1
CUSTODIAN CONTRACT
Between
EAST WEST SECURITIES COMPANY, INC.
and
EAST WEST BANK
2
TABLE OF CONTENTS
1. Employment of Custodian and Property to be Held by It ...............................................4
------------------------------------------------------
2. Duties of the Custodian With Respect to Property of the Funds Held By the Custodian..................4
-----------------------------------------------------------------------------------
2.1 Holding Securities .........................................................................4
------------------
2.2 Delivery of Securities .....................................................................5
----------------------
2.3 Registration of Securities .................................................................7
--------------------------
2.4 Bank Accounts ..............................................................................7
-------------
2.5 Payments for Shares ........................................................................7
-------------------
2.6 Availability of Federal Funds .............................................................8
------------------------------
2.7 Collection of Income .......................................................................8
--------------------
2.8 Payment of Fund Moneys......................................................................8
----------------------
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.........................9
-------------------------------------------------------------------
2.10 Payments for Repurchases or Redemptions of Shares of a Fund.................................9
-----------------------------------------------------------
2.11 Appointment of Agents.......................................................................10
---------------------
2.12 Deposit of Fund Assets in Securities System.................................................10
-------------------------------------------
2.13 Segregated Account..........................................................................11
------------------
2.14 Joint Repurchase Agreements.................................................................11
---------------------------
2.15 Ownership Certificates for Tax Purposes.....................................................12
---------------------------------------
2.16 Proxies.....................................................................................12
-------
2.17 Communications Relating to Fund Portfolio Securities........................................12
----------------------------------------------------
2.18 Proper Instructions.........................................................................12
-------------------
2.19 Actions Permitted Without Express Authorization.............................................13
-----------------------------------------------
2.20 Evidence of Authority.......................................................................13
---------------------
2.21 Notice to Fund by Custodian Regarding Cash Movement.........................................13
---------------------------------------------------
3. Duties of Custodian With Respect to the Books of Account and Calculation of Net Asset Value and Net
----------------------------------------------------------------------------------------------------
Income...............................................................................................13
------
4. Records..............................................................................................14
-------
5. Opinion of Fund's Independent Public Accountants.....................................................14
------------------------------------------------
6. Reports to Fund by Independent Public Accountants....................................................14
-------------------------------------------------
7. Compensation of Custodian............................................................................15
-------------------------
8. Responsibility of Custodian..........................................................................15
---------------------------
9. Effective Period, Termination and Amendment..........................................................16
-------------------------------------------
10. Successor Custodian..................................................................................17
-------------------
2
3
11. Interpretive and Additional Provisions...............................................................17
--------------------------------------
12. California Law to Apply..............................................................................17
-----------------------
13. Notices..............................................................................................18
-------
14. Counterparts.........................................................................................18
------------
15. Limitations of Liability.............................................................................18
------------------------
3
4
CUSTODIAN CONTRACT
This Contract between EAST WEST SECURITIES COMPANY, INC., (the
"Fund"), a Maryland corporation, organized and existing under the laws of the
State of Maryland, having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and EAST WEST BANK, a California banking
corporation, having its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, hereinafter called the "Custodian,"
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Fund. Except as otherwise expressly provided herein, the
securities and other assets of the Fund shall be segregated from all
other persons and entities. The Fund will deliver to the Custodian all
securities and cash owned by the Fund and all payments of income,
payments of principal or capital distributions received by the Fund
with respect to all securities owned by the Fund from time to time,
and the cash consideration received by the Fund for units of
beneficial interest ("Shares") of the Fund as may be issued or sold
from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more
sub-custodians upon the terms specified in the Proper Instructions.
2. Duties of the Custodian With Respect to Property of the Fund Held By
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, including all
securities owned by the Fund, other than securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System," or securities which are subject to a joint
repurchase agreement with affiliated funds pursuant to Section 2.14.
The Custodian shall maintain records of all receipts, deliveries and
locations of such securities, together with a current inventory
thereof, and shall conduct periodic physical inspections of
certificates representing stocks, bonds and other securities held by
it under this Contract in such manner as the Custodian shall determine
from time to time to be advisable in order to verify the accuracy of
such inventory. With respect to securities held by any agent appointed
pursuant to Section 2.11 hereof, and with respect to securities held
by any sub-custodian appointed pursuant to Section 1 hereof, the
Custodian may rely upon certificates from such agent as to the
holdings of such agent and from such sub-custodian as to the holdings
of such
4
5
sub-custodian, it being understood that such reliance in no way
relieves the Custodian of its responsibilities under this Contract.
The Custodian will promptly report to the Fund the results of such
inspections, indicating any shortages or discrepancies uncovered
thereby, and take appropriate action to remedy any such shortages or
discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Fund;
(3) In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund, in
accordance with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed pursuant to
Section 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new securities are to be delivered to the
Custodian;
(7) Upon the sale of such securities for the account of the Fund,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom";
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
failure to act in accordance with the standard of reasonable
care or any higher standard of care imposed upon the
Custodian by any applicable law or regulation if such
above-stated standard of reasonable care were not part of
this Contract;
5
6
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided
that, in any such case, the new securities and cash, if any,
are to be delivered to the Custodian;
(10) For delivery in connection with any loans of portfolio
securities of the Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified by
the Fund, (b) certificated securities of a description
specified by the Fund, registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, or (c)
securities of a description specified by the Fund,
transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings
requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed, except that in cases where
additional collateral is required to secure a borrowing
already made, further securities may be released for the
purpose;
(12) 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, as
amended, (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 for the
Fund;
(13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transaction for a Fund;
(14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection with
distributions in kind, in satisfaction of requests by holders
of Shares for repurchase or redemption; and
(15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of
6
7
the Fund signed by an officer of the Fund and certified by
its Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund or
in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies
affiliated with the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.11 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities
accepted by the Custodian on behalf of the Fund under the terms of
this Contract shall be in "street names" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund,
other than cash maintained in a joint repurchase account with other
affiliated funds pursuant to Section 2.14 of this Contract or by a
particular Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940, as amended,
(the "1940 Act"). Funds held by the Custodian for the Fund may be
deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company
and the funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of Trustees
("Board") of the Fund. Such funds shall be deposited by the Custodian
in its capacity as Custodian for the Fund and shall be withdrawable by
the Custodian only in that capacity. If requested by the Fund, the
Custodian shall furnish the Fund, not later than twenty (20) days
after the last business day of each month, an internal reconciliation
of the closing balance as of that day in all accounts described in
this section to the balance shown on the daily cash report for that
day rendered to the Fund.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of the Fund as will enable the Custodian to receive
the cash consideration due to the Fund and will deposit into the
Fund's account such payments as are received from the Transfer Agent.
The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the
respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall make federal funds available to
the Fund as of specified
7
8
times agreed upon from time to time by the Fund and the Custodian in
the amount of checks, clearing house funds, and other non-federal
funds received in payment for Shares of the Fund which are deposited
into the Fund's accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by
the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to
the Fund's custodian account. Without limiting the generality
of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. The
collection of income due the Fund on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be
necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is
properly entitled.
(2) The Fund shall promptly notify the Custodian whenever income
due on securities is not collected in due course and will
provide the Custodian with monthly reports of the status of
past due income. The Fund will furnish the Custodian with a
weekly report of accrued/past due income for the Fund. Once
an item is identified as past due and the Fund has furnished
the necessary claim documentation to the Custodian, the
Custodian will then initiate a claim on behalf of the Fund.
The Custodian will furnish the Fund with a status report
monthly unless the parties-otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out moneys of the Fund in the following cases
only:
(1) Upon the purchase of securities, futures contracts or options
on futures contracts for the account of the Fund but only (a)
against the delivery of such securities, or evidence of title
to futures contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) "pursuant to Section 2.11 hereof"
registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or
in proper form for transfer, (b) in the case of a purchase
effected through a Securities System, in accordance with the
conditions set forth in Section 2.12 hereof or (c) in the
case of repurchase agreements entered into between the Fund
and any other party, (i) against delivery of the securities
either
8
9
in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase for the account of the Fund of securities owned by
the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
(3) For the redemption or repurchase of Shares of the Fund issued
by the Fund as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes; management,
accounting, transfer agent and legal fees; and operating
expenses of the Fund, whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees of the Fund signed by an
officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
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.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of the Fund, but subject to the limitations of the
Certificate of Incorporation and any applicable votes of the Board of
the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment
to holders of shares of the Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares including
without limitation through bank drafts, automated clearing-house
facilities, or by other means. In connection with the redemption or
repurchase of
9
10
Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a
commercial bank designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act and any
applicable state law or regulation, to act as a custodian, as its
agent to carry out such of the provisions of this Section 2 as the
Custodian may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities System. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission ("SEC") under
Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System", in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(1) The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to securities of
the Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Fund;
(3) The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund upon (i) receipt
of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect
such transfer and payment for the account of the Fund. Copies
of all advices from the Securities System of transfers of
securities for the account of the Fund shall identify the
Fund, be maintained for the Fund by the Custodian and be
provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a
written advice or notice and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Fund.
10
11
(4) The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting
system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for any loss or
damage to the Fund resulting from use of the Securities
System by reason of any negligence, misfeasance or misconduct
of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such
agent to enforce effectively such rights as it may have
against the Securities 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 the Securities
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 been made whole for any such loss or
damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and
diligence in making use of any Securities System.
2.13 Segregated Account. 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 by the Custodian pursuant to Section 2.12 hereof, (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 for the Fund, (ii) for purpose of
segregating cash or government securities in connection with options
purchased, sold or written for the Fund or commodity futures contracts
or options thereon purchased or sold for the Fund, (iii) for the
purpose of compliance by the Fund with the procedures required by any
release or releases of the SEC 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 signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper Instructions,
the Custodian shall deposit and/or maintain any assets of the Fund and
any affiliated funds which are
11
12
subject to joint repurchase transactions in an account established
solely for such transactions for the Fund and its affiliated funds.
For purposes of this Section 2.14, "affiliated funds" shall include
all investment companies and their portfolios for which subsidiaries
or affiliates of Federated Investors serve as investment advisers,
distributors or administrators in accordance with applicable exemptive
orders from the SEC. The requirements of segregation set forth in
Section 2.1 shall be deemed to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Fund and the investment adviser of the
Fund all written information (including, without limitation, pendency
of calls and maturities of securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund and the maturity of futures contracts purchased or
sold by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund and the
investment adviser of the Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer. If the Fund or the investment adviser of the Fund
desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the
Custodian in writing at least three business days prior to the date on
which the Custodian is to take such action. However, the Custodian
shall nevertheless exercise its best efforts to take such action in
the event that notification is received three business days or less
prior to the date on which action is required. For securities which
are not held in nominee name, the Custodian will act as a secondary
source of information and will not be responsible for providing
corporate action notification to the Fund.
2.18 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give
such instructions with respect to the
12
13
transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the Board of the
Fund accompanied by a detailed description of procedures approved by
the Board, Proper Instructions may include communications effected
directly between electromechanical or electronic devices provided that
the Board and the Custodian are satisfied that such procedures afford
adequate safeguards for the Fund's assets.
2.19 Actions Permitted Without Express Authorization. The Custodian may
in its discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund in such form that it may
be allocated to the Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Fund.
2.20 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to
have been properly executed on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of the Fund
as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination of or any action
by the Board pursuant to the Certificate of Incorporation as described
in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the
contrary.
2.21 Notice to Fund By Custodian Regarding Cash Movement. The Custodian
will provide timely notification to the Fund of any receipt of cash,
income or payments to the Fund and the release of cash or payment by
the Fund.
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Fund to keep the books of
account of the Fund and/or compute the net asset value per share of the
outstanding Shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net
13
14
asset value per share. If so directed, the Custodian shall also calculate daily
the net income of the Fund as described in the Fund's currently effective
private offering memorandum ("Memorandum") and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the 1940 Act, with particular attention to
Section 31 thereof and Rules 3la-1 and 3la-2 thereunder, and specifically
including identified cost records used for tax purposes. All such records shall
be the property of the Fund and shall at all times during the regular business
hours of the Custodian be open for inspection by duly authorized officers,
employees or agents of the Fund and upon notice to the Fund, employees and
agents of the SEC. In the event of termination of this Contract, the Custodian
will deliver all such records to the Fund to a successor Custodian, or to such
other person as the Fund may direct. The Custodian shall supply daily to the
Fund a tabulation of securities owned by the Fund and held by the Custodian and
shall, when requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include certificate numbers
in such tabulations. In addition, the Custodian shall electronically transmit
daily to the Fund information pertaining to security trading and other
investment activity and all other cash activity of the Fund.
5. Opinion of Fund's Independent Public Accountants.
The Custodian shall take all reasonable action to obtain from year to
year favorable opinions from independent public accountants with respect to its
activities hereunder in connection with the preparation of the Fund's
registration statement, periodic reports, or any other reports to the SEC and
with respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants.
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants for the Fund
on the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian for the Fund under this
Contract; such reports shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Fund, to provide reasonable assurance that
any material inadequacies would be disclosed by such examination and, if there
are no such inadequacies, the reports shall so state.
14
15
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian, and as reflected on Schedule A attached hereto.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in
carrying out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be imposed
upon the Custodian by any applicable law or regulation if such above stated
standard of reasonable care was not part of this Contract. The Custodian shall
be entitled to rely on and may act upon advice of counsel for the Fund on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice, provided that such action is not in violation
of applicable federal or state laws or regulations, and is in good faith and
without negligence. Subject to the limitations set forth in Section 15 hereof,
the Custodian shall be kept indemnified by the Fund but only from the assets of
the Fund involved in the issue at hand and be without liability for any action
taken or thing done by it that is reasonably related to its responsibility to
carry out the terms and provisions of this Contract in accordance with the
above standards.
In order that the indemnification provisions contained in this Section
8 shall apply, however, it is understood that if in any case the Fund may be
asked to indemnify or save the Custodian harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Custodian will use all reasonable care to
identify and notify the Fund promptly concerning any situation which presents
or appears likely to present the probability of such a claim for
indemnification. The Fund shall have the option to defend the Custodian against
any claim which may be the subject of this indemnification, and in the event
that the Fund so elects it will so notify the Custodian and thereupon the Fund
shall take over complete defense of the claim, and the Custodian shall in such
situation initiate no further legal or other expenses for which it shall seek
indemnification under this Section. The Custodian shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian
with respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Fund. If the Fund
requires the Custodian to take any action with respect to securities, which
action involves the payment of money or which action may, in the reasonable
opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Custodian may request the Fund, as a prerequisite to requiring
the Custodian to take such action, to provide indemnity to the Custodian in an
amount and form satisfactory to the Custodian. Subject to the limitations set
forth in Section 15 hereof, the Fund agrees to indemnify and hold harmless the
Custodian and its nominee from and against all taxes, charges, expenses,
assessments, claims and liabilities (including reasonable counsel fees)
(referred to herein as authorized charges) incurred
15
16
or assessed against it or its nominee in connection with the performance of
this Contract, except such as may arise from it or its nominee's own failure to
act in accordance with the standard of care set forth herein or any higher
standard of care which would be imposed upon the Custodian by any applicable
law or regulation if such above-stated standard of care were not part of this
Contract. To secure any authorized charges and any advances of cash or
securities made by the Custodian to or for the benefit of the Fund for any
purpose which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any business
day, the Fund hereby grants to the Custodian a security interest in and pledges
to the Custodian securities held for the Fund by the Custodian in an amount not
to exceed 10 percent of the Fund's gross assets, the specific securities to be
designated in writing from time to time by the Fund or the Fund's investment
adviser. Should the Fund fail to make such designation, or should it instruct
the Custodian to make advances exceeding the percentage amount set forth above
and should the Custodian do so, the Fund hereby agrees that the Custodian shall
have a security interest in all securities or other property purchased for the
Fund with the advances by the Custodian, which securities or property shall be
deemed to be pledged to the Custodian, and the written instructions of the Fund
instructing their purchase shall be considered the requisite description and
designation of the property so pledged for purposes of the requirements of the
Uniform Commercial Code. Should the Fund fail to repay promptly any authorized
charges or advances of cash or securities, subject to the provision of the
second paragraph of this Section 8 regarding indemnification, the Custodian
shall be entitled to use available cash and to dispose of pledged securities
and property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of the Fund has approved the initial use of a
particular Securities System as required in each case by Rule 17f-4 under the
1940 Act; provided further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
or any provision of the Certificate of Incorporation, and further provided,
that the Fund may at any time by action of its Board (i) substitute another
bank or trust company for the Custodian by giving notice as described above to
the Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller
of the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its reasonable costs, expenses and
disbursements incurred in connection with its performance of this agreement
through the date of termination.
16
17
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Fund,
the Custodian shall, upon termination, deliver to such successor custodian at
the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder for the Fund and shall transfer to
separate accounts of the successor custodian all of the Fund's securities held
in a Securities System. If no such successor custodian shall be appointed, the
Custodian shall, in like manner, upon receipt of a certified copy of a vote of
the Board of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote. In the
event that no written order designating a successor custodian or certified copy
of a vote of the Board shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the Custodian shall
have the right to deliver to a bank or trust company, which is a 'bank' as
defined in the 1940 Act, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $100,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract for the Fund and to transfer to
separate accounts of such successor custodian all of the Fund's securities held
in any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the Certificate of Incorporation. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment
of this Contract.
12. California Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of California.
17
18
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Fund at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to the Custodian at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as the Fund or
the Custodian may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of
liability as set forth in paragraph 9 of the Certificate of Incorporation and
agrees that the obligations and liabilities assumed by the Fund pursuant to
this Contract, including, without limitation, any obligation or liability to
indemnify the Custodian pursuant to Section 8 hereof, shall be limited in any
case to the Fund and its assets and that the Custodian shall not seek
satisfaction of any such obligation from the shareholders of the Fund, from its
shareholders, or from the Trustees, Officers, employees or agents of the Fund,
or any of them.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 14th day of July, 2000.
EAST WEST SECURITIES COMPANY, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------------------
President
EAST WEST BANK
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Secretary
18
19
Custodian Contract
Schedule A
For its services under the Custodian Contract, the Custodian will
receive an annual fee of 0.02% of the Fund's average daily total assets. There
is no fee under this Agreement for custody services relating to LLC interests
held by the Fund.
All fees are to be accrued daily and paid quarterly.
19