CUSTODIAN AGREEMENT
AGREEMENT made as of this 29th day of December 1997 between
DRESDNER RCM EQUITY FUNDS, INC. (the "Fund") on behalf of Dresdner RCM Emerging
Markets Fund (the "Portfolio" ), and XXXXX BROTHERS XXXXXXXX & CO. (the
"Custodian").
WITNESSETH
WHEREAS the Fund is organized as a Maryland Corporation with one or more
series of shares, and is an open-end management investment company registered
with the Securities and Exchange Commission.
WHEREAS the Fund, on behalf of the Portfolio, wishes to employ the
Custodian and the Custodian has agreed to provide custodial, banking and related
services to the Portfolio in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and the Custodian agree as follows:
1. APPOINTMENT OF CUSTODIAN. Upon the terms and conditions set forth in
this Agreement, the Fund hereby
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appoints the Custodian as a custodian, and the Custodian hereby accepts such
appointment. The Fund shall deliver or shall cause to be delivered to the
Custodian cash, securities and other property ("Property") owned by the
Portfolio from time to time during the term of this Agreement. The Custodian
shall be under no obligation to request or to require that any or all Property
of the Fund be delivered to it, and the Custodian shall have no responsibility
with respect to any Property not delivered to it.
2. DEFINITIONS.
In this Agreement, the following words shall, unless the context
otherwise requires, have the following meanings:
(i) "1940 Act" - the Investment Company Act of 1940 and the rules and
regulations thereunder.
(ii) "Advances" - shall have the meaning ascribed to it in Section 11 hereof.
(iii) "Agency Accounts" - shall have the meaning ascribed to it in Section 5
hereof.
(iv) "Agent" - shall have the meaning ascribed to it in Section 7 hereof.
(v) "BBH Accounts" - shall have the meaning ascribed to it in Section 5
hereof.
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(vi) "Book-Entry Agent" - shall have the meaning ascribed to it in Section
4.1(b) hereof.
(vii) "Derivative Instruments and Commodities" - any form of risk transfer
contract in which a gain or loss is recognized from fluctuations in
market price levels or rates, indexes or benchmarks, and which includes
without limitation futures, forwards, options, swaps, forward rate and
forward exchange contracts, leverage- or commodity-related similar
contracts and any other risk transfer contract whether traded on or off
an exchange.
(viii) "Electronic Instructions" - shall have the meaning ascribed to it in
Section 8.3 hereof.
(ix) "Electronic Reports" - shall have the meaning ascribed to it in Section
8.3 hereof.
(x) "Force Majeure" - shall have the meaning ascribed to it in Section 10.4
hereof.
(xi) "Investments" - assets of the Portfolio, other than Property held by the
Custodian, a Subcustodian or a Securities Depository, but which the
Custodian may note on its records as being assets of the Portfolio
including without limitation Derivative Instruments and Commodities.
(xii) "Liability" - shall have the meaning ascribed to it in
Section 11 hereof.
(xiii) "Margin Account" - shall have the meaning ascribed
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to it in Section 4.2(d) hereof.
(xiv) "Margin Agreement" - shall have the meaning ascribed to it in Section
4.2(d) hereof.
(xv) "Omnibus Accounts" - accounts established in the name of the Custodian on
behalf of its customers in which assets on deposit with the Custodian by
one or several customers may be deposited. Omnibus Accounts may be
established for the purpose of holding cash or securities.
(xvi) "Proper Instructions" - any direction to take or not to take action in
respect of Property (including cash) or Investments which the Custodian
reasonably believes to be sent by an authorized person and to be genuine.
Proper Instructions may be sent via the media set forth in Section 6
hereof or as otherwise agreed between the Custodian and the Fund on
behalf of the Portfolio.
(xvii) "Property" - shall have the meaning ascribed to it in Section 1
hereof.
(xviii) "Securities Accounts" - shall have the meaning ascribed to it in
Section 4 hereof.
(xix) "Securities Depository" - a generally recognized book-entry system or a
clearing agency which acts as a securities depository in any country in
which securities are maintained under this Agreement and with which the
Custodian or a Subcustodian may maintain
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securities or other Property owned by or held on behalf of the Fund,
pursuant to the provisions hereof, including Euroclear and Cedel.
(xx) "Segregated Accounts" - shall have the meaning ascribed to it in
Section 4.2(d) hereof.
(xxi) "Subcustodian" - shall mean any subcustodian appointed pursuant to
Section 7 of this Agreement.
(xxii) "Voluntary Corporate Actions" - corporate actions (as further
described in Section 8.4) in respect of portfolio securities of the
Fund which require an investment decision.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND. The Fund
represents and warrants that the execution, delivery and performance by the
Fund of this Agreement on behalf of the Portfolio are within the Fund's
corporate, trust or other constitutive powers, have been duly authorized by
all necessary corporate, trust or other appropriate action under its
constitutive documents, and do not contravene or constitute a default under
any provision of applicable law or regulation or of the constitutive
documents of the Fund or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Fund. The Fund agrees to inform
the Custodian reasonably promptly if any statement set forth in this Section
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5
elsewhere made by the Fund in this Agreement ceases to be true and correct. The
Fund shall safeguard and shall solely be responsible for the safekeeping of any
testkeys, identification codes, other security devices or statements of account
with which the Custodian provides it. If and when applicable, the Fund shall
execute a license agreement or sublicense agreement in form and substance
satisfactory to it governing its use of any electronic instruction system
proprietary to the Custodian or an affiliate of the Custodian or proprietary to
a third party which has licensed such system to the Custodian or an affiliate of
the Custodian.
The Fund hereby represents and warrants that in its reasonable opinion it
has disclosed appropriately and adequately, or will in its reasonable opinion
appropriately and adequately disclose, all material investment risks, including
without limitation those relating to the custody, settlement or servicing of
foreign securities in the markets in which the Fund invests or intends to
invest, to the shareholders or other investors in the Portfolio or to other
persons who have property or contractual rights to or interests in the assets of
the Portfolio which are the subject of this Custodian Agreement.
4. SECURITIES ACCOUNT. The Fund hereby authorizes the Custodian to open and
maintain, with itself or with
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Subcustodians, securities accounts (each a "Securities Account") and authorizes
the Custodian to deposit or record, as the case may be, in such Securities
Account the Portfolio's Property delivered to and accepted by the Custodian, or
such other Investments as the Fund, on behalf of the Portfolio requests the
Custodian to record by notation only. The Custodian shall keep safely all
Property delivered to it. In the event of a loss of a security for which the
Custodian would be liable under the provisions of this Agreement, the Custodian
shall be responsible for either replacing the security or for reimbursing the
Fund the value of the security . The Securities Account shall be maintained in
the manner and on the terms set forth below. (All references in this Section to
the Custodian shall include a Subcustodian, Securities Depository or any agent
of the Custodian.)
4.1 MANNER OF HOLDING OR RECORDING SECURITIES AND OTHER INVESTMENTS -
(a) SECURITIES REPRESENTED BY PHYSICAL CERTIFICATES - Securities
represented by share certificates or other instruments shall be held in
registered or bearer form (i) in the Custodian's vault, (ii) in the vault
of a Subcustodian or other agent of the Custodian, (iii) in an account
maintained by the Custodian or a Subcustodian at a Securities Depository,
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or (iv) in accordance with customary market practice in the Custodian's
discretion (x) in the country in which settlement is to occur or (y) for
the particular security in respect of which settlement is instructed.
Securities held at a Subcustodian will be held subject to the terms of
the Subcustodian Agreement in effect between the Custodian and the
Subcustodian.
Securities held in a Securities Depository will be held subject to the
agreement, rules, statement of terms and conditions or other document or
conditions effective between the Securities Depository and the Custodian or
the Subcustodian. Such securities shall be held (i) in an account which
contains only assets of the Custodian held as custodian or otherwise on
behalf of others if such account is maintained by the Custodian with a
Securities Depository (unless market practice or Securities Depository
rules and regulations require the Custodian also to hold its own assets in
such account), or (ii) in an account which contains only assets of the
Subcustodian or other agent held as custodian or otherwise on behalf of
others if such account is maintained by the Subcustodian or other agent
with a Securities Depository (unless market practice or Securities
Depository rules and regulations require a Subcustodian also to hold its
own assets in such account).
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Registered securities of the Portfolio may be registered in the name
of the Custodian, the Fund on behalf of the Portfolio or a nominee of
either of them and may be held in any manner set forth above, with or
without any indication of fiduciary capacity, provided that securities are
held in an account of the Custodian or a Subcustodian containing only
assets of the Portfolio or only assets held by the Custodian or a
Subcustodian as custodian for its customers or are otherwise held on
behalf of others.
(b) SECURITIES REPRESENTED BY BOOK-ENTRY - Securities represented by
book-entry on the books of the issuer, a registrar, a clearing agency or
other agent of the issuer (a "Book-Entry Agent") may be so held in an
account of the Custodian or a Subcustodian or other Agent maintained with
such Book-Entry Agent provided such account contains only assets of the
Portfolio or only assets held as custodian for customers or are otherwise
held on behalf of others.
(c) OTHER INVESTMENTS - At the specific request of the Fund, the
Custodian shall note on its records Investments owned by the Portfolio that
are not represented by physical securities or by book-entry, including
without limitation Derivative Instruments and Commodities. The Fund
acknowledges that such notation is for recordkeeping purposes only, that
the Custodian
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may not be able to exercise control over such Investments and that such
Investments may represent contractual rights of the Fund which the
Custodian cannot enforce. The Fund shall be responsible for requesting that
any statements applicable to such Investments, including brokerage
statements, be sent to the Custodian.
4.2 POWERS AND DUTIES OF THE CUSTODIAN WITH RESPECT TO THE SECURITIES
ACCOUNT - The Custodian shall have the following powers and duties with respect
to the Securities Account:
(a) PURCHASES - Upon receipt of Proper Instructions, insofar as funds
are available or as funds are otherwise provided by the Custodian at its
discretion pursuant to Section 11 hereof for the purpose, to pay for and
receive securities purchased for the account of the Portfolio, payment
being made (i) upon receipt of the securities by the Custodian, by a
clearing corporation of a securities exchange of which the Custodian or a
Subcustodian is a member, or by a Securities Depository, or (ii) otherwise
in accordance with (A) governmental regulations, (B) rules of Securities
Depositories or other U.S. or foreign clearing agencies, (C) generally
accepted trade practice in the applicable local market, (D) the terms
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of the instrument representing the security, or (E) the terms of Proper
Instructions.
(b) SALES - Upon receipt of Proper Instructions, to make delivery
of securities which have been sold for the account of the Portfolio (i)
against payment therefor in cash, by check or by bank wire transfer;
(ii) by credit to the account of the Custodian or Subcustodian with a
clearing corporation of a securities exchange of which the Custodian or
a Subcustodian is a member; (iii) by credit to the account of the
Custodian or Subcustodian with a Securities Depository; or (iv)
otherwise in accordance with (A) governmental regulations, (B) rules of
Securities Depositories or other U.S. or foreign clearing agencies, (C)
generally accepted trade practice in the applicable local market, (D)
the terms of the instrument representing the security, or (E) the terms
of Proper Instructions.
(c) OTHER TRANSFERS - To deliver Property of the Portfolio to a
Subcustodian, another custodian or another third party as necessary to
effect transactions authorized by Proper Instructions, and upon receipt of
Proper Instructions, to make such other disposition of Property of the
Portfolio in a manner other than or for purposes other than as enumerated
elsewhere in this Agreement, provided that the instructions relating to
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such disposition shall state the amount of Property to be delivered and the
name of the person or persons to whom delivery is to be made.
(d) FUTURES; OPTIONS; SEGREGATED ACCOUNTS - Upon the receipt of
Proper Instructions and the execution of any agreements relating to margin
in respect of a Derivative Instrument or Commodity ("Margin Agreements"),
to establish and maintain on its books a segregated account or accounts for
and on behalf of the Portfolio, into which account or accounts may be
transferred cash and/or securities of the Portfolio in accordance with the
terms of such Margin Agreements and any Proper Instructions ("Segregated
Accounts").
Upon receipt of Proper Instructions or upon receipt of instructions given
pursuant to any Margin Agreement, or pursuant to the terms of such Agreement,
the Custodian shall (i) receive and retain, confirmations or other documents
evidencing the purchase or sale of such Derivative Instruments or Commodities
by the Fund on behalf of the Portfolio; (ii) deposit and maintain, pursuant
to a Margin Agreement, in a segregated account, either physically or by
book-entry in a Securities Depository, for the benefit of any futures
commission merchant ("Margin Account"), or pay pursuant to Proper [EU1]
Instructions to such broker, dealer or futures commission merchant, such
securities, cash or other assets as are designated by the Fund on behalf of
the Portfolio as initial, maintenance or variation "margin" deposits or other
collateral intended to secure the Fund's performance of its obligations under
the terms of any Derivative Instrument or Commodity, in accordance with
the provisions of any Margin Agreement relating thereto; and (iii) otherwise
pay, release and/or transfer securities, cash or other assets into or out of
such Margin Accounts only in [EU2]accordance with the provisions of any such
Margin Agreement. Unless otherwise agreed to in writing by the Custodian
(which may be in the form of an applicable Margin Agreement), the Custodian
shall not be responsible for the sufficiency of assets held in any Segregated
Account
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established in compliance with applicable margin maintenance requirements or for
the performance of the other terms of any agreement relating to a Derivative
Instrument or Commodity, PROVIDED HOWEVER, the Custodian shall in any event be
responsible for the execution of a Proper Instruction with respect to such
Segregated Account.
Notwithstanding anything in this Agreement to the contrary, the Fund,
on behalf of the Portfolio agrees that the Custodian's responsibility for
any Derivative Instruments and Commodities shall be limited to the exercise
of reasonable care with respect to any confirmations or other documents
evidencing the purchase or sale of such Derivative Instrument by the Fund
on behalf of the Portfolio which the Custodian receives.
(e) STOCK LENDING - Upon receipt of Proper Instructions, to deliver
securities of the Portfolio, in connection with loans of securities by the
Portfolio, to the borrower thereof prior to receipt of the collateral, if
any, for such borrowing consistent with the terms and conditions contained
in a separate agreement specifically relating to securities lending.
(f) NON-DISCRETIONARY DETAILS - Without the necessity of express
authorization from the Fund, (1) to attend to all nondiscretionary details
in connection with the sale, exchange, substitution, purchase, transfer or
other dealings with securities, cash or other Property of the Portfolio
held by the Custodian except as otherwise directed from time to time by the
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Directors or Trustees of the Fund on behalf of the Portfolio, and (2) to
make payments to itself or others for minor expenses of handling securities
or other similar items relating to the Custodian's duties under this
Agreement, provided that all such payments shall be accounted for to the
Fund on behalf of the Portfolio.
4.3 CORPORATE ACTIONS - Unless the Custodian receives timely Proper
Instructions to the contrary, the Custodian will perform or will cause the
Subcustodian to perform the following:
(i) exchange securities held by it for the account of the Portfolio
for other securities in connection with any reorganization,
recapitalization, split-up of shares, change of par value, conversion or
other event relating to the securities or the issuer of such securities,
and shall deposit any such securities in accordance with the terms of any
reorganization or protective plan;
(ii) surrender securities in temporary form for definitive
securities; surrender securities for transfer into the name of the
Custodian, the Portfolio or a nominee of either of them, as permitted by
Section 4.1(a); and surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness;
(iii) deliver warrants, puts, calls, rights or similar securities to
the issuer or trustee thereof, or to the agent of such issuer or trustee,
for the purpose of exercise or sale, and deposit securities upon
invitations for tenders thereof;
(iv) take all necessary action to comply with the terms of all
mandatory
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or compulsory exchanges, calls, tenders, redemptions, or similar rights of
security ownership, and promptly notify the Portfolio of such action, and
collect all stock dividends, rights and other items of like nature;
(v) collect amounts due and payable to the Fund on behalf of the
Portfolio with respect to portfolio securities of the Portfolio, and
promptly credit to the account of the Fund on behalf of the Portfolio all
income and other payments relating to portfolio securities and other assets
held by the Custodian hereunder upon Custodian's receipt of such income or
payments or as otherwise agreed in writing by the Custodian and the Fund,
provided that the Custodian shall not be responsible for the collection of
amounts due and payable with respect to portfolio securities that are in
default;
(vi) endorse and deliver any instruments required to effect
collection of any amount due and payable to the Fund on behalf of the
Portfolio with respect to securities; execute ownership and other
certificates and affidavits on the Fund's behalf for all federal, state and
foreign tax purposes in connection with receipt of income, capital gains or
other payments with respect to portfolio securities and other assets of the
Portfolio, or in connection with the purchase, sale or transfer of such
securities or other assets; and file any certificates or other affidavits
for the refund or reclaim of foreign taxes paid;
(vii) deliver to the Portfolio all forms of proxies, all notices of
meetings, and any other notices or announcements affecting or relating to
securities owned by the Portfolio that are received by the Custodian, any
Subcustodian, or any nominee of either of them, and, upon receipt of Proper
Instructions, the Custodian shall execute and deliver, or cause such
Subcustodian or nominee to execute and deliver, such proxies or other
authorizations as may be required. Except as directed pursuant to Proper
Instructions, neither the Custodian nor any
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Subcustodian or nominee shall vote upon any such securities, or execute any
proxy to vote thereon, or give any consent or take any other action with
respect thereto.
In fulfilling the duties set forth above, the Custodian shall be
responsible for sending to the Portfolio all information pertaining to the
relevant terms of a corporate action which it in fact receives, provided that
the Custodian has exercised the standard of care set forth herein, the Custodian
shall not be responsible for incorrect information it receives, or information
it has not received but should have received, from industry-accepted third-party
securities information vendors.
Notwithstanding any provision of this Agreement to the contrary, with
respect to portfolio securities registered in so-called street name, the
Custodian shall use reasonable efforts to collect cash or share entitlements due
and payable to the Portfolio but shall not be responsible for its inability to
collect such cash or share entitlements.
The Custodian shall only be responsible for acting on the Proper
Instructions of the Fund in respect of any Voluntary Corporate Action provided
the Custodian has received a Proper Instruction requesting such action a
reasonable time prior to expiration of the time within which action in respect
of such Voluntary Corporate Action may be taken, in order to ensure that
Custodian has sufficient time to take such action. The deadline for the
acceptance of such instruction may be set forth by the Custodian in its
communication of the terms of such action to the Fund and shall take into
consideration delays which occur due to (i) the involvement of a Subcustodian,
Securities Depository or other intermediary; (ii) differences in time zones; or
(iii) other factors particular to a given market, exchange or issuer.
Any advance credit of cash or shares by the Custodian or a Subcustodian
expected to be received as a result of any corporate event shall be subject to
actual collection and may, when the Custodian deems such collection unlikely, be
reversed by the Custodian
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upon written notice to the Fund. As used herein, an "advance credit of cash or
shares" shall mean any credit of cash or shares to any account maintained
hereunder prior to actual receipt and collection of such cash or shares in
anticipation of a distribution expected to be received in the future.
5. CASH ACCOUNTS.
5.1 OPENING AND MAINTAINING CASH ACCOUNTS - Subject to the terms and
conditions set forth in this Section 5, the Fund on behalf of the Portfolio,
hereby authorizes the Custodian to open and maintain, with itself or with
Subcustodians, cash accounts in United States Dollars and in such other
currencies as the Fund shall from time to time request or as are in the
Custodian's discretion required in order for the Custodian to carry out the
terms of this Agreement. The Custodian shall make payments from or deposits to
any of said accounts upon its receipt of Proper Instructions from the Fund
providing sufficient details to effect such transaction.
Cash accounts opened on the books of the Custodian ("BBH Accounts") shall
be opened in the name of the Fund on behalf of the Portfolio. Subject always to
the provisions of Section 10 hereof, the Custodian shall be liable for repayment
of any and all deposits carried on its books as principal, whether denominated
in United States Dollars or in other currencies.
Cash accounts opened on the books of Subcustodians
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appointed pursuant to Section 7 hereof may be opened in the name of the
Portfolio or the Custodian or in the name of the Custodian for its customers
generally ("Agency Accounts"). Such deposits shall be treated as portfolio
securities, and accordingly the Custodian shall be responsible for the exercise
of reasonable care in respect of the administration of such Agency Accounts but
so long as the Custodian exercises reasonable care as herein defined in
attempting to obtain repayments, the Custodian shall not be liable for their
repayment in the event the Subcustodian fails to make repayment (including in
the event of the Subcustodian's bankruptcy or insolvency). Both BBH Accounts and
Agency Accounts shall have the benefit of the provisions of Section 10 of this
Agreement.
The Fund bears all risks of holding or transacting in any currency. Any
credit made to any Agency or BBH Account shall be provisional and may be
reversed by the Custodian in the event such payment is not actually collected.
The Custodian shall not be liable for any loss or damage arising from the
applicability of any law or regulation now or hereafter in effect, or from the
occurrence of any event, which may delay or affect the transferability,
convertibility or availability of any currency in the country (i) in which such
BBH or Agency Accounts are maintained or (ii) in which such currency is issued,
and in no event shall the Custodian be obligated to
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make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected
by any such law, regulation or event. Without limiting the generality of the
foregoing, neither the Custodian nor any Subcustodian shall be required to
repay any deposit made at a foreign branch of either the Custodian or
Subcustodian during such time as such branch cannot repay the deposit due to
(i) an act of [EU3]war, insurrection or civil strife; or (ii) an action by a
foreign government or instrumentality, whether de jure or de facto, in the
country in which the branch is located preventing such repayment, unless the
Custodian or such Subcustodian expressly agrees in writing to repay the
deposit under such circumstances.
All currency transactions in any account opened pursuant to this Agreement
are subject to exchange control regulations of the United States and of the
country where such currency is the lawful currency or where the account is
maintained. Any taxes, costs, charges or fees imposed on the convertibility of a
currency held by the Portfolio shall be for the account of the Portfolio.
5.2 FOREIGN EXCHANGE TRANSACTIONS - The Custodian shall, pursuant to
Proper Instructions, settle foreign exchange transactions (including contracts,
futures, options and options on futures) on behalf and for the account of the
Portfolio with such currency brokers or banking institutions, including
Subcustodians, as the Fund may direct pursuant to Proper Instructions. The
Custodian shall be responsible for the transmission of cash and instructions to
and from the currency broker or banking institution with which the contract or
option is made and the safekeeping of
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all certificates and other documents and agreements evidencing or relating to
such foreign exchange transactions as the Custodian may receive. In connection
with such transactions, the Custodian is authorized to make free outgoing
payments of cash in the form of U. S. Dollars or foreign currency without
receiving confirmation of a foreign exchange contract or option or confirmation
that the countervalue currency completing the foreign exchange contract has been
delivered or received or that the option has been delivered or received. The
Fund, on behalf of the Portfolio, accepts full responsibility for its use of
third-party foreign exchange dealers and for execution of said foreign exchange
contracts and options and understands that the Fund shall be responsible for any
and all costs and interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties to deliver
foreign exchange.
Foreign exchange transactions (including without limitation contracts,
futures, options, and options on futures), other than those executed with the
Custodian as principal, but including those executed with Subcustodians, shall
be deemed to be portfolio securities of the Portfolio and accordingly the
Custodian shall only be responsible for delivering or receiving currency on
behalf of the Portfolio in respect of such contracts pursuant to Proper
Instructions subject to the fourth paragraph of this Section 5. The
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Custodian shall not be responsible for the failure of any counterparty in such
agency transaction to perform its obligations thereunder.
Alternatively, such transactions may be undertaken by the Custodian as
principal, if instructed by the Portfolio and accepted by the Custodian, which
instructions may be in the form of a standing instruction.
The obligations of the Custodian in respect of all foreign exchange
transactions shall be contingent on the free, unencumbered transferability of
the currency transacted on the actual settlement date of the transaction.
5.3 DELAYS - In the event a delay is caused by the negligence or willful
misconduct of the Custodian in carrying out a Proper Instruction to transfer
cash in connection with any transaction referred to in Section 5.1 or 5.2 above,
the Custodian shall be liable to the Portfolio for interest to be calculated at
the rate customarily paid by the Custodian on overnight deposits at the time the
delay occurs for the period from the day when the transfer should have been
effected until the day it is in fact effected. The Custodian shall not be liable
for delays in carrying out such instructions to transfer cash which are not due
to the Custodian's own negligence or willful misconduct.
6. PROPER INSTRUCTIONS. Proper Instructions shall include, in the following
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order of the preferred method of giving such instructions, authenticated
electromechanical communications including direct electronic transmissions,
authenticated SWIFT and tested telex, including Electronic Instructions as
described in Section 8.3,; a written request signed by two or more authorized
persons as set forth below; telefax transmissions; and oral instructions,
including telephone. Proper Instructions may also include such other methods
of communicating Proper Instructions as the parties hereto may from time to
time agree. Each of the first four methods of communicating Proper
Instructions is described and defined below and may from time to time be
described and defined in written operating memoranda between the Custodian
and the Fund. The Custodian is hereby authorized to act on instructions sent
via any of the foregoing methods from any director, employee or officer of
the Fund or from any other agent of the Fund as the Fund shall from time to
time instruct.
Authenticated electro-mechanical communications shall include
communications effected directly between electromechanical or electronic
devices or systems, including authenticated SWIFT and tested telex
transmissions, and other forms of communications involving or between such
electro-mechanical or electronic devices or systems as the parties may from
time to time agree upon in writing. In the event media other than tested
telex transmissions are agreed upon, the Custodian may in its discretion
require that the Fund on behalf of the Portfolio or other agent and the
Custodian enter into certain operating memoranda which shall set forth the
media through which such Proper Instructions shall be transmitted and the
data which must be included in such Proper Instructions in order for such
instructions to be complete. Once such operating memoranda shall have been
instituted, the Fund, or Agent shall be responsible for sending instructions
which meet the requirements set forth in such operating memoranda and the
Custodian shall only be
22
responsible for acting on instructions which meet such requirements. The
Custodian shall not be liable for damages of any kind, including direct or
consequential losses resulting from technological or equipment failures or
communications system failures of any kind in respect of instructions sent or
attempted to be sent via electromechanical communications.
A written request signed by two or more authorized persons shall include
a written request, direction, instruction or certification signed or
initialed on behalf of the Fund by two or more persons as the Directors or
Trustees of the Fund shall have from time to time authorized, or by such
other written procedure as the Custodian and the Fund shall from time to time
agree in writing. Those persons authorized to give Proper Instructions may be
identified by the Directors or Trustees by name, title or position (including
any of its directors, employees or agents or person or entity with similar
responsibilities which is authorized to give Proper Instructions on behalf of
the Fund to the Custodian) and will include at least one officer empowered by
the Directors or Trustees to name other individuals or entities who are
authorized to give Proper Instructions on behalf of the Fund.
Telephonic or other oral instructions or instructions given by telefax
transmission may be given by any one of the persons referred to in the
preceding paragraph and will be considered Proper Instructions if the
Custodian believes them to have been given by a person authorized to give
such instructions with respect to the transaction involved.
With respect to telefax transmissions, the Fund and the Custodian hereby
acknowledge that the Custodian cannot verify that authorized signatures on
telefax instructions are original or properly affixed. Accordingly, so long
as the Custodian has no actual knowledge to the contrary, the Custodian shall
not be responsible for losses or expenses incurred through actions taken in
reliance on unauthorized telefax instructions. Oral instructions will be
confirmed by authenticated electro-mechanical communications
23
or written instructions in the manner set forth above, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reliance upon such oral instructions. The Fund hereby authorizes the
Custodian to tape record any and all telephonic or other oral instructions
given to the Custodian by or on behalf of the Portfolio (including any of its
Directors, Trustees, employees or agents or any other person or entity with
similar responsibilities which is authorized to give Proper Instructions on
behalf of the Fund to the Custodian).
Proper Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
The Custodian shall not be responsible for its failure to act on any
instruction received from the Fund which the Custodian in good faith believes
does not meet the requirements set forth herein, provided that the Custodian
promptly notifies the Fund that the instruction in question does not conform
to the requirements for Proper Instruction.
7. AUTHORITY TO APPOINT SUBCUSTODIANS AND AGENTS AND TO UTILIZE SECURITIES
DEPOSITORIES. Subject to the provisions hereinafter set forth in this
Section 7, the Fund hereby authorizes the Custodian to utilize Securities
Depositories to act on behalf of the Portfolio and to appoint from time to
time and to utilize Subcustodians.
The Custodian may deposit and/or maintain Property of the Portfolio in
any non-U.S. Securities Depository provided such Securities Depository meets
the requirements of an "eligible foreign custodian" under Rule 17f-5
promulgated under the 1940 Act, or any successor rule or regulation ("Rule
17f-5") or which by order of the Securities and Exchange Commission is
exempted therefrom. The Custodian may deposit and/or maintain, either
directly or through one or more agents appointed by the Custodian, Property
of the Portfolio in any Securities Depository in the United States, including
The Depository Trust Company,
24
provided such Depository meets applicable requirements of the Federal Reserve
Bank or of the Securities and Exchange Commission. Notwithstanding anything
in this Agreement to the contrary, any Property held in a Securities
Depository, whether or not the Custodian is a direct participant or member,
will be held subject to the rules, regulations, operating memoranda or other
conditions of participation in such Securities Depository.
Subject to the succeeding paragraph, the Custodian may, at any time and
from time to time, appoint any bank as defined in Section 2(a)(5) of the 1940
Act meeting the requirements of a custodian under Section 17(f) of the 1940
Act and the rules and regulations thereunder, to act on behalf of the
Portfolio as a subcustodian for purposes of holding Property of the Portfolio
in the United States. Additionally, the Custodian may, at any time and from
time to time, appoint (i) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under Rule 17f-5 or which by
order of the Securities and Exchange Commission is exempted therefrom, or
(ii) any bank as defined in Section 2(a)(5) of the 1940 Act meeting the
requirements of a custodian under Section 17(f) of the 1940 Act and the rules
and regulations thereunder, to act on behalf of the Portfolio as a
subcustodian for purposes of holding Property of the Portfolio outside the
United States. Any bank, trust company or other entity appointed pursuant to
the foregoing provisions shall be a Subcustodian.
Prior to the appointment of any Subcustodian for purposes of holding
Property of the Portfolio outside the United States, the Custodian shall have
obtained written
25
confirmation of the approval of the Board of Trustees or Directors of the
Fund with respect to (i) the identity of a Subcustodian, (ii) the country or
countries in which, and the Securities Depositories, if any, through which,
any proposed Subcustodian is authorized to hold Property of the Portfolio,
and (iii) the subcustodian agreement which shall govern such appointment.
Each such duly approved Subcustodian and the countries where and Securities
Depositories through which they may hold Property of the Customer shall be
listed on Appendix A attached hereto as the same may from time to time be
amended. The Custodian may, at any time in its discretion, remove any
Subcustodian that has been appointed as such but will promptly notify the
Fund of any such action. In addition, the Fund on behalf of the Portfolio,
may instruct the Custodian to terminate the use of one or more Subcustodians.
The Fund shall be responsible for informing the Custodian sufficiently in
advance of a proposed investment which is to be held in a country in which no
Subcustodian is authorized to act in order that the Custodian shall have
sufficient time to establish a subcustodial arrangement in accordance herewith.
In the event, however, the Custodian is unable to establish such arrangements
prior to the time such investment is to be acquired, the Custodian is authorized
to designate at its discretion a local safekeeping agent, and the use of such
local safekeeping agent shall be at the sole
26
risk of the Portfolio, and accordingly the Custodian shall be responsible to the
Portfolio for the actions of such agent if and only to the extent the Custodian
shall have recovered from such agent for any damages caused the Portfolio by
such agent.
With respect to securities and funds held by a Subcustodian, either
directly or indirectly (including by a Securities Depository or clearing
agency), notwithstanding any provisions of this Agreement to the contrary,
payment for securities purchased and delivery of securities sold may be made
prior to receipt of securities or payment, respectively, and securities or
payment may be received in a form, in accordance with (i) governmental
regulations, (ii) rules of Securities Depositories and clearing agencies, (iii)
generally accepted trade practice in the applicable local market, (iv) the terms
of the instrument representing the security, or (v) the terms of Proper
Instructions.
In the event the Custodian receives a claim from a Subcustodian under the
indemnification provisions of any subcustodian agreement, the Custodian shall
promptly give written notice to the Fund of such claim. No more than thirty days
after written notice to the Fund of the Custodian's intention to make such
payment, if the Fund in its reasonable opinion believes that such claim is
entitled to indemnity, the Fund will reimburse the Custodian the amount of such
payment except in respect of any negligence
27
or misconduct of the Custodian or Subcustodian.
The Custodian may at any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company as its agent (an "Agent") to
carry out such of the provisions of this Agreement as the Custodian may from
time to time direct, provided, however, that the appointment of such Agent shall
not relieve the Custodian of any of its responsibilities under this Agreement.
8. REPORTING; RECORDS. The Custodian shall have and perform the following
duties with respect to recordkeeping.
8.1 RECORDS - The Custodian shall create, maintain and retain such
records relating to its activities and obligations under this Agreement as will
enable the Custodian to comply with its obligations hereunder and as are
customarily maintained by a professional custodian.
8.2 ACCESS TO RECORDS - The books and records maintained by the Custodian
pursuant to this Section 8 shall at reasonable times during the Custodian's
regular business hours be open to inspections and audit by the auditors and by
employees and agents of the Fund and the Securities and Exchange Commission
provided that all such individuals shall observe all security requirements of
the Custodian applicable to its own employees having access to similar records
and such rules as may be reasonably imposed by the Custodian.
8.3 ELECTRONIC RECORDS AND COMMUNICATIONS - The Custodian may make any of
its records available to the Fund via electronic reporting which may include
without limitation on-line software systems ("Electronic Reports").
28
The Fund understands that such Electronic Reports may include data provided to
the Custodian by outside sources which may not have been independently verified
by the Custodian and is subject to change. Accordingly, the Custodian shall not
be liable for inaccuracies, errors or incomplete information furnished by such
sources, provided the Custodian has exercised the standard of care as set forth
herein.
The Custodian shall upon request, also make available to the Fund certain
software to be used to initiate payment and securities transfer instructions,
affirm brokerage transactions reported through the Institutional Delivery System
or initiate other transaction instructions for the Custodian's processing
("Electronic Instructions").
The Fund agrees that it shall be responsible for protecting and maintaining
the confidentiality and security of any codes assigned in respect of the Fund's
access to such Electronic Reports or Electronic Instructions and that, absent
any actual knowledge that the confidentiality of the Electronic Instructions
system has been compromised, any instructions received through such system using
the client code assigned to the Fund shall be deemed to have originated from or
on behalf of the Fund and to be Proper Instructions.
The Custodian shall not be responsible for information added to, changed or
omitted by electronic programming malfunction, unauthorized access or other
failure of such
29
systems unless such actions are the direct result of the Custodian's negligence,
bad faith or willful malfeasance.
8.5 APPOINTMENT AS RECORDKEEPING AND NET ASSET VALUE CALCULATION AGENT -
The Custodian is hereby appointed recordkeeping and net asset value calculation
agent responsible for creating, maintaining and retaining such records relating
to its obligations under this Agreement as are required under the 1940 Act
(including Section 31 thereof and Rules 31a-1 and 31a-2 thereunder). All such
records will be the property of the Fund.
The Custodian shall compute and determine the net asset value per share of
the Fund as of the close of business on the New York Stock Exchange on each day
on which such Exchange is open, unless otherwise directed by Proper
Instructions. Such computation and determination shall be made in accordance
with (1) the provisions of the Fund's Declaration of Trust or Certificate of
Incorporation and By-Laws, as they may from time to time be amended and
delivered to the Custodian, (2) the votes of the Board of Trustees or Directors
of the Fund at the time in force and applicable, as they may from time to time
be delivered to the Custodian, and (3) Proper Instructions. On each day that
the Custodian shall compute the net asset value per share of the Fund, the
Custodian shall provide the Fund with written reports.
In computing the net asset value, the Custodian may rely upon any
information furnished by Proper Instructions, including without limitation any
information (1) regarding accrual of liabilities of the Fund and liabilities
of the Fund not appearing on the books of account kept by the Custodian, (2)
regarding the existence, status and proper treatment of reserves, if any,
authorized by the Fund, (3) regarding the sources of
30
quotations to be used in computing the net asset value, including those listed
in Appendix B, (4) regarding the fair value to be assigned to any securities or
other property for which price quotations are not readily available, and (5)
regarding the sources of information with respect to "corporate actions"
affecting portfolio securities of the Fund, including those listed in Appendix
B. (Information as to "corporate actions" shall include information as to
dividends, distributions, stock splits, stock dividends, rights offerings,
conversions, exchanges, recapitalizations, mergers, redemptions, calls, maturity
dates and similar transactions, including the ex- and record dates and the
amounts or other terms thereof.) The Fund may instruct the Custodian to utilize
a particular source for the valuation of a specific Security or other Property
so long as the Custodian has exercised the standard of care set forth herein,
the Custodian shall be protected in utilizing the valuation provided by such
source without further inquiry in order to effect calculation of the Fund's net
asset value. The Fund agrees to provide the Custodian with Proper Instructions
setting forth all liabilities which ought to be included in the calculation of
the Fund's net asset value.
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Trustees or Directors of the Fund
from time to time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
10.1, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 8.5: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 8.5, but shall not be held accountable or liable for
any losses or damages the Fund or any shareholder or former shareholder of the
Fund or any other person may suffer or incur arising from or based upon errors
or delays in the determination of such net asset value resulting from any
31
event beyond the reasonable control of the Custodian unless such error or delay
was due to the Custodian's negligence or reckless or willful misconduct in
determination of such net asset value. (The parties hereto acknowledge, however,
that the Custodian's causing an error or delay in the determination of net asset
value may, but does not in and of itself, constitute negligence or reckless or
willful misconduct.) In the absence of negligence or failure to inform the Fund
of any error or delay of which it is aware, the Custodian shall not be liable or
responsible to the Fund, any present or former shareholder of the Fund or any
other person for any error or delay which continued or was undetected after the
date of an audit performed by the certified public accountants employed by the
Fund if, in the exercise of reasonable care in accordance with generally
accepted accounting standards, such accountants should have become aware of such
error or delay in the course of performing such audit. The Custodian's
liability for any such negligence or reckless or willful misconduct which
results in an error in determination of such net asset value shall be limited
exclusively to the direct, out-of-pocket loss the Fund, shareholders or former
shareholders shall actually incur, measured by the difference between the actual
and the erroneously computed net asset value, and any expenses the Fund shall
incur in connection with correcting the records of the Fund affected by such
error (including charges made by the Fund's registrar and transfer agent for
making such corrections) or communicating with shareholders or former
shareholders of the Fund affected by such error.
Without limiting the foregoing, so long as the Custodian has exercised the
standard of care set forth herein the Custodian shall not be held accountable or
liable to the Fund, any shareholder or former shareholder thereof or any other
person for any delays or losses, damages or expenses any of them may suffer or
incur resulting from (1) the Custodian's failure to receive timely and suitable
notification concerning quotations or corporate actions relating to or affecting
portfolio securities of the Fund or (2) any errors
32
in the computation of the net asset value based upon or arising out of
quotations or information as to corporate actions if received by the Custodian
either (i) from a source which the Custodian was authorized pursuant to the
third paragraph of this Section 8.5 to rely upon, (ii) from a source which in
the Custodian's reasonable judgment was as reliable a source for such quotations
or information as the sources authorized pursuant to that third paragraph, or
(iii) from relevant information known to the Fund which would impact the
calculation of net asset value but which is not communicated by the Fund or the
to the Custodian.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the Fund and the Custodian will
consult and make good faith efforts to reach agreement on what actions should be
taken in order to mitigate any loss suffered by the Fund or its present or
former shareholders, in order that the Custodian's exposure to liability shall
be reduced to the extent possible after taking into account all relevant factors
and alternatives. It is understood that in attempting to reach agreement on
the actions to be taken or the amount of the loss which should appropriately be
borne by the Custodian, the Fund and the Custodian will consider such relevant
factors as the amount of the loss involved, the Fund's desire to avoid loss of
shareholder good will, the fact that other persons or entities could have been
reasonably expected to have detected the error sooner than the time it was
actually discovered, the appropriateness of limiting or eliminating the benefit
which shareholders or former shareholders might have obtained by reason of the
error, and the possibility that other parties providing services to the Fund
might be induced to absorb a portion of the loss incurred. [EU5]
33
9. RESPONSIBILITY OF CUSTODIAN. In carrying out the provisions of this
Agreement, the Custodian and its nominees shall be held to the exercise of
reasonable care, provided that the Custodian shall not thereby be required to
take any action which is in contravention of any law, rule or regulation or any
order of any court of competent jurisdiction. As used in this Agreement,
"reasonable care" shall mean the level of care which a professional custodian
providing custody services to institutional investors would provide in light of
the circumstances and events which reasonably influence its performance in the
market where the securities are held or the transaction is effected, including
without limitation local market practices relating to securities settlement and
safekeeping, and "negligence" shall mean the failure to exercise reasonable care
as herein defined. The Custodian shall, subject to the provisions set forth in
Sections 9 and 10 hereof, be responsible to the Fund for any direct loss or
damage (without taking into account special circumstances) which the Fund incurs
by reason of the Custodian's negligence, bad faith or willful malfeasance.
With respect to securities and funds held by a Subcustodian, either
directly or [EU6]indirectly (including by a Securities Depository or foreign
clearing agency), including demand deposits, currencies or other deposits
and foreign exchange contracts as referred to herein, the
34
Custodian agrees to monitor the activities of the Subcustodians and to use its
best efforts to recover from the Subcustodians any amounts the Subcustodian may
owe to the Custodian or the Fund and, consistent therewith, shall be liable to
the Fund if and only to the extent that such Subcustodian is liable to the
Custodian and the Custodian recovers under the applicable subcustodian
agreement.
With respect to the securities, cash and other Property of the Portfolio
held by a Securities Depository utilized by the Custodian or any Subcustodian or
any agent of the Custodian, the Custodian shall not be liable for the acts and
omissions of such Securities Depository unless and only to the extent that such
Securities Depository is liable to the Custodian and the Custodian recovers from
such Securities Depository, provided always that the Custodian shall be liable
to the Fund only for any direct loss or damage to the Fund resulting from use of
the Securities Depository if caused by the negligence, bad faith or willful
malfeasance of the Custodian. In the event of a loss of Fund assets held at a
Securities Depository, the Custodian shall use reasonable efforts to recover or
cause a Subcustodian to use reasonable efforts to recover such assets from such
Securities Depository.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominees from all claims and liabilities (including reasonable counsel fees)
incurred or assessed against it or its nominees in connection with the
performance of this Agreement, except such as may arise from
35
its or its nominees breach of the relevant standard of conduct set forth herein
and is not inconsistent with any provision contained herein. The Fund shall in
no event be liable for indirect or consequential damages or for loss of goodwill
incurred by the Custodian. Without limiting the foregoing indemnification
obligation of the Fund, the Fund agrees to indemnify the Custodian and any
nominee in whose name portfolio securities or other property of the Fund is
registered against any liability the Custodian or such nominee may incur by
reason of taxes assessed to the Custodian or such nominee or other reasonable
costs, liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that portfolio securities or other property
of the Portfolio is registered in the name of the Custodian or such nominee.
10. LIMITATIONS TO CUSTODIAN'S RESPONSIBILITY.
10.1 LIABILITY IN GENERAL - Except as otherwise provided in this
Agreement, the Custodian shall be responsible for loss or damage which the Fund
may incur by reason of the Custodian's negligence, bad faith or willful
malfeasance, PROVIDED ALWAYS that such loss or damage shall be limited to direct
damages incurred by the Fund without taking into account special circumstances,
and PROVIDED FURTHER that the Custodian shall in no event be liable for
36
indirect or consequential damages or for loss of goodwill, even if the Custodian
has been advised of the likelihood of such loss or damage and regardless of the
form of action.
10.2 LIABILITY OF THE CUSTODIAN WITH RESPECT TO PROPER INSTRUCTIONS;
EVIDENCE OF AUTHORITY; ETC. the Custodian shall not be liable for, and shall be
indemnified by the Fund for losses or damages incurred or assessed against the
Custodian as a result of, any action taken or omitted in reliance upon Proper
Instructions or upon any other written notice, request, direction, instruction,
certificate or other instrument believed by it to be genuine provided that the
Custodian shall be responsible for losses, costs or expenses which the Fund
incurs as direct result of the Custodian's negligence in carrying out any Proper
Instruction.
The Custodian shall be entitled to receive and act upon advice of (a) its
own counsel or counsel which it selects, (b) counsel for the Fund, or (c) such
other counsel as the Fund and the Custodian may agree upon, with respect to all
matters. The Custodian shall be without liability for any action taken or
omitted pursuant to advice given by counsel previously approved by the Fund.
10.3 TITLE TO SECURITIES, FRAUDULENT SECURITIES - So long as and to the
extent that it is in the exercise of reasonable care, the Custodian shall not be
responsible for the title, validity or genuineness of any Property or
37
evidence of title thereto received by it or delivered by it pursuant to this
Agreement.
10.4 FORCE MAJEURE - Notwithstanding any other provision contained herein,
the Custodian shall not be liable for any action taken, or for any failure to
take any action required to be taken hereunder, or otherwise for its failure to
fulfill its obligations hereunder (including without limitation the failure to
receive or deliver securities or the failure to receive or make any payment) in
the event and to the extent that the taking of such action or such failure
arises out of or is caused by civil commotion, act of God, accident, fire, water
damage, explosion, mechanical breakdown, computer or system failure or other
equipment failure, malfunction or failure caused by computer virus, failure or
malfunctioning of any communications medium for whatever reason, interruption
(whether partial or total) of power supplies or other utility service, strike or
other stoppage (whether partial or total) of labor, market conditions which
prevent the orderly execution of securities transactions or affect the value of
Property, any law, decree, regulation or order of any government or governmental
body, de facto or de jure (including any court or tribunal), rules or
regulations of any Securities Depository or clearing agency or any other cause
whatsoever (whether similar or dissimilar to the foregoing) beyond its control
or the control of its
38
Subcustodian or other agent (collectively, "Force Majeure").
[EU7]10.5 SOVEREIGN RISK - Without limiting the generality of the foregoing
Section 10.4, the Custodian shall not be liable for any losses resulting from a
Sovereign Risk. As used herein, a Sovereign Risk shall mean any act of war,
terrorism, riot, insurrection or civil commotion; the imposition of exchange
control restrictions; confiscation, expropriation or nationalization of any
property including without limitation cash, cash equivalents, securities or the
assets of any issuer of securities by any governmental or quasi-governmental
authority (including without limitation those authorities which are judicial,
legislative, executive, military or religious in nature), whether de facto or de
jure; currency devaluation or revaluation; the imposition of taxes, levies or
other charges affecting the Fund's property, or any other political risk
(whether similar or dissimilar to the foregoing) incurred in respect of the
country in which the issuer of such securities is organized or in which such
securities are held or such payments are held or effected.
10.6 CURRENCY RISKS - The Portfolio bears all risks of holding or
transacting in any currency. Without limiting the generality of the foregoing,
the Fund bears all risks that rules or procedures imposed by Securities
Depositories, exchange controls, asset freezes or other laws or regulations
shall prohibit or impose burdens on or costs relating to the transfer by or for
the account of the Fund of securities, cash or currency held outside the United
States or denominated in a currency other than U. S. dollars or on the
conversion of any currency so held. The Custodian shall in no event be obligated
to substitute another
39
currency (including U.S. dollars) for a currency whose transferability,
convertibility or availability has been affected by any such law, regulation,
rule or procedure.
10.7 INVESTMENT RISKS NOT ASSUMED BY CUSTODIAN - The Custodian shall have
no liability in respect of any loss or damage suffered by the Portfolio, insofar
as such loss or damage arises from commercial or other investment risks inherent
in investing in capital markets or in holding securities in a particular
jurisdiction or country including without limitation: (i) political, legal,
economic, settlement and custody infrastructure, exchange rate and currency
risks; (ii) investment and repatriation restrictions; (iii) the Fund's or
Custodian's inability to protect and enforce any local legal rights including
rights of title and beneficial ownership; (iv) corruption and crime in the local
market; (v) unreliable information which emanates from the local market; (vi)
volatility of banking and financial systems and infrastructure; (vii) bankruptcy
and insolvency risks of any and all local banking agents, counterparties to
cash and securities transactions or registrars or transfer agents; (viii) risk
of issuer insolvency or default; and (ix) market conditions which prevent the
orderly execution of transactions or the value of assets.
10.8 INVESTMENT LIMITATIONS - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Portfolio, the Custodian may assume unless and until notified
in writing to the contrary that Proper Instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Declaration
of Trust or Certificate of Incorporation or By-Laws (or comparable documents) or
votes or proceedings of the
40
shareholders or Trustees or Directors of the Fund. The Custodian shall not be
liable to the Fund for any violation which occurs in the course of carrying out
instructions given in accordance with this Agreement by the Fund or any of any
investment limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting the Fund.
10.9 FOREIGN OWNERSHIP LIMITATIONS - The Fund shall be responsible for
monitoring foreign ownership limitations in any markets in which it invests.
10.10 RESTRICTED SECURITIES - The Custodian shall only be responsible
for notifying the Portfolio of any restrictions on the transfer of securities
held in the Securities Account of which the Custodian is in fact aware. In no
event shall the Custodian be responsible for the inability of a the Portfolio to
sell or transfer restricted securities or for delays incurred in the sale or
transfer of restricted securities if such inability or delay is the result of
the terms of the security itself, actions of the issuer, its counsel or other
representative (including without limitation its registrar), or limitations due
to laws, regulations or other applicable rules. The Custodian shall only be
responsible for transmitting information to the Fund as to those corporate
actions in respect of restricted securities which it in fact receives.
41
10.11 MARKET INFORMATION - The Custodian may in its discretion make
market information available to the Fund. This service is for informational
purposes only and is not to be construed as a recommendation to buy or sell a
particular security, to invest or not to invest in a particular country, or
to take any action whatsoever. Although information reported therein is
believed to be accurate, the Custodian does not represent or warrant its
accuracy or completeness. The Fund accordingly acknowledges that the
Custodian provides market information on a best [EU8]efforts basis and
recognizes its responsibility to consult with its own independent sources
before making any investment or other decisions.
11. ADVANCES AND SECURITY FOR ADVANCES. In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds from
any BBH or Agency Account on behalf of the Portfolio for which there would be,
at the close of business on the date of such payment or transfer, whether known
at that time or subsequently determined, insufficient funds held by the
Custodian or any Subcustodian, Securities Depository, or otherwise on behalf of
the Fund, or if the Custodian or any nominee thereof shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in connection
with the performance of this Agreement, except as such may arise from its or its
nominees own negligent action, negligent failure to act or willful misconduct
(collectively a "Liability"),
42
the Custodian may, in its discretion without further Proper Instructions,
provide or authorize an advance ("Advance") for the account of the Fund in an
amount sufficient to satisfy such Liability or to allow the settlement or
completion of the transaction by reason of which such payment or transfer of
funds is to be made. Any Advance shall be payable on demand made by the
Custodian, unless otherwise agreed by the Fund and the Custodian, and shall
accrue interest from the date of the Advance to the date of payment by the Fund
at a rate agreed upon from time to time by the Custodian and the Fund or
otherwise at the rate the Custodian customarily charges on loans to customers.
It is understood that any transaction in respect of which the Custodian shall
have made an Advance, including but not limited to a foreign exchange contract
or transaction in respect of which the Custodian is not acting as a principal,
is for the account of and at the risk of the Portfolio, and not, by reason of
such Advance, deemed to be a transaction undertaken by the Custodian for its own
account and risk. If the Custodian shall make or authorize any Advance to the
Fund or incur any Liability, then in such event any property at any time held
for the account of the Portfolio by the Custodian, a Subcustodian, a Securities
Depository or otherwise ("Collateral") shall be security for such Liability or
for such Advance and the interest thereon, and if the Fund shall fail to pay
such Advance or interest when
43
due or shall fail to reimburse or indemnify the Custodian promptly in respect of
a Liability, the Custodian shall be entitled to utilize available cash and to
dispose of the Portfolio's property, including securities and balances in any
BBH or Agency Account, to the extent necessary (which shall include the right to
sell or assign securities or otherwise assign its security interest to third
parties) to obtain repayment, reimbursement or indemnification.
For purposes of this Section 11, all such Collateral shall be treated as
financial assets credited to securities accounts under revised Articles 8 and 9
of the Uniform Commercial Code (1994), whether such Articles have in fact been
adopted in the jurisdiction in which the securities are held or the Advance is
granted. Accordingly, with respect to any Collateral, the Custodian shall have
the rights and benefits of a secured creditor that is a securities intermediary
for the Fund under the Uniform Commercial Code as revised.
Deposits maintained in Agency Accounts and BBH Accounts (including all
accounts denominated in any currency) shall collectively constitute a single and
indivisible current account with respect to the Fund's obligations to the
Custodian or any Subcustodian hereunder. Accordingly, balances in all such
Agency and BBH Accounts shall at all times be available for satisfaction of the
Fund's obligations under this Agreement to the Custodian or any of
44
its Subcustodians or agents including without limitation any Advances incurred
pursuant to this Section.
12. COMPENSATION. The Portfolio shall pay the Custodian a custody fee based on
such fee schedule as may from time to time be agreed upon in writing by the
Custodian and the Fund. Such fee, together with all out-of-pocket expenses for
which the Custodian is to be reimbursed, shall be billed to the Portfolio and be
paid by cash or wire transfer to the
Custodian.
13. TERMINATION. This Agreement shall continue in full force and effect until
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 thirty (30) days after the date of such delivery or mailing. In the event
of termination the Custodian shall be entitled to receive, prior to delivery of
the securities, cash and other Property held by it, payment of all accrued fees
and unreimbursed expenses and all Advances and Liabilities, upon receipt by the
Fund of a statement setting forth such fees, expenses, Advances and Liabilities.
In the event of the appointment of a successor custodian, it is agreed that
the cash, securities and
45
other Property owned by the Fund and held by the Custodian or any Subcustodian
shall be delivered to the successor custodian, and the Custodian agrees to
cooperate with the Fund in execution of documents and performance of other
actions necessary or desirable in order to substitute the successor custodian
for the Custodian under this Agreement.
14. MISCELLANEOUS. The following miscellaneous provisions shall govern the
relationship between the parties --
14.1. EXECUTION OF DOCUMENTS, ETC. - Upon request, the Fund shall execute
and deliver to the Custodian such proxies, powers of attorney or other
instruments as may be reasonable and necessary or desirable in connection with
the performance by the Custodian or any Subcustodian of their respective
obligations to the Fund under this Agreement or any applicable subcustodian
agreement with respect to the Fund.
14.2. ENTIRE AGREEMENT - This Agreement constitutes the entire
understanding and agreement of the Fund on behalf of the Portfolio, on the one
hand, and the Custodian, on the other, with respect to the subject matter hereof
and accordingly, supersedes as of the effective date of this Agreement any
custodian agreement or other oral or written agreements heretofore in effect
between the Fund and the Custodian with respect to custody of the Fund's
Property.
14.3. WAIVERS AND AMENDMENTS - No provision of this Agreement may be
waived, amended or terminated except by a statement in writing signed by the
party against which enforcement of such waiver, amendment or termination is
sought; PROVIDED HOWEVER any appendix or addendum to this Agreement may be added
or amended from time to time by
46
the Fund's execution and delivery to the Custodian of such additional or amended
appendix or addendum, in which case the terms thereof shall take effect
immediately upon execution by the Custodian or otherwise as set forth in this
Agreement.
14.4. INTERPRETATION - In connection with the operation of this
Agreement, the Custodian and the Fund may agree in writing from time to time on
such provisions interpretative of or in addition to the provisions of this
Agreement with respect to the Fund as may be consistent with the general tenor
of this Agreement. No interpretative or additional provisions made as provided
in the preceding sentence shall be deemed to be an amendment of this Agreement.
14.5. CAPTIONS - Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the parties
hereto.
14.6. GOVERNING LAW - The provisions of this Agreement shall be
construed in accordance with and governed by the laws of the State of New
York without giving effect to principles of conflicts of law. The parties
hereto irrevocably consent to the exclusive jurisdiction of the courts of the
State of New York and the federal courts located in New York City in the
borough of Manhattan.
14.7 NOTICES - Except in the case of Proper Instructions, notices and
other writings contemplated by this Agreement shall be delivered by hand or by
facsimile transmission (provided that in the case of delivery by facsimile
transmission, such notice or other writing shall also be mailed postage prepaid)
to the parties at the following addresses:
(a) If to the Fund:
Dresdner RCM Global Investors LLC
Four Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 0000-0000
Attn: Legal Services Department
47
Telephone (000) 000-0000
Telefax (000) 000-0000
(b) If to the Custodian:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
Telephone (000) 000-0000
Telefax: (000) 000-0000
or to such other address as the Fund or the Custodian may have designated in
writing to the other.
14.8. ASSIGNMENT - This Agreement shall be binding on and shall inure to
the benefit of the Fund on behalf of the Portfolio and the Custodian and their
respective successors and assigns, provided that neither the Custodian nor the
Fund may assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party.
14.9. COUNTERPARTS - This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered
by the Fund and the Custodian.
14.10. CONFIDENTIALITY; SURVIVAL OF OBLIGATIONS - The parties hereto
agree that each shall treat confidentially the terms and conditions of this
Agreement and all information provided by each party to the other regarding its
business and operations. All confidential information provided by a party
hereto shall be used by any other party hereto solely for
48
the purpose of rendering or obtaining services pursuant to this Agreement and,
except as may be required in carrying out this Agreement, shall not be disclosed
to any third party without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is publicly available
when provided or thereafter becomes publicly available other than through a
breach of this Agreement, or that is required to be disclosed by or to any bank
examiner of the Custodian or any Subcustodian, any regulatory authority, any
auditor of the parties hereto, or by judicial or administrative process or
otherwise by applicable law or regulation. The provisions of this Agreement and
any other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and behalf on the day and year first above written.
Dresdner RCM Equity Funds, Inc.
on behalf Dresdner RCM Emerging XXXXX BROTHERS XXXXXXXX & CO.
Markets Fund.
By /s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: President Title: Partner
49
