CUSTODY AGREEMENT
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Agreement made as of the 1 day of February, 1995,
between Philadelphia Fund, Inc., (the "Fund"), an open-end
diversified investment company corporation organized under the
laws of Maryland and having its office at 0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, XX 00000, and Star Bank, N.A.
(the "Custodian"), a national banking association having its
principal office and place of business at Star Bank Center, 000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxx 00000, which Agreement provides
for the furnishing of custodian services to the Fund. Custodian
agrees to retain custody of U.S. Government Securities and
securities issued and sold primarily in the United States.
Pursuant to Paragraph 6 of Article IX of this Agreement,
Custodian hereby appoints Bankers Trust Company as Sub-Custodian
to retain custody of foreign securities in accordance with the
terms and conditions of the Agreement dated as of 10/17/94
between Bankers Trust Company and Star Bank, N.A. attached
hereto as Appendix D (the "Sub-Custodian Agreement"). The Fund
hereby acknowledges such appointment and expressly agrees to the
terms and conditions set forth in the Sub-Custodian Agreement.
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth the Fund, on behalf of the Fund, and the Custodian
agree as follows:
ARTICLE I
DEFINITIONS
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Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Authorized Person" shall be deemed to include the Chairman,
President, Secretary, Treasurer, Controller, and the Senior Vice
President, or any other person, whether or not any such person
is an officer or employee of the Fund, duly authorized by the
Board of Directors of the Fund to give Oral Instructions and
Written Instructions on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received
by the Custodian from time to time, subject in each case to any
limitations on the authority of such person as set forth in
Appendix A or any such Certificate.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency
securities, its successor or successors and its nominee or
nominees, provided the Custodian has received a certified copy
of a resolution of Board of Directors of the Fund specifically
approving deposits in the Book-Entry System.
3. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement
to be given to the Custodian which is signed on behalf of the
Fund by an officer of the Fund and is actually received by the
Custodian.
4. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee
or nominees. The term "Depository" shall further mean and
include any other person or clearing agency authorized to act as
a depository under the Investment Company Act of 1940, its
successor or successors and its nominee or nominees, provided
that the Custodian has received a certified copy of a resolution
of the Board of Directors of the Fund specifically approving DTC
and such other person or clearing agency as a depository.
5. "Dividend and Transfer Agent" shall mean the dividend and
transfer agent active, from time to time, in such capacity
pursuant to a written agreement with the Fund, changes in which
the Fund shall immediately report to the Custodian in writing.
6. "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States
or agencies or instrumentalities thereof, commercial paper,
obligations (including certificates of deposit, bankers'
acceptances, repurchase and reverse repurchase agreements with
respect to the same) and bank time deposits of domestic banks
that are members of Federal Deposit Insurance Corporation, and
short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or
their equivalent on the same day as such purchase or sale, all
of which mature in not more than thirteen (13) months.
7. "Officers" shall be deemed to include the Chairman, the
President, the Secretary, the Treasurer, the Controller, and
Senior Vice President of the Fund listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
8. "Oral Instructions" shall mean oral instructions actually
received by the Custodian from an Authorized Person (or from a
person which the Custodian reasonably believes in good faith to
be an Authorized Person) and confirmed by Written Instructions
from Authorized Persons in such manner so that such Written
Instructions are received by the Custodian on the next business
day.
9. "Prospectus" shall mean the Fund's then currently effective
prospectus and statement of additional information, as filed
with and declared effective from time to time by the Securities
and Exchange Commission.
10. "Security or Securities" shall mean Money Market
Securities, common or preferred stocks, options, financial
futures and options thereon, bonds, debentures, corporate debt
securities, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interest
therein, or any property or assets.
11. "Written Instructions" shall mean communication actually
received by the Custodian from one Authorized Person or from one
person which the Custodian reasonably believes in good faith to
be an Authorized Person in writing or by telex or any other such
system whereby the receiver of such communication is able to
verify by codes or otherwise with a reasonable degree of
certainty the authenticity of the senders of such communication.
12. "Foreign Securities" include securities issued and sold
primarily outside of the United States by a foreign government,
a national of any foreign country or a corporation or other
organization incorporated or organized under the laws of any
foreign country and
securities issued or guaranteed by the Government of the United
States or by any state or any political subdivision thereof or by
any agency thereof by any entity organized under the laws of the
United States or of any state thereof which have been issued and
sold primarily outside the United States.
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
1. The Fund, hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies at any time owned by
the Fund during the period of this Agreement (the "Fund
Assets").
2. The Custodian hereby accepts appointment as such Custodian
and agrees to perform the duties thereof as hereinafter set
forth.
ARTICLE III
DOCUMENTS TO BE FURNISHED BY THE TRUST
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The Fund hereby agrees to furnish to the Custodian the following
documents:
1. A copy of its Articles of Incorporation certified by its
Secretary.
2. A copy of its By-Laws certified by its Secretary.
3. A copy of the resolution of its Board of Directors appointing
the Custodian certified by its Secretary.
4. A copy of the most recent Prospectus of the Fund.
5. A Certificate of the President and Secretary setting forth
the names and signatures of the present officers of the Fund.
ARTICLE IV
CUSTODY OF CASH AND SECURITIES
------------------------------
1. The Fund will deliver or cause to be delivered to the
Custodian all Fund Assets, including cash received for the
issuance of its shares, at any time during the period of this
Agreement. The Custodian will not be responsible for such Fund
Assets until actually received by it or its' sub-custodians.
Upon such receipt, the Custodian shall hold in safekeeping and
physically segregate at all times from the property of any other
persons, firms or corporations all Fund Assets received by it
from or for the account of the Fund. The Custodian will be
entitled to reverse any credits made on the Fund's behalf where
such credits have been previously made and monies are not
finally collected within 90 days of the making of such credits.
The Custodian is hereby authorized by the Fund, acting on behalf
of the Fund, to actually deposit any Fund Assets in the
Book-Entry System or in a Depository, provided, however, that
the Custodian shall always be accountable to the Fund for the
Fund Assets so deposited. Fund Assets deposited in the
Book-Entry System or the Depository will be represented in
accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the
Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account or accounts
in the name of the Fund all monies received by it for the
account of the Fund, and shall disburse the same only:
(a) In payment for Securities purchased for the account of the
Fund, as provided in Article V;
(b) In payment of dividends or distributions, as provided in
Article VI hereof;
(c) In payment of original issue or other taxes, as provided
in Article VII hereof;
(d) In payment for shares of the Fund redeemed by it, as
provided in Article VII hereof;
(e) Pursuant to Certificates (i) directing payment and setting
forth the name and address of the person to whom the payment is
to be made, the amount of such payment and the purpose for which
payment is to be made (the Custodian not being required to
question such direction) or
(f) In reimbursement of the expenses and liabilities of the
Custodian, as provided in paragraph 10 of Article IX hereof.
3. Promptly after the close of business on each day the Fund is
open and valuing its portfolio, the Custodian shall furnish the
Fund with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all
transfers to or from the account of the Fund during said day.
Where Securities are transferred to the account of the Fund
without physical delivery, the Custodian shall also identify in
its records as belonging to the Fund a quantity of Securities 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 the Book-Entry System or Depository. At least
monthly and from time to time, the Custodian shall furnish the
Fund with a detailed statement of the Securities held for the
Fund under this Agreement.
4. All Securities held for the Fund, which are issued or
issuable only in bearer form, except such Securities as are held
in the Book-Entry System, shall be held by the Custodian in that
form; all other Securities held for the Fund may be registered
in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry System
or Depository or their successor or successors, or their 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 the Book-Entry
System or 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 which are not held in the Book-Entry System
by a Depository or a Sub-Custodian in a separate account or
accounts in the name of the Fund segregated at all times from
those of any other fund maintained and operated by the Fund and
from those of any other person or persons.
5. Unless otherwise instructed to the contrary by a
Certificate, the Custodian shall with respect to all Securities
held for the Fund in accordance with this Agreement on a timely
basis:
(a) Collect all income due or payable to the Fund with respect
to the Fund Assets;
(b) Present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
(c) Surrender Securities in temporary form for definitive
Securities;
(d) 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, including
any foreign taxing authority, now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the
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.
6. Upon receipt of a Certificate and not otherwise, the
Custodian directly or through the use of the Book-Entry System
or the Depository shall:
(a) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner of
any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange 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;
(c) Deliver any Securities held for the account of the Fund to
any protective committee, reorganization committee or other
person in connection with the reorganization, refinancing,
merger, consolidation, 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; and
(d) Make such transfers or exchanges of the assets of the Fund
and take such other steps as shall be stated in said Certificate
to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund.
(e) Deliver any securities held for the Fund to the depository
agent in connection with tender or other similar offers for
portfolio securities of the Fund as directed by the Fund.
7. The Custodian shall promptly deliver to the Fund all
notices, proxy material and executed but unvoted proxies
pertaining to shareholder meetings of Securities held by the
Fund. The Custodian shall not vote or authorize the voting of
any Securities or give any consent, waiver or approval with
respect thereto unless so directed by a Certificate or Written
Instruction.
8. The Custodian shall promptly deliver to the Fund all
material received by the Custodian and pertaining to Securities
held by the Fund with respect to tender or exchange offers,
calls for redemption or purchase, expiration of rights, name
changes, stock splits and stock dividends, or any other activity
involving ownership rights in such Securities.
ARTICLE V
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
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1. Promptly after each purchase of Securities by the Fund, the
Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a
Certificate or Written Instructions, and (ii) with respect to
each purchase of Money Market Securities, Written Instructions,
a Certificate or Oral Instructions, specifying with respect to
each such purchase: (a) the name of the issuer and the title of
the Securities, (b) the principal amount purchased and accrued
interest, if any, (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 from whom or the
broker through whom the purchase was made. The Custodian shall
upon receipt of Securities purchased by or for the Fund, pay out
of the monies held for the account of the Fund the total amount
payable to the person from whom or the broker through whom the
purchase was made, provided that the same conforms to the total
amount payable as set forth in such Certificate, Written
Instructions or Oral Instructions.
2. Promptly after each sale of Securities by the Fund for the
account of the Fund, the Fund shall deliver to the Custodian (i)
with respect to each sale of Securities which are not Money
Market Securities, a Certificate or Written Instructions, and
(ii) with respect to each sale of Money Market Securities,
Written Instructions, a Certificate or Oral Instructions,
specifying with respect to each such sale: (a) the name of the
issuer and the title of the Security, (b) the principal amount
sold, and accrued interest, if any, (c) the date of sale, (d)
the sale price per unit, (e) the total amount payable to the
Fund upon such sale and (f) the name of the broker through whom
or the person to whom the sale was made. The Custodian shall
deliver the Securities upon receipt of the total amount payable
to the Fund upon such, provided that the same conforms to the
total amount payable as set forth in such Certificate, Written
Instructions or Oral Instructions. Subject to the foregoing,
the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers
in Securities.
3. The Custodian shall upon receipt of Proper instructions
establish and maintain a segregated account or accounts for and
on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities
maintained in an account in a Depository or Book-Entry System,
i) in accordance with the provisions of any Agreement among
the Fund, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Fund,
ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the
Fund or commodity futures contracts or options thereon purchased
or sold by the Fund,
iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666,
or any subsequent release or releases or rule of the Securities
and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and
iv) for other proper corporate purposes, but only, in the case
of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
4. On contractual settlement date, the account of the Fund will
be charged for all purchases settling on that day, regardless of
whether or not delivery is made. On contractual settlement
date, sale proceeds will likewise be credited to the account of
the Fund irrespective of delivery.
In the case of "sale fails", the Custodian may request the
assistance of the Fund in making delivery of the failed
Security.
5. Liability for Payment in Advance of Receipt of Securities
Purchased -- Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase of
securities for the account of the Fund is made by the Custodian
in advance of receipt of the securities purchased in the absence
of specific written instructions from the Fund to so pay in
advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had
been received by the Custodian.
ARTICLE VI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
-------------------------------------
1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Directors, certified by the
Secretary, either (i) setting forth the date of the declaration
of any dividend or distribution in respect of shares of the
Fund, the date of payment thereof, the record date as of which
Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of
that date and the total amount to be paid by the Dividend and
Transfer Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distributions in
respect of shares of the Fund on a daily basis and authorizing
the Custodian to rely on Written Instructions or a Certificate
setting forth the date of the declaration of any such dividend
or distribution, the date of payment thereof, the record date as
of which Fund shareholders entitled to payment shall be
determined, the amount payable per share to Fund shareholders of
record as of that date and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
2. Upon the payment date specified in such resolution, Written
Instructions or Certificate, as the case may be, the Custodian
shall arrange for such payments to be made by the Dividend and
Transfer Agent out of monies held for the account of the Fund.
ARTICLE VII
SALE AND REDEMPTION OF SHARES OF THE FUND
-----------------------------------------
1. The Custodian shall receive and credit to the account of the
Fund such payments for shares of the Fund issued or sold from
time to time as are received from the distributor for the Fund's
shares, from the Dividend and Transfer Agent of the Fund, or
from the Fund.
2. Upon receipt of Written Instructions, the Custodian shall
arrange for payment of redemption proceeds to be made by the
Dividend and Transfer Agent out of the monies held for the
account of the Fund in the total amount specified in the Written
Instructions.
3. Availability of Federal Funds --Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon
receipt of Proper Instructions, make federal funds available to
the Fund as of specified times agreed upon from time to time by
the Fund and the Custodian in the amount of checks received in
payment for Shares of the Fund which are deposited into the
Fund's account.
ARTICLE VIII
INDEBTEDNESS
------------
In connection with any borrowings, the Fund will cause to be
delivered to the Custodian by a bank or broker (including the
Custodian, if the borrowing is from the Custodian), requiring
Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank or
broker setting forth the amount which such bank or broker will
loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a)
the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference
an attached promissory note, duly endorsed by the Fund, acting
on behalf of the Fund, or other loan agreement, (c) the date and
time, if known, on which the loan is to be entered into, (d) the
date on which the loan becomes due and payable, (e) the total
amount payable to the Fund on the borrowing date, (f) the market
value of Securities collateralizing the loan, including the name
of the issuer, the title and the number of shares or the
principal amount of any particular Securities and the Custodian
shall deliver on the borrowing date specified in a Certificate
the specified collateral and the executed promissory note, if
any, against delivery by the lending bank or broker of the total
amount of the loan payable provided that the same conforms to
the total amount payable as set forth in
the Certificate. The Custodian may, at the option of the lending
bank or broker, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the
lending bank or broker, by virtue of any promissory note or loan
agreement. The Custodian shall deliver in the manner directed by
the Fund from time to time such Securities as additional
collateral as may be specified in a Certificate to collateralize
further any transaction described in this paragraph. The Fund
shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive
from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate
or Written Instructions the name of the issuer, the title and
number of shares or the principal amount of any particular
Securities to be delivered as collateral by the Custodian, the
Custodian shall not be under any obligation to deliver any
Securities. The Custodian may require such reasonable conditions
with respect to such collateral and its dealings with third-party
lenders as it may deem appropriate.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
1. Except as otherwise provided herein, the Custodian shall not
be liable for any loss, damage, including counsel fees,
resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of its own
negligence, willful misconduct, or breach of this agreement.
The Fund, only from Fund Assets (or insurance purchased by the
Fund with respect to its liabilities on behalf of the Fund
hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with
respect to any loss, claim, liability or cost (including
reasonable attorneys' fees) arising or alleged to arise from or
relating to the Fund's duties hereunder or any other action or
inaction of the Fund or its Directors, officers, employees or
agents, except such as may arise from the negligent action,
omission, willful misconduct or breach of this agreement by the
Custodian, its directors, officers, employees or agents. The
Custodian shall defend, indemnify and hold harmless the Fund and
its Directors, officers, employees or agents with respect to any
loss, claim, liability
or cost (including reasonable attorneys' fees) arising or alleged
to arise from or relating to the Custodian's duties with respect
to the Fund hereunder or any other action or inaction of the
Custodian or its directors, officers, employees, agents, nominees
or Sub-Custodians as to the Fund, except such as may arise from
the negligent action, omission or willful misconduct of the Fund,
its Directors, officers, employees or agents. The Custodian may,
with respect to questions of law, apply for and obtain the advice
and opinion of counsel to the Fund at the expense of the Fund, or
of its own counsel at its own expense, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with the advice or opinion of counsel to the
Fund, and shall be similarly protected with respect to anything
done or omitted by it in good faith in conformity with advice or
opinion of its counsel, unless counsel to the Fund shall, within
a reasonable time after being notified of legal advice received
by the Custodian, have a differing interpretation of such question
of law. The Custodian shall be liable to the Fund for any
proximate loss or damage resulting from the use of the Book-Entry
System or any Depository arising by reason of any negligence,
misfeasance or misconduct on the part of the Custodian or any of
its employees, agents, nominees or Sub-Custodians but not for any
special, incidental, consequential, or punitive damages; provided,
however, that nothing contained herein shall preclude recovery by
the Fund, on behalf of the Fund, of principal and of interest to
the date of recovery on, Securities incorrectly omitted from the
Fund's account or penalties imposed on the Fund, in connection
with the Fund, for any failures to deliver Securities.
In any case in which one party hereto may be asked to
indemnify the other or hold the other harmless, the party from
whom indemnification is sought (the "Indemnifying Party") shall
be advised of all pertinent facts concerning the situation in
question, and the party claiming a right to indemnification (the
"Indemnified Party") will use reasonable care to identify and
notify the Indemnifying Party promptly concerning any situation
which presents or appears to present a claim for indemnification
against the Indemnifying Party. The Indemnifying Party shall
have the option to defend the Indemnified Party against any
claim which may be the subject of the indemnification, and in
the event the Indemnifying Party so
elects, such defense shall be conducted by counsel chosen by the
Indemnifying Party and satisfactory to the Indemnified Party and
the Indemnifying Party will so notify the Indemnified Party and
thereupon such Indemnifying Party shall take over the complete
defense of the claim and the Indemnifying Party shall sustain no
further legal or other expenses in such situation for which
indemnification has been sought under this paragraph. The
expenses of any additional counsel retained by the Indemnified
Party shall be borne by the Indemnified Party. In no case shall
any party claiming the right to indemnification confess any claim
or make any compromise in any case in which the other party has
been asked to indemnify such party (unless such confession or
compromise is made with such other party's prior written consent).
The obligations of the parties hereto under this paragraph shall
survive the termination of this Agreement.
2. Without limiting the generality of the foregoing, the
Custodian, acting in the capacity of Custodian hereunder, shall
be under no obligation to inquire into, and shall not be liable
for:
(a) The validity of the issue of any Securities purchased by
or for the account of the Fund, the legality of the purchase
thereof, or the propriety of the amount paid therefor;
(b) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for which
the same are sold;
(c) The legality of the issue or sale of any shares of the
Fund, or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of the Fund,
or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any
dividend by the Fund in respect of shares of the Fund;
(f) The legality of any borrowing by the Fund on behalf of the
Fund, using Securities as collateral;
3. The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount due to the Fund
from the Dividend and Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Dividend and
Transfer Agent of the Fund of any amount paid by the Custodian
to the Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
4. Income due or payable to the Fund with respect to Fund
Assets will be credited to the account of the Fund as follows:
(a) Dividends will be credited on the first business day
following payable date irrespective of collection.
(b) Interest on fixed rate municipal bonds and debt securities
issued or guaranteed as to principal and/or interest by the
government of the United States or agencies or instrumentalities
thereof (excluding securities issued by the Government National
Mortgage Association) will be credited on payable date
irrespective of collection.
(c) Interest on fixed rate corporate debt securities will be
credited on the first business day following payable date
irrespective of collection.
(d) Interest on variable and floating rate debt securities and
debt securities issued by the Government National Mortgage
Association will be credited upon the Custodian's receipt of
funds.
(e) Proceeds from options will be credited upon the
Custodian's receipt of funds.
5. Notwithstanding paragraph 5 of this Article IX, the
Custodian shall not be under any duty or obligation 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
(i) it shall be directed to take such action by a Certificate
and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action or, at the Custodian's option, prepayment.
6. The Custodian may appoint one or more financial or banking
institutions, as Depository or Depositories or as Sub-Custodian
or Sub-Custodians, including, but not limited
to, banking institutions located in foreign countries, of
Securities and monies at any time owned by the Fund, upon terms
and conditions approved in a Certificate. Current Depository(s)
and Sub-Custodian(s) are noted in Appendix B. The Custodian shall
not be relieved of any obligation or liability under this
Agreement in connection with the appointment or activities of
such Depositories or Sub-Custodians. Any such Sub-Custodian
shall be qualified to serve as such for assets of investment
companies registered under the Investment Company Act of 1940,
as amended ("1940 Act"). The Custodian shall promptly forward
to the Fund all documents it receives from any Sub-Custodian
appointed hereunder which are provided to assist directors of
registered investment companies fulfill their responsibilities
under Rule 17f-5 under the 1940 Act. Further, the Custodian
shall promptly inform the Fund in writing if it receives any
written statement of the Fund's account maintained by any
Sub-Custodian which contains an error.
7. 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 account of the Fund are such as properly may
be held by the Fund under the provisions of the Articles of
Incorporation and the Fund's By-Laws.
8. The Custodian shall treat all records and other information
relating to the Fund and the Fund Assets as confidential and
shall not disclose any such records or information to any other
person unless (a) the Fund shall have consented thereto in
writing or (b) such disclosure is compelled by law.
9. The Custodian shall be entitled to receive and the Fund
agrees to pay to the Custodian, for the Fund's account from Fund
Assets only, such compensation as shall be determined pursuant
to Appendix C attached hereto, or as shall be determined
pursuant to amendments to such Appendix approved by the
Custodian and the Fund, on behalf of the Fund. The Custodian
shall be entitled to charge against any money held by it for the
account of the Fund the amount of any loss, damage, liability or
expense, including counsel fees, for which it shall be entitled
to reimbursement under the provisions of this Agreement as
determined by
agreement of the Custodian and the Fund or by the final order of
any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the
Custodian may charge against the account of the Fund include, but
are not limited to, the expenses of Sub-Custodians incurred in
settling transactions involving the purchase and sale of
Securities of the Fund.
10. The Custodian shall be entitled to rely upon any
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions and any Written Instructions actually received
by the Custodian pursuant to Article IV or V hereof. The Fund
agrees to forward to the Custodian Written Instructions from
Authorized Persons confirming Oral Instructions in such manner
so that such Written Instructions are received by the Custodian,
whether by hand delivery, telex or otherwise, on the first
business day following the day on which such Oral Instructions
are given to the Custodian. The Fund agrees that the fact that
such confirming instructions are not received by the Custodian
shall in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
11. The Custodian will (a) set up and maintain proper books of
account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will
meet the obligations of the Fund under the Investment Company
Act of 1940, with particular attention to Section 31 thereof and
Rules 31 a-1 and 31 a-2 thereunder and those records are the
property of the Fund, and (b) preserve for the periods
prescribed by applicable Federal statute or regulation all
records required to be so preserved. The books and records of
the Custodian shall be open to inspection and audit at
reasonable times and with prior notice by Officers and auditors
employed by the Fund.
12. The Custodian and its Sub-Custodians shall promptly send to
the Fund, for the account of the Fund, any report received on
the systems of internal accounting control of the
Book-Entry System or the Depository and with such reports on their
own systems of internal accounting control as the Fund may
reasonably request from time to time.
13. The Custodian performs only the services of a custodian and
shall have no responsibility for the management, investment or
reinvestment of the Securities from time to time owned by the
Fund. The Custodian is not a selling agent for shares of the
Fund and performance of its duties as a custodial agent shall
not be deemed to be a recommendation to the Custodian's
depositors or others of shares of the Fund as an investment.
14. Anything to the contrary in their Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or damage
to the Fund resulting from use of a Sub-Custodian, Depository or
Book-Entry System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents, Sub-Custodians
or of any of its or their employees or from failure of the
Custodian or any such agent or Sub-Custodians to enforce
effectively such rights as it may have against a Sub-Custodian,
the Depository or Book-Entry System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against such Sub-Custodian,
the Depository or Book-Entry System or any other person which
the Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not made whole for
any such loss or damage.
15. Opinion of Fund's Independent accountant -- The Custodian
shall take all reasonable action, as the Fund may from time to
time request, to obtain from year to year favorable opinions
from the Fund's independent accountants with respect to its
activities hereunder in connection with the preparation of the
Fund's Form N-1A, and Form N-SAR or other annual reports to the
Securities and Exchange Commission and with respect to any other
requirements of such Commission.
ARTICLE X
TERMINATION
-----------
1. Either of the parties hereto may terminate this Agreement
for any reason by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than ninety (90) days after the date of giving of such notice.
If such notice is given by the Fund, on behalf of the Fund, it
shall be accompanied by a copy of a resolution of the Board of
Directors, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating
a successor custodian or custodians. In the event such notice
is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a
resolution of its Board of Directors, certified by the
Secretary, designating a successor custodian or custodians to
act on behalf of the Fund. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus, and undivided profits.
Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver,
on that date, directly to the successor custodian all Securities
and monies then owned by the Fund and held by it as Custodian.
Upon termination of this Agreement, the Fund shall pay to the
Custodian on behalf of the Fund such compensation as may be due
as of the date of such termination. The Fund agrees on behalf
of the Fund that the Custodian shall be reimbursed for its
reasonable costs in connection with the termination of this
Agreement.
2. If a successor custodian is not designated by the Fund, on
behalf of the Fund, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will
not serve, the Fund shall upon the delivery by the Custodian to
the Fund of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
monies then owned by the Fund, be deemed to be the custodian
for the Fund, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other than
the duty with respect to Securities held in the Book-Entry System
which cannot be delivered to the Fund to hold such Securities
hereunder in accordance with this Agreement.
ARTICLE XI
MISCELLANEOUS
-------------
1. Appendix A sets forth the names and the signatures of all
Authorized Persons. The Fund agrees to furnish to the
Custodian, on behalf of the Fund, a new Appendix A in form
similar to the attached Appendix A, if any present Authorized
Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Authorized
Persons as set forth in the last delivered Appendix A.
2. No recourse under any obligation of this Agreement or for
any claim based thereon shall be had against any organizer,
shareholder, Officer, Director, past, present or future as such,
of the Fund or of any predecessor or successor, either directly
or through the Fund or any such predecessor or successor,
whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or
otherwise; it being expressly agreed and understood that this
Agreement and the obligations thereunder are enforceable solely
against Fund Assets, and that no such personal liability
whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Directors of the Fund or of
any predecessor or successor, or any of them as such, because of
the obligations contained in this Agreement or implied therefrom
and that any and all such liability is hereby expressly waived
and released by the Custodian as a condition of, and as a
consideration for, the execution of this Agreement.
3. The obligations set forth in this Agreement as having been
made by the Fund have been made by the Board of Directors,
acting as such Directors for and on behalf of the Fund, pursuant
to the authority vested in them under the laws of the State of
Maryland, the Articles of Incorporation and the By-Laws of the
Fund This Agreement has been executed by Officers of the
Fund as officers, and not individually, and the obligations
contained herein are not binding upon any of the Directors,
Officers, agents or holders of shares, personally, but bind only
the Fund and then only to the extent of Fund Assets.
4. Such provisions of the Prospectus of the Fund and any other
documents (including advertising material) specifically
mentioning the Custodian (other than merely by name and address)
shall be reviewed with the Custodian by the Fund.
5. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its offices at Star Bank Center, 000
Xxxxxx Xxxxxx, X. X. 0000, Xxxxxxxxxx, Xxxx 00000, attention
Mutual Fund Custody Department, or at such other place as the
Custodian may from time to time designate in writing.
6. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Fund shall be
sufficiently given when delivered to the Fund or on the second
business day following the time such notice is deposited in the
U.S. mail postage prepaid and addressed to the Fund at its
office at 0000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxx Xxxxx, XX
00000 or at such other place as the Fund may from time to time
designate in writing.
7. This Agreement with the exception of Appendices A & B may
not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as
this Agreement, and authorized and approved by a resolution of
the Board of Directors.
8. 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 or by the Custodian, and no attempted assignment by
the Fund or the Custodian shall be effective without the written
consent of the other party hereto.
9. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
10. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective Officers, thereunto
duly authorized as of the day and year first above written.
ATTEST: Philadelphia Fund, Inc.
/s/Xxxxxx X. Xxxx By:/s/Xxxxxx X. Xxxxxx
----------------------- ----------------------
Xxxxxx X. Xxxx
Title: President
-------------------
ATTEST: Star Bank, N.A.
/s/Xxxx Xxxxxxx By:/s/Xxxxx X. Xxxxx
----------------------- ------------------------
Title: Vice President & Trust Officer
-------------------------------
APPENDIX A
Board of Directors
------------------
Authorized Persons Specimen Signatures
------------------ -------------------
Chairman: Xxxxxx X. Xxxxxx /s/Xxxxxx X. Xxxxxx
------------------ -------------------
President: Xxxxxx X. Xxxxxx /s/Xxxxxx X. Xxxxxx
------------------ -------------------
Secretary: Xxxxxx X. Xxxx /s/Xxxxxx X. Xxxx
------------------ -------------------
Treasurer: Xxxxxx X. Xxxx /s/Xxxxxx X. Xxxx
------------------ -------------------
Controller:
------------------ -------------------
Adviser Employees:
Xxxxx X. Xxxxxxx /s/Xxxxx X. Xxxxxxx
------------------ -------------------
Xxxxx X. Xxxxx /s/Xxxxx X. Xxxxx
------------------ -------------------
------------------ -------------------
American Data Services, Inc.
Employees:
Xxxxxxx X. Xxxxxx /s/Xxxxxxx X Xxxxxx
------------------ -------------------
Xxxxx Xxxx /s/Xxxxx Xxxx
------------------ -------------------
------------------ -------------------
------------------ -------------------
APPENDIX B
The following Depository(s) and Sub-Custodian(s) are employed
currently by Star Bank, N.A. for securities processing and
control . . .
The Depository Trust Company (New York)
0 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
(For Foreign Securities and certain non-DTC eligible
Securities)
APPENDIX C
Star Bank, N.A.
Custody Fee Schedule
Star Bank, N.A., as Custodian, will receive monthly compensation
for services according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
--------------------------
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed
through DTC or Federal Reserve $7.00
(c) For each portfolio transaction processed
through our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $25.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $8.00
(f) For each option/future contract written,
exercised or expired $20.00
(g) For each Cedel/Euro clear transaction $100.00
(h) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free
delivery (excludes initial conversion), maturity, tender or
exchange:
II. Monthly Market Value Fee
------------------------
Based upon Month-end at a rate of: Million
-------
.0005 (5 Basis Points) on First $10
.0003 (3 Basis Points) on Next $10
.0002 (2 Basis Points) on Next $20
.0001.5 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee $650.00
-------------------
IV. Out-of-Pocket Expenses
----------------------
The only out-of-pocket expenses charged to your account will
be shipping fees or transfer fees.
V. XXX Documents
-------------
Per Shareholder/year to hold each XXX Document $8.00
For purposes of calculating the fee, all assets being held by Star
Bank N.A., as Custodian, and under management by Xxxxxx Financial
Corp will be included.
Star Bank, N.A.
Cash Management Fee Schedule
Services Unit Cost Monthly Cost
-------- --------- ------------
DDA Account Maintenance $10.00
Deposits .35
Deposited Items .10
Checks Paid .15
Balance Reporting - P.C. Access 50.00
ACH Origination .08($40 min.)
Controlled Disbursement 110.00
Deposited Items Returned 5.00
NSF 20.00
Data Transmission 110.00
Data Capture .10
(varies depending upon what
information needs to be captured)
Drafts Cleared .179
Lockbox Maintenance 50.00
Lockbox items Processed
(with copy of check) .30
(without copy of check) .24
Wires - Outgoing (Repetitive) 10.00
(Non-Repetitive) 11.00
- Incoming (With Notification) 7.50
PC - initiated wire (outgoing)
(Repetitive) 8.00
(Non-Repetitive) 8.00
Stop Payments 20.00
*Uncollected Charge Star Bank Prime Rate as of first of month
plus 4%
*Fees for uncollected balances are figured on the monthly average.
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against 100% of the cash
management services fees. Earnings credits are based on the
average yield on the 91 day U.S. Treasury Xxxx for the preceding
thirteen weeks less 10% reserve.
Star Bank, N.A.
Global Custody
Fee Schedule
1. Annual Charge on Fund Assets Non-Emerging Markets:
--------------------------------------------------
- 10 basis points on the first $25 million
- 12 basis points on the next $25 million
- Remainder to be negotiated
2. Transaction Fee For Non-Emerging Markets:
-----------------------------------------
- $125 per Security Purchase/sale until funds asset value
reaches $25 million
- $75 per security purchase/sale once funds asset value
exceeds $25 million
Non-Emerging Markets:
---------------------
- Cedel (Eurobonds) - Australia - Austria
- Euroclear (Eurobonds) - Belgium - Hong Kong
- Canada - Indonesia
- Denmark - Malaysia
- France - Mexico
(Equities)
- Germany - Philippines
- Italy - Singapore
- Ireland - Spain
- Japan - Sweden
- Luxembourg - Thailand
- Netherlands
- New Zealand
- Norway
- Switzerland
- United Kingdom
Asset and Transaction Fee - Emerging Markets:
---------------------------------------------
Country Annual Asset Fee Transactions
------- ---------------- ------------
Argentina 45 Basis Points $175
Bangladesh 35 Basis Points $175
Brazil 50 Basis Points $125
Chile 30 Basis Points $125
Columbia 40 Basis Points $150
Finland 15 Basis Points $125
Greece 50 Basis Points 20 Basis Points
India 45 Basis Points $175
Mexico (Bonds) 30 Basis Points $125
Pakistan 30 Basis Points $175
Xxxx 00 Basis Points $175
Portugal 15 Basis Points $125
Shanghai 25 Basis Points $100
Xxxxxxx 00 Xxxxx Xxxxxx $100
South Korea 15 Basis Points $125
Sri Lanka 25 Basis Points $100
Turkey 30 Basis Points $125
Venezuela 35 Basis Points $125
3. Base Fee - $525 per Account (per month)
4. Communications (Globe *Link) - Free of Charge
* THE ABOVE FEE SCHEDULE ASSUMES THE CLIENT WILL DEAL DIRECTLY
WITH STAR BANK AND ALL FOREIGN SECURITY TRANSACTIONS WILL BE
SETTLED IN U.S. DOLLARS.
Notes
-----
1. Fees are billed monthly.
2. Fees for the receipt of positions relating to the initial
asset transaction will be waived with the exception of Spain
and Indonesia were re-registration fees will be assessed.
3. Cash movements relating to third party FX trades will be
assessed at $15 per U.S. wire movement and $50 per non U.S.
wire movement. For FX trades concluded with BTCo., this charge
will be waived.
4. Fees for investment in countries not listed will be negotiated
separately.
5. Fees for stamp duty and registration, charged by local
authorities, not included as part of trade cost will be
billed separately.
APPENDIX D
CUSTODIAN AGREEMENT
AGREEMENT dated as of October 17, 1994 between BANKERS TRUST
COMPANY (the "Custodian") and Star Bank, N.A. (the "Customer").
WHEREAS, the Customer serves as custodian with respect to the
assets of various investors, including investment companies
registered under the Investment Company Act of 1940 ("1940 Act")
and any series thereof (each investor, including each series of a
registered investment company, an "Investor");
WHEREAS, the Customer wishes to retain the Custodian to
provide certain global subcustodian services to the Customer and
the Custodian is willing to provide such services;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein conatined, it is agreed among the parties hereto
as follows:
1. Employment of Custodian. The Customer hereby employs the
Custodian as custodian of all assets of an Investor which the
Customer delivers to the Custodian and accepted by the Custodian
or any of its subcustodians (as that term is defined in Section
5) anywhere in the world (the "Property") pursuant to the terms
and conditions set forth herein. Without limitation, such
Property shall include stocks and other equity interests of every
type, evidences of indebtedness, other instruments representing
same or rights or obligations to received, purchase, deliver or
sell same and other non-cash investment property of the Customer
("Securities") and cash from whatever source and in whatever
currency ("Cash"). The Custodian shall not be responsible for
any property of the Customer held or received by the Customer or
others and not delivered to the Custodian or any of its
Subcustodians. In delivering any assets to the Custodian, the
Customer shall specify the Investor which owns beneficially such
assets, and shall provide such other information as the Custodian
shall reasonably request.
2. Custody Account. The Custodian agrees to establish and
maintain one or more custody accounts each in the name of the
Customer, on behalf of, and in the name of the Investor
(individually an "Account", collectively the "Accounts") for any
and all Property from time to time received and accepted by the
Custodian or any of its Subcustodians for the account of the
Customer. The Customer acknowledges its responsibility as a
principal for all of its obligations to the Custodian arising
under or in connection with this Agreement, notwithstanding that
it may be acting on behalf an Investor and warrants its authority
to
deposit in the Accounts any Property received therefor by the
Custodian or any Subcustodian and to give, and authorize others
to give instructions related thereto. The Customer agrees theat
the Custodian shall not be subject to, nor shall its rights and
obligations under this Agreement or with respect to the Accounts
be affected by, any agreement between the Customer and any other
person.
The Custodian shall hold, keep safe and protect as custodian
in the Account, on behalf of the Customer, all Property. All
transactions, including, but not limited to, foreign exchange
transactions, involving the Property shall be executed or
settled solely in accordance with Instructions (as that term is
defied in Section 10), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other
income and payments whether paid in cash or in kind,
on the Property, as the same become payable and
credit the same to the appropriate Account;
(b) present for payment all Securities held in the
Account which are called, redeemed or retired or
otherwise become payable and all coupons and
other income items which call for payment upon
presentation to the extent that the Custodian or its
Subcustodian is actually notified of such
opportunities and hold the cash received in the
appropriate Account pursuant to this Agreement;
(c) exchange Securities where the exchange is purely
ministerial (including, without limitation, the
exchange of temporary securities for those in
definitive form and the exchange of warrants, or
other documents of entitlement to securities, for
the Securities themselves);
(d) whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue,
stock dividend or stock split is received for the
Account and such rights entitlement or fractional
interest bears an expiration date, if after
endeavoring to obtain the Customer's Instructions
such Instructions are not received in time for the
Custodian to take timely action, sell in the
discretion of the Custodian (which sale the Customer
hereby authorizes the Custodian to make)
such rights entitlement or fractional interest and
credit the appropriate Account with the net proceeds
of such sale;
(e) execute in the Customer's name for the appropriate
Account, whenever the Custodian deems it
appropriate, such ownership and other certificates
as may be required to obtain the payment of income
from the Property; and
(f) pay for the Account, any and all taxes and levies in
the nature of taxes imposed on income on the
Property by any governmental authority. In the
event there is insufficient Cash available in an
Account to pay such taxes and levies, the Custodian
shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may
deposit additional Cash in the Account or take steps
to have sufficient Cash available. The Customer
agrees, when and if requested by the Custodian and
required in connection with the payment of any such
taxes to cooperate with the Custodian in furnishing
information, executing documents or otherwise.
The Custodian shall deliver, subject to Section 12 below, any
and all Property in the Account in accordance with Instructions
and in connection therewith, the Customer will accept delivery
of Securities of the same class and denomination in place of
those contained in the Account. Neither the Custodian nor any
Subcustodian shall have any duty or responsibility to see to the
application of any Property withdrawn from the Account upon
Instructions.
Except as otherwise may be agreed upon by the parties hereto,
the Custodian shall not be required to comply with any
Instructions to settle the purchase of any Securities for an
Account unless there is sufficient Cash in the Account at the
time or to settle the sale of any Securities from the Account
unless such Securities are in deliverable form. Notwithstanding
the foregoing, if the purchase price of such Securities exceeds
the amount of Cash in the Account at the time of such purchase,
the Custodian may, in its sole discretion, advance the amount of
the difference in order to settle the purchase of such
Securities. The amount of any such advance shall be deemed a
loan from the Custodian to the Customer payable on demand and
bearing interest accruing from the date such loan is made to but
not including the date such loan is repaid at a rate per annum
customarily charged by the Custodian on similar loans.
3. Records, Ownership of Property and Statements. The
ownership of the Property whether Securities, Cash and/or other
property, and whether held by the Custodian or a Subcustodian or
in a Securities Depository (as described in Section 5) as
hereinafter authorized, shall be clearly recorded on the
Custodian's books as belonging to the Account and not for the
Custodian's own interest.
The Custodian shall keep accurate and detailed accounts of all
investments, receipts, disbursements and other transactions for
each Account. All accounts, books and records of the Custodian
relating thereto shall be open to inspection and audit at all
reasonable times during normal business hours by any person
designated by the Customer. The Custodian will supply to the
Customer from time to time, as mutually agreed upon, a statement
in respect to any Property in the Accounts held by the Custodian
or by a Subcustodian. In the absence of the filing in writing
with the Custodian by the Customer of exceptions or objections to
any such statement within sixty (60) days of the mailing thereof,
the Customer shall be deemed to have approved such statement;
absent manifest error or ommission, and in such case or upon
written approval of the Customer of any such statement, the
Custodian shall, to the extent permitted by law, be released,
relieved and discharged with respect to all matters and things
set forth in such statement as though such statement had been
settled by the decree of a court of competent jurisdiction in an
action in which the Customer and all persons having any equity
interest in the Customer were parties.
4. Maintenance of Property Outside of the United States.
Pursuant to Instrustions, Property in an Account may be held in a
country or other jurisdiction outside of the United States;
provided that (a) with respect to Securities, such country or
other jurisdiction shall be one in which the principal trading
market for such Securities is located or the country or other
jurisdiction in which such Securities are to be presented for
payment or are acquired for the Account and (b) with respect to
Cash, the amount thereof to be maintained in any country or other
jurisdiction shall be an amount which is deemed necessary to
settle transactions relating to Securities purchased for the
Account in such country or jurisdiction or which is received in
connection with the holding of such Securities in the Account.
Instructions to settle Securities transactions shall be deemed to
authorize the holding of such Securities and Cash in that
country.
5. Subcustodians and Securities Systems. The Customer
authorizes and instructs the Custodian to hold the Property in
each Account in custody accounts which have been established by
the Custodian with (a) one of its U.S. branches or another U.S.
bank or trust company or branch thereof located in the U.S. which
is itself qualified under the 1940 Act to act as custodian
(individually. a "U.S. Subcustodian"), or a U.S. securities
depository or clearing agency, including the Federal book-entry
system, in which the Custodian or a U.S. Subcustodian
participates (individually, a "U.S. Securities System") or (b)
one of its non-U.S. branches or majority-owned subsidiaries, a
non-U.S. branch or majority-owned subsidiaryof a U.S bank or non-
U.S. bank or trust company, acting as custodian (individually, a
"non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S.
depository or clearing system in which the Custodian or any
Subcustodian participates (individually a "non-U.S. Securities
System"; U.S. Securities Systems and non-U.S. Securities
Systems, collectively, "Securities Systems"), PROVIDED that in
each case in which a U.S. Subcustodian or U.S. Securities System
is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; PROVIDED FURTHER, that in
each case in which a non-U.S. Subcustodian or non-U.S. Securities
System is employed (a) such Subcustodian or Securities System
either is (i) a qualified U.S. bank as defined by rule 17f-5
under the 1940 Act ("Rule 17f-5") or (ii) an "eligible foreign
custodian" within the meaning of Rule 17f-5 or such Subcustodian
or Securities System is the subject of an order granted by the
U.S. Securities and Exchange Commission exempting such agent or
the subcustody arrangements thereto from all or part of the
provisions of Rule 17f-5 and (b) the agreement between the
Custodian and such non-U.S. Subcustodian has been approved by
Instructions; it being understood that the Custodian shall have
no liability or responsibility for determining whether the
approval of any Subcustodian or Securities System has been proper
under the 1940 Act or any rule or regulation thereunder.
Upon receipt of Instruction, the Custodian agrees to cease
the employment of any Subcustodian or Securities System with
respect to the Customer, and if desirable and practicable,
appoint a replacement subcustodian or securities system in
accordance with the provisions of this Section 5. In addition
the Custodian may, at any time in its discretion, upon written
notification to the Customer, terminate the employment of any
Subcustodian or Securities System.
Upon request of the Customer, the Custodian shall deliver to
the Customer annually a certificate stating: (a) the identity of
each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of the Custodian and the name and address of the
governmental agency or other regulatory authority that supervises
or regulates such non-U.S. Subcustodian and non-U.S. Securities
System; (b) the countries in which each non-U.S. Subcustodian or
non-U.S. Securities System is located; and (c) so long as Rule
17f-5 requires an investment company board of directors/trustees
to directly approve its foreign custody arrangements, such other
information relating to such non-U.S. Subcustodians and non-U.S.
Securities Systems as may reasonably requested by the Customer to
ensure compliance with Rule 17f-5. So long as Rule 17f-5
requires and investment company board of directors/trustees to
directly approve its foreign custody arrangements, the Custodian
also shall furnish annually to the Customer information
concerning such non-U.S. Subcustodians and non-U.S. Securities
Systems similar in kind and scope as that furnished to the
Customer in connection with execution of this Agreement.
Custodian agrees to provide Customer with notice of any material
adverse changes in the facts or circumstances upon which such
information is based as soon as practicable after it becomes
aware of any such material adverse changes in the normal course
of its custodial activities.
6. Use of Subcustodian. With respect to Securities in
an Account which are maintained by the Custodian in the custody
of a Subcustodian pursuant to Section 5, or maintained by the
Custodian or Subcustodian in the custody of a Securities System,
pursuant to Section 5.
(a) The Custodian will identify on its books as belonging
to the Customer, on behalf of, and in the name of, an
Investor, any Securities held by such Subcustodian or
Securities System.
(b) In the event that a Subcustodian permits any of the
Securities placed in its care to be held in a
Securities System, such Subcustodian will be required
by its agreement with the Custodian to identify on its
books such Securities as being held for the account of
the Custodian for its customers.
(c) Any Securities in an Account held by a Subcustodian
will be subject only to the instructions of the
Custodian or its agents; and any Securities
held in a Securities System for the account of the
Custodian or a Subcustodian will be subject only to the
instructions of the Custodian or such subcustodian, as
the case may be.
(d) Securities deposited with a Subcustodian will be
maintained in an account holding only assets for
customers of the Custodian.
(e) Any agreement the Custodian shall enter into with a
Subcustodian with respect to the holding of Securities
shall require that (i) the Account will be adequately
indemnified or its losses adequately insured; (ii) the
Securities are not subject to any
right, charge, security interest lien or claim of any
kind in favor of such Subcustodian or its creditors
except a claim for payment in accordance with such
agreement for their safe custody or administration and
expenses related thereto and (iii) beneficial ownership
of such Securities be freely transferable without the
payment of money or value other than for safe custody
or administration and expenses related thereto. (iv)
adequate records will be maintained identifying the
Property held pursuant to such Agreement as belonging
to the Custodian, on behalf of its customers and (v) to
the extent permitted by applicable law, officers of or
auditors employed by, or other representatives of or
designated by, the Custodian, including the independent
public accountants of or designated by the Customer be
given access to the books and records of such
Subcustodian relating to its actions under its
agreement pertaining to any Property held by it
thereunder or, if such access is not permitted by law,
confirmation of or pertinent information contained in
such books and records shall be furnished to such
persons designated by the Custodian.
7. Holding of Securities, Nominees, etc. Securities in an
Account which are held by the Custodian or any subcustodian may
be held by such entity in the name of the Customer, in its own
name, in the name of its nominee or in bearer form. Securities
which are held with a Subcustodian or are eligible for deposit
in a Securities System as provided above may be maintained
with the Subcustodian or Securities System, as the case may be,
in an account for the Custodian's or Subcustodian's customers.
The Custodian or Subcustodian, as the case may be, may combine
certificates of the same issue held by it as fiduciary or as a
custodian. In the event that any Securities in the name of the
Custodian or its nominee or held by one of its Subcustodians and
registered in the name of such Subcustodian or its nominee are
called for partial redemption by the issuer of such Security,
the Custodian may, subject to the rules or regulations
pertaining to allocation of any Securities System in which
such Securities have been deposited, allot, or cause to be
allotted, the called portion to the respective beneficial
holders of such class of security in any manner the Custodian
deems to be fair and equitable.
8. Proxies, etc. With respect to any proxies, notices,
reports or other communications relative to any of the Securities
in the Account, the Custodian shall perform such services
relative thereto as may be agreed upon between the Custodian and
the Customer. Neither the Custodian nor its nominees or agents
shall vote upon or in respect of any of the Securities in the
Account, execute any form of proxy to vote thereon, or give any
consent or
take any action (except as provided in Section 2) with respect
thereto except upon the receipt of Instructions from the Customer
relative thereto.
9. Settlement Procedures. Settlement and payment for
Securities received for the Account and delivery of Securities
maintained for an Account may be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without
limitation, delivering Securities to the purchaser thereof or to
a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later
payment for such Securities from such purchaser or dealer, and
in accordance with the standard operating procedures of the
Custodian in effect from time to time for that jurisdiction or
market.
Notwithstanding that the Custodian may settle purchases and
sales of securities or credit income from Securities, on a
contractual basis, as outlined in the Investment Manager User
Guide as provided to the Customer by the Custodian, the Custodian
may, at its sole option, reverse such credits or debits to the
appropriate Account in the event that the transaction does not
settle, or the income is not received, in a timely manner, and
the Customer agrees to hold the Custodian harmless from any
losses which may result therefrom.
10. Instructions. The term "Instructions" means instructions
from the Customer in respect of any of the Custodian's duties
hereunder which have been received by the Custodian at its
address set forth in Section 15 below in writing or by tested
telex signed or given by such one or more person or persons as
the Customer shall have from time to time authorized in writing
to give the particular class of Instructions in question and
whose name and (if applicable) signature and office address have
been filed with the Custodian, or which have been transmitted
electronically through an electronic on-line service and
communications system offered by the Custodian or other
electronic instruction system acceptable to the Custodian, or
upon receipt of such other form of instructions as the Customer
may from time to time authorize in writing and which the
Custodian agrees to accept. The Custodian shall have the right
to assume in the absence of notice to the contrary from the
Customer that any person whose name is on file with the Custodian
pursuant to this Section 10 has been authorized by the Customer
to give the Instructions in question and that such authorization
has not been revoked.
11. Standard of Care. The Custodian shall be responsible for
the performance of only such duties as are set forth herein or
contained in Instructions given to the Custodian which are not
contrary to the provisions of this Agreement. The Custodian
will use reasonable care with respect to the safekeeping of
Property in
each Account and in carrying out its obligations under the
Agreement. So long as and to the extent that it has exercised
reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any Property or other property
or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting
upon, and may conclusively rely on, without liability for any
loss resulting therefrom, any notice, request, consent,
certificate or other instrument reasonably believed by it to be
genuine and to be signed or furnished by the proper party or
parties, including, without limitation, Instructions, and shall
be indemnified by the Customer for any losses, damages, costs and
expenses (including, without limitation, the fees and expenses of
counsel) incurred by the Custodian and arising out of action
taken or omitted in good faith by the Custodian hereunder or
under any Instructions. The Custodian shall be liable to the
Customer for any loss which shall occur directly as the result of
the failure of any Subcustodian to exercise reasonable care with
respect to the safekeeping of such Securities. With respect to
Securities Systems, the Custodian shall only be liable for losses
arising from the employment of such Securities System caused by
the Bank's own failure to exercise reasonable care. In the event
of any loss to the Customer by reason of failure of the Custodian
or any Subcustodian to utilize reasonable care, the Custodian
shall be liable to the Customer to the extent of Customer's
actual damages at the time such loss was discovered without
reference to any special conditions or circumstances. In no
event shall the Custodian be liable for any consequential or
special damages. The Custodian shall be entitled to rely, and
may act, on advice of counsel (who may be counsel for the
Customer) on all matters and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
In the event the Customer subscribes to an electronic on-line
service and communications system offered by the Custodian, the
Customer shall be fully responsible for the security of the
Customer's connecting terminal, assess thereto and the proper and
authorized use thereof and the initiation and application of
continuing effective safeguards with respect thereto and agree to
defend and indemnify the Custodian and hold the Custodian
harmless from and against any and all losses, damages, costs and
expenses (including the fees and expenses of counsel) incurred by
the Custodian as a result of any improper or unauthorized use of
such terminal by the Customer or by any others.
All collections of funds or other property paid or
distributed in respect to Securities in an Account, including
funds involved in third-party foreign exchange transactions,
shall be made at the risk of the Customer. The Custodian shall
have no liability for any loss occasioned by delay in the actual
receipt of notice by the Custodian or by its subcustodian of any
payment, receipt or other transaction regarding Securities in an
Account respect of which
the Custodian has agreed to take action as provided in Section 2
hereof. The Custodian shall not be liable for any loss resulting
from, or caused by, or resulting from acts of governmental
authorities (whether de jure or de facto), including, without
limitation, nationalization, expropriation, and the imposition of
currency restrictions; acts of war, terrorism, insurrection or
revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons
beyond the control of the Custodian; hurricane, cyclone,
earthquake, volcanic eruption, nuclear fusion, fission,
radioactivity or other acts of God.
The provisions of this Section shall survive termination of
this Agreement.
12. Fees and Expenses. The Customer agrees to pay to the
Custodian such compensation for its services pursuant to this
Agreement as may be mutually agreed upon in writing from time to
time and the Custodian's out-of-pocket or incidental expenses,
including (but not limited to) legal fees. The Customer
hereby agrees to hold the Custodian harmless from any liability
or loss resulting from any taxes or other governmental charges,
and any expense related thereto, which may be imposed, or
assessed with respect to any Property in any Account and also
agrees to hold the Custodian, its Subcustodians, and their
respective nominees harmless from any liability as a record
holder of Property in the Account. The Custodian is authorized
to charge any non-custodial account of the Customer for such
fees and other expenses described in this section. The
provisions of this Section shall survive the termination of this
Agreement.
13. Amendment, Modifications, etc. No provisions of this
Agreement may amended, modified or waived except in writing
signed by the parties hereto.
14. Termination. This Agreement may be terminated by the
Customer or the Custodian (in its entirety or with respect to any
Account) by ninety (90) days' written notice to the other;
provided that notice by the Customer shall specify the
names of the persons to whom the Custodian shall deliver the
Securities in each applicable Account and to whom the Cash in
such Account shall be paid. If notice of termination is given by
the Custodian, the Customer shall, within ninety (90) days
following the giving of such notice, deliver to the Custodian a
written notice specifying each Account to be terminated and the
names of the persons to whom the Custodian shall deliver the
Securities in such Accounts and to whom the Cash in such Accounts
shall be paid. In either case, the Custodian will deliver such
Securities and Cash in each Account to the persons so specified,
after deducting therefrom any amounts which the Custodian
determines to be owing by that Account. In addition, the
Custodian may in its discretion withhold from such delivery from
an Account such Cash and Securities as may be
necessary to settle transactions pending at the time of such
delivery. If within ninety (90) days following the giving of a
notice of termination by the Custodian, the Custodian does not
receive from the Customer a written notice specifying the names
of the persons to whom the Cash in each applicable Account shall
be paid, the Custodian, at its election, may deliver such
Securities and pay such Cash to a bank or trust company doing
business in the State of New York to be held and disposed of
pursuant to the provisions of this Agreement, or may continue to
hold such Securities and Cash until a written notice as aforesaid
is delivered to the Custodian.
15. Notices. Except as otherwise provided in this Agreement,
all requests, demands or other communications between the
parties or notices in connection herewith (a) shall be in
writing, had delivered or sent by telex, telegram, facsimile or
cable, or other means of electronic communication agreed upon by
the parties hereto addressed, if to the Customer, to its address
set forth on the signature page hereof and, if to the Custodian,
to c/o BTNY Services, Inc., 00 Xxxxxxxx Xxxxx, Xxxxxx Xxxx, Xxx
Xxxxxx 00000, Attention: Global Securities Services, (Telex Xx.
000000 Xxxx 00 Answerback: BANTRUS) (Facsimile No.
201-860-7290), or in either case to such other address as shall
have been furnished to the receiving party pursuant to the
provisions hereof and (b) shall be deemed effective when
received, or, in the case of a telex, when sent to the proper
number and acknowledged by a proper answerback.
16. Security for Payment. To secure payment of all fees and
expenses payable to Custodian by a specific Account, the Customer
hereby grants to Custodian a continuing security interest in and
right to setoff against such Account and all Property held
therein from time to time in the full amount of such
obligations. To secure payment of all fees and expenses payable
to the Custodian by the Customer, the Customer hereby grants the
Custodian a continuing security interest and right of setoff
against the balance from time to time in any non-custodian
account of the Customer (the "Pledged Balances"), and Custodian
may, at any time or from time to time at Custodian's sole option
and without notice, appropriate and apply toward the payment of
such obligations, the Pledged Balances. If at any time the
Property in an Account and the Pledged Balances are insufficient
to fully collateralize such obligations, Customer shall provide
to Custodian additional collateral in form and amount
satisfactory to Custodian and shall grant to Custodian a
continuing security interest in and right of setoff against such
collateral. In any such case and without limiting the foregoing,
Custodian shall be entitled to take such other action(s) or
exercise such other options, powers and rights as Custodian now
or hereafter has a secured creditor under the New York Uniform
Commercial Code or any other applicable law.
17. Governing Law and Successors and Assigns. This Agreement
shall be governed by the law of the State of New York and shall
not
be assignable by either party, but shall bind the successors in
interest of the Customer and Custodian.
18. Publicity. Customer shall furnish to Custodian at its
office referred to in Section 15 above, prior to any
distribution thereof, copies of any material prepared for
distribution to any persons who are not parties hereto that
refer in any way Custodian. Customer shall not distribute or
permit the distribution of such materials if Custodian
reasonable objects in writing within ten (10) business days (or
such other time as may be mutually agreed) after receipt
thereof. The provisions of this Section shall survive the
termination of this Agreement.
19. Submission to Jurisdiction. To the extent, if any, to
which the Customer or any of its respective properties may be
deemed to have or hereafter to acquire immunity, on the ground
of sovereignty or otherwise, from any judicial process or
proceeding to enforce this Agreement or to collect amounts due
hereunder (including, without limitation, attachment proceedings
prior to judgment or in aid of execution) in any jurisdiction,
the Customer hereby waives such immunity and agrees not to claim
the same. Any suit, action or proceeding arising out of this
Agreement may be instituted in any State or Federal court
sitting in the City of Xxx Xxxx, Xxxxx xx Xxx Xxxx, Xxxxxx
Xxxxxx of America, and the Customer irrevocably submits to the
non-exclusive jurisdiction of any such court in any such suit,
action or proceeding and waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the
laying of venue of such suit, action or proceeding brought in
such a court and any claim that such suit, action or proceeding
was brought in an inconvenient forum. The Customer hereby
irrevocably designates, appoints and empowers, as its authorized
agent to receive, for and on behalf of the Customer and its
property service of process in the State of New York when and as
such legal actions or proceedings may be brought in any of the
aforementioned courts, and such service of process shall be
deemed complete upon the date of delivery thereof to such agent
whether or not such agent gives notice thereof to the Customer
or upon the earliest of any other date permitted by applicable
law. The Customer further irrevocably consents to the service
of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
certified air mail, postage prepaid, to the Customer at its
address set forth below or in any other manner permitted by law,
such service to become effective upon the earlier of (i) the
date fifteen (15) days after such mailing or (ii) any earlier of
date permitted by applicable law. The Customer agrees that it
will at all times continuously maintain an agent to receive
service of process in the City and State of New York on behalf
of itself and its properties with respect to this Agreement and
in the event that, for any reason, the agent named above or its
successor shall no longer serve as agent of the Customer to
receive service of
process in the City and State of New York on its behalf, the
Customer shall promptly appoint a successor to so serve and shall
advise the Custodian thereof.
20. Headings. The headings of the paragraphs hereof are
included for convenience of reference only and do not form a
part of this Agreement.
STAR BANK, N.A.
By:/s/X.X. Xxxxxx Senior Vice President
------------------------------------
Title: Senior Trust Officer
Address: 000 Xxxxxx Xx.
X.X. 0000
Xxxxxxxxxx, Xxxx 00000
BANKERS TRUST COMPANY
By:/s/
------------------------------------
Title: Vice President
---------------------------------
