or Oral Instructions of the Fund or
its investment advisor including, but not limited to, any
broker-dealer or other entity to hold any Securities or
other property of the Fund as collateral or otherwise
pursuant to any investment strategy.
(2) The validity of the issue of any Securities purchased by
the Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
(3) The legality of the sale of any Securities by the Fund or
the propriety of the amount for which the same are sold;
(4) The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
(5) The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
(6) The legality of the declaration or payment of any
distribution of the Fund;
(7) The legality of any borrowing for temporary administrative
or emergency purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or
not represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
required to effect collection of any amount due to the Fund from
the Transfer Agent nor be required to cause payment or
distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent.
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(e) Collection Where Payment Refused. The Custodian shall not be
required to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless
and until it shall be directed to take such action and it shall
be assured to its satisfaction of reimbursement of its related
costs and expenses.
(f) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any
time delivered to or held by it for the Fund are such as may
properly be held by the Fund under the provisions of its
governing instruments or Prospectus.
(g) Reliance on Written Instructions or Oral Instructions. The
Custodian shall be entitled to rely upon any Written Instruction,
notice or other instrument in writing received by the Custodian
and reasonably believed by the Custodian to be genuine and to be
signed by an officer or Authorized Person of the Fund. Where the
Custodian is issued Oral Instructions, the Fund acknowledges that
if written confirmation is requested, the validity of the
transactions or enforceability of the transactions authorized by
the Fund shall not be affected if such confirmation is not
received or is contrary to Oral Instructions given. The Custodian
shall be under no duty to question any direction of an Authorized
Person to review any property held in the account, to make any
suggestions with respect to the investment of the assets in the
account, or to evaluate or question the performance of any
Authorized Person. The Custodian shall not be responsible or
liable for any diminution of value of any securities or other
property held by the Custodian.
7. APPOINTMENT OF SUBCUSTODIANS. The Custodian is hereby authorized to appoint
one or more domestic subcustodians (which may be an affiliate of the Custodian)
to hold Securities and monies at any time owned by the Fund. The Custodian is
also hereby authorized when acting pursuant to Written Instructions to: 1) place
assets with any Foreign Custodian located in a jurisdiction which is not a
Selected Country and with Euroclear, Clearstream, Banc One or any other
transnational depository; and 2) place assets with a broker or other agent as
subcustodian in connection with futures, options, short selling or other
transactions. When acting pursuant to such Written Instructions, the Custodian
shall not be liable for the acts or omissions of any subcustodian so appointed.
In the case of a domestic subcustodian other than an affiliate of the Custodian,
use of such entity shall be subject to Fund approval, which shall not be
unreasonably withheld.
8. OVERDRAFT FACILITY AND SECURITY FOR PAYMENT. In the event that the Custodian
receives Written Instructions to make payments or transfers of monies on behalf
of the Fund for which there would be, at the close of business on the date of
such payment or transfer, insufficient monies held by the Custodian on behalf of
the Fund, the Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a) shall be payable on
the next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue
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interest from the date of the Overdraft to the date of payment in full by the
Fund at a rate agreed upon from time to time, by the Custodian and the Fund or,
in the absence of specific agreement, by such rate as charged to other customers
of Custodian under procedures uniformly applied. The Custodian and the Fund
acknowledge that the purpose of such Overdraft is to temporarily finance the
purchase of Securities for prompt delivery in accordance with the terms hereof,
to meet unanticipated or unusual redemptions, to allow the settlement of foreign
exchange contracts or to meet other unanticipated Fund expenses. The Custodian
shall promptly notify the Fund (an "Overdraft Notice") of any Overdraft. To
secure payment of any Overdraft, the Fund hereby grants to the Custodian a
continuing security interest in and right of setoff against the Securities and
cash in the Fund's account from time to time in the full amount of such
Overdraft. Should the Fund fail to pay promptly any amounts owed hereunder, the
Custodian shall be entitled to use available cash in the Fund's account and to
liquidate Securities in the account as necessary to meet the Fund's obligations
under the Overdraft. In any such case, and without limiting the foregoing, the
Custodian shall be entitled to take such other actions(s) or exercise such other
options, powers and rights as the Custodian now or hereafter has as a secured
creditor under the Massachusetts Uniform Commercial Code or any other applicable
law.
9. TAX OBLIGATIONS. To the extent an Authorized Person has provided necessary
information to the Custodian, the Custodian shall use reasonable efforts to
assist the Fund with respect to the Fund's tax obligations, including the
payment of taxes, withholding requirements, certification and reporting
requirements, and claims for exemptions or refunds, interest, penalties and
other related expenses of the Fund. The Fund shall notify the Custodian in
writing of any such tax obligations. The Custodian shall have no responsibility
or liability for any tax obligations now or hereafter imposed on the Fund by any
taxing authorities, domestic or foreign.
To the extent the Custodian may be responsible under any applicable law for any
tax obligation, the Fund shall direct the Custodian with respect to the
performance of such obligations, and shall provide the Custodian with the
necessary funds and all information required by the Custodian to meet such
obligations. All such tax obligations shall be paid from the Fund unless paid by
the Company.
In making payments to service providers pursuant to Written Instructions, the
Fund acknowledges that the Custodian is acting as a paying agent and not as the
payor, for tax information reporting and withholding purposes.
ARTICLE II
FOREIGN CUSTODY MANAGER SERVICES
1. DELEGATION. The Board delegates to, and the Custodian hereby agrees to
accept responsibility as the Fund's Foreign Custody Manager for selecting,
contracting with and monitoring Foreign Custodians in Selected Countries set
forth in Appendix C in accordance with Rule 17f-5(c).
14
2. CHANGES TO APPENDIX C. Appendix C may be amended by written agreement
from time to time to add or delete jurisdictions by written agreement signed by
an Authorized Person of the Fund and the Custodian, but the Custodian reserves
the right to delete jurisdictions upon reasonable notice to the Fund.
3. REPORTS TO BOARD. Custodian shall provide written reports notifying the
Board of the placement of Assets with a particular Foreign Custodian and of any
material change in Fund's foreign custody arrangements. Such reports shall be
provided to the Board quarterly, except as otherwise agreed by the Custodian and
the Fund.
4. MONITORING SYSTEM. In each case in which the Custodian has exercised
delegated authority to place Assets with a Foreign Custodian, the Custodian
shall establish a system, to re-assess or re-evaluate selected Foreign
Custodians, at least annually in accordance with Rule 17f-5(c)(3).
5. STANDARD OF CARE. In exercising the delegated authority under this
Article II of the Agreement, the Custodian agrees to exercise reasonable care,
prudence and diligence such as a person having responsibility for the
safekeeping of the Assets would exercise in like circumstances. Contracts with
Foreign Custodians shall provide for reasonable care for Assets based on the
standards applicable to Foreign Custodians in the Selected Country. In making
this determination, the Custodian shall consider the provisions of Rule
17f-5(c)(2).
6. USE OF SECURITIES DEPOSITORIES. In exercising its delegated authority,
the Custodian may assume, unless instructed in writing to the contrary, that the
Board or the Fund's investment adviser has determined, pursuant to Rule 17f-7,
to place and maintain foreign assets with any Securities Depository as to which
the Custodian has provided the Fund with a Risk Analysis.
ARTICLE III
INFORMATION SERVICES
1. RISK ANALYSIS. The Custodian will provide the Fund with a Risk Analysis
with respect to Securities Depositories operating in the countries listed in
Appendix C. If the Custodian is unable to provide a Risk Analysis with respect
to a particular Securities Depository, it will notify the Fund. If a new
Securities Depository commences operation in one of the Appendix C countries,
the Custodian will provide the Fund with a Risk Analysis in a reasonably
practicable time after such Securities Depository becomes operational. If a new
country is added to Appendix C, the Custodian will provide the Fund with a Risk
Analysis with respect to each Securities Depository in that country within a
reasonably practicable time after the addition of the country to Appendix C.
2. MONITORING OF SECURITIES DEPOSITORIES. The Custodian will monitor the
custody risks associated with maintaining assets with each Securities Depository
for which it has provided the
15
Fund with a Risk Analysis as required under Rule 17f-7. The Custodian will
promptly notify Fund or its investment adviser of any material change in these
risks.
3. USE OF AGENTS. The Custodian may employ agents, including, but not
limited to Foreign Custodians, to perform its responsibilities under Sections 1,
2, and 3 above.
4. EXERCISE OF REASONABLE CARE. The Custodian will exercise reasonable
care, prudence, and diligence in performing its responsibilities under this
Article III. With respect to the Risk Analyses provided or monitoring performed
by an agent, the Custodian will exercise reasonable care in the selection of
such agent, and shall be entitled to rely upon information provided by agents so
selected in the performance of its duties and responsibilities under this
Article III.
5. LIABILITIES AND WARRANTIES. While the Custodian will take reasonable
precautions to ensure that information provided is accurate, the Custodian shall
have no liability with respect to information provided to it by third parties.
Due to the nature and source of information, and the necessity of relying on
various information sources, most of which are external to the Custodian, the
Custodian shall have no liability for direct or indirect use of such
information.
ARTICLE IV
GENERAL PROVISIONS
1. COMPENSATION.
(a) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in a
separate Fee Schedule which schedule may, on and after three
years from the effective date of this Agreement, be modified by
the Custodian upon not less than sixty days prior written notice
to the Fund.
(b) The Custodian will xxxx the Fund as soon as practicable after the
end of each calendar month. The Fund will promptly pay to the
Custodian the amount of such billing.
(c) If not paid directly or timely by the Fund, the Custodian may
charge against assets held on behalf of the Fund compensation and
any expenses incurred by the Custodian in the performance of its
duties pursuant to this Agreement. The Custodian shall also be
entitled to charge against assets of the Fund the amount of any
loss, damage, liability or expense incurred with respect to the
Fund, including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The
expenses which the Custodian may charge include, but are not
limited to, the expenses of domestic subcustodians and Foreign
Custodians incurred in settling transactions.
16
2. INSOLVENCY OF FOREIGN CUSTODIANS. The Custodian shall be responsible for
losses or damages suffered by the Fund arising as a result of the insolvency of
a Foreign Custodian only to the extent that the Custodian failed to comply with
the standard of care set forth in Article II with respect to the selection and
monitoring of such Foreign Custodian.
3. LIABILITY FOR DEPOSITORIES. The Custodian shall not be responsible for
any losses resulting from the deposit or maintenance of Securities, Assets or
other property of the Fund with a Securities Depository.
4. DAMAGES. Under no circumstances shall the Custodian be liable for any
indirect, consequential or special damages with respect to its role as Foreign
Custody Manager, Custodian or information vendor.
5. INDEMNIFICATION; LIABILITY OF THE FUND.
(a) The Fund shall indemnify and hold the Custodian harmless from all
liability and expense, including reasonable counsel fees and
expenses, arising out of the performance of the Custodian's
obligations under this Agreement except as a result of the
Custodian's negligence or willful misconduct.
(b) The Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the
Directors, Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Fund, individually,
but are binding only upon the assets and property of the Fund.
6. FORCE MAJEURE. Notwithstanding anything in this Agreement to the
contrary, the Custodian shall not be liable for any losses resulting from or
caused by events or circumstances beyond its reasonable control, including, but
not limited to, losses resulting from nationalization, strikes, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or the breakdown, failure or malfunction of any
utilities or telecommunications systems; or any order or regulation of any
banking or securities industry including changes in market rules and market
conditions affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or any other similar event.
7. TERMINATION.
(a) Either party may terminate this Agreement by giving the other
party ninety (90) days notice in writing, specifying the date of
such termination. In the event notice is given by the Fund, it
shall be accompanied by a Certificate evidencing the vote of the
Fund's Board to terminate this Agreement and designating a
successor.
17
(b) In the event notice of termination is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the
Custodian a Certificate evidencing the vote of the Board
designating a successor custodian. In the absence of such
designation, the Custodian may designate a successor custodian,
which shall be a person qualified to so act under the Act or the
Fund. If the Fund fails to designate a successor custodian, the
Fund shall, upon the date specified in the notice of termination,
and upon the delivery by the Custodian of all Securities and
monies then owned by the Fund, be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and or
the Fund responsibilities under this Agreement other than the
duty with respect to Securities held in the Book-Entry System
which cannot be delivered to the Fund.
(c) Upon termination of the Agreement, the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian,
deliver to the successor all Securities and monies then held by
the Custodian on behalf of the Fund, after deducting all fees,
expenses and other amounts owed.
(g) In the event of a dispute following the termination of this
Agreement, all relevant provisions shall be deemed to continue to
apply to the obligations and liabilities of the parties.
8. INSPECTION OF BOOKS AND RECORDS. The books and records pertaining to the
Fund and each portfolio thereunder, which are in the possession of the
Custodian, shall be the property of the fund, provided that the Custodian shall
be entitled to retain a copy thereof if needed for regulatory purposes. Such
books and records shall be prepared and maintained as required by the Act and
other applicable securities laws, rules and regulations. Such books and records
shall be open to inspection and audit at reasonable times by officers and
auditors employed by the Fund at its own expense and with prior written notice
to the Custodian, and by the appropriate employees of the Securities and
Exchange Commission.
8. CONFIDENTIALITY. The Custodian agrees to keep confidential all records
of the Fund and each portfolio thereunder and information relative to the Fund
and each portfolio thereunder and the shareholders (past, present and potential)
of each portfolio, unless the release of such records or information is
otherwise consented to, in writing by the Fund or has been made public. The Fund
further agrees that, should the Custodian be required to provide such
information or records to duly constituted domestic and foreign governmental
authorities (who may institute civil or criminal contempt proceedings for
failure to comply), the Custodian shall not be required to seek the Fund's
consent prior to disclosing the information, provided that the Custodian gives
the Fund prior written notice of the provision of such information and records.
9. COOPERATION WITH ACCOUNTANTS. The Custodian shall cooperate with the
Fund's independent public accountants and shall take all reasonable action in
the performance of its obligations under this Agreement to ensure that the
necessary information is made available to such accountants for the expression
of their opinion, as required by the Fund.
18
11. DISASTER RECOVERY. The Custodian shall make reasonable provision for
emergency use of electronic data processing equipment to the extent appropriate
equipment is available. In the event of equipment failure, the Custodian shall,
at no additional expense to the Fund, take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
12. ENFORCEMENT OF OBLIGATIONS. The Fund and the Custodian further agree
that the obligations of the Fund under this Agreement with respect to any
portfolio shall be enforceable against the assets of that portfolio only, and
not against the assets of any other portfolio.
13. MISCELLANEOUS.
(a) Appendix A is a Certificate signed by the Secretary of the Fund
setting forth the names and the signatures of Authorized Persons.
The Fund shall furnish a new Certificate when the list of
Authorized Persons is changed in any way. Until a new
certification is received, the Custodian shall be fully protected
in acting upon Written Instructions or Oral Instructions from
Authorized Persons as set forth in the last delivered
Certificate.
(b) Appendix B is a Certificate signed by the Secretary of the Fund
setting forth the names and the signatures of the present
officers of the Fund. The Fund agrees to furnish to the Custodian
a new Certificate when any changes are made. Until a new
Certificate is received, the Custodian shall be fully protected
in relying upon the last delivered Certificate.
(c) Any required written notice or other instrument shall be
sufficiently given if addressed to the Custodian or the Fund as
the case may be and delivered to it at its offices at:
The Custodian:
Boston Safe Deposit and Trust Company
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
The Fund:
THE XXXXXXX/XXXXXX INVESTMENT GROUP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Vice President, Mutual Fund Operations
19
or at such other place as the parties may from time to time
designate to the other in writing.
(d) This Agreement may not be amended or modified except by a written
agreement executed by both parties.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by
the Fund without the written consent of the Custodian, or by the
Custodian without the written consent of the Fund authorized or
approved by a vote of the Board, provided, however, that the
Custodian may assign the Agreement or any function thereof to any
corporation or entity which directly or indirectly is controlled
by, or is under common control with, the Custodian and any other
attempted assignment without written consent shall be null and
void.
(f) Nothing in this Agreement shall give or be construed to give or
confer upon any third party any rights hereunder.
(g) The Custodian represents that it is a U.S. Bank within the
meaning of paragraph (a)(7) of Rule 17f-5.
(h) The Fund acknowledges and agrees that, except as expressly set
forth in this Agreement, the Fund is solely responsible to assure
that the maintenance of the Fund's Securities and cash hereunder
complies with applicable laws and regulations, including without
limitation the Act and the rules and regulations promulgated
thereunder and applicable interpretations thereof or exemptions
therefrom. The Fund represents that it has determined that it is
reasonable to rely on Custodian to perform the responsibilities
delegated pursuant to this Agreement.
(i) This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts.
(j) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(k) Each party represents to the other that it has all necessary
power and authority, and has obtained any consent or approval
necessary to permit it, to enter into and perform this Agreement
and that this Agreement does not violate, give rise to a default
or right of termination under or otherwise conflict with any
applicable law, regulation, ruling, decree or other governmental
authorization or any contract to which it is a party or by which
any of its assets is bound.
20
(l) 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 representatives duly authorized as of the day and year first
above written.
THE XXXXXXX/XXXXXX INVESTMENT GROUP,
ON BEHALF OF THE FUNDS LISTED ON APPENDIX D
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
21
APPENDIX A
LIST OF AUTHORIZED PERSONS
I, Xxxxxx X. Xxxxxxx, the Secretary of THE XXXXXXX/XXXXXX INVESTMENT
GROUP, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Written Instructions or Oral Instructions on behalf of the Fund and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Signature
---------------- ------------------------------------
The following individuals are authorized to confirm wire transfers and
check requisitions only. These individuals are not otherwise authorized to issue
Written Instructions or Oral Instructions.
------------ ------------------------------------
By: THE XXXXXXX/XXXXXX INVESTMENT GROUP
Secretary:
--------------------------
Dated:
------------------------------
00
XXXXXXXX X
FUND OFFICERS
I, Xxxxxx X. Xxxxxxx, the Secretary of THE XXXXXXX/XXXXXX INVESTMENT
GROUP, a business trust organized under the laws of the Commonwealth of
Massachusetts (the "Fund"), do hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's governing instrument and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
---- -------- ---------
---------------- --------------------- ----------------------
THE XXXXXXX/XXXXXX INVESTMENT GROUP
By:
----------------------------------------
Secretary
Dated:
23
APPENDIX C
SELECTED COUNTRIES
[List]
"*Note, Custodian will not act as a Foreign Custody Manager with respect to
assets held in this country. Holding assets and use of Mellon's usual
subcustodian in this country is subject to Instructions by the Fund and
its execution of a separate letter-agreement pertaining to custody and
market risks."
24
APPENDIX D
THE XXXXXXX/XXXXXX INVESTMENT GROUP MUTUAL FUNDS
(June __, 2002)
Xxxxxxx/Xxxxxx International Equity Fund
Xxxxxxx/Xxxxxx ADR Equity Fund
Xxxxxxx/Xxxxxx European Equity Fund
25
