CUSTODIAN AGREEMENT
AGREEMENT made as of the 3rd day of May, 1991, as amended July 13, 1992,
between each of the Xxxxxx Funds listed in Schedule A, each of such Funds acting
on its own behalf separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds being hereinafter
referred to as the "Fund"), and Xxxxxx Fiduciary Trust Company (the
"Custodian").
WHEREAS, the Custodian represents to the Fund that it is eligible to serve
as a custodian for a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Fund wishes to appoint the Custodian as the Fund's custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Appointment of Custodian. The Fund hereby employs and appoints the
Custodian as custodian of its assets for the term and subject to the provisions
of this Agreement. At the direction of the Custodian, the Fund agrees to deliver
to the Sub-Custodians appointed pursuant to Section 2 below (the
"Sub-Custodians") securities, funds and other property owned by it. The
Custodian shall have no responsibility or liability for or on account of
securities, funds or other property not so delivered to the Sub-Custodians. Upon
request, the Fund shall deliver to the Custodian or to such Sub-Custodians as
the Custodian may direct such proxies, powers of attorney or other instruments
as may be reasonably necessary or desirable in connection with the performance
by the Custodian or any Sub-Custodian of their respective obligations under this
Agreement or any applicable Sub-Custodian Agreement.
2. Appointment of Sub-Custodians. The Custodian may at any time and from
time to time appoint, at its own cost and expense, as a Sub-Custodian for the
Fund any bank or trust company which meets the requirements of the 1940 Act and
the rules and regulations thereunder to act as a custodian, provided that the
Fund shall have approved in writing any such bank or trust company and the
Custodian gives prompt written notice to the Fund of any such appointment. The
agreement between the Custodian and any Sub-Custodian shall be substantially in
the form of the Sub-Custodian agreement attached hereto as Exhibit 1 (the
"Sub-Custodian Agreement") unless otherwise approved by the Fund, provided,
however, that the agreement between the Custodian and any Sub-Custodian
appointed primarily for the purpose of holding foreign securities of the Fund
shall be substantially in the form of the Sub-Custodian Agreement attached
hereto as Exhibit 1(A) (the "Foreign Sub-Custodian Agreement"; the
"Sub-Custodian Agreement" and the "Foreign Sub-Custodian Agreement" are herein
referred to collectively and each individually as the "Sub-Custodian
Agreement"). All Sub-Custodians shall be subject to the instructions of the
Custodian and not the Fund. The Custodian may, at any time
1
in its discretion, remove any bank or trust company which has been appointed as
a Sub-Custodian but shall in such case promptly notify the Fund in writing of
any such action. Securities, funds and other property of the Fund delivered
pursuant to this Agreement shall be held exclusively by Sub-Custodians appointed
pursuant to the provisions of this Section 2.
The Sub-Custodians which the Fund has approved to date are set forth in
Schedule B hereto. Schedule B shall be amended from time to time as
Sub-Custodians are changed, added or deleted. The Fund shall be responsible for
informing the Custodian sufficiently in advance of a proposed investment which
is to be held at a location not listed on Schedule B, in order that there shall
be sufficient time for the Custodian to put the appropriate arrangements in
place with such Sub-Custodian pursuant to such Sub-Custodian Agreement.
With respect to the securities, funds or other property held by a
Sub-Custodian, the Custodian shall be liable to the Fund if and only to the
extent that such Sub-Custodian is liable to the Custodian. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities, funds or other property of the
Fund to any such Sub-Custodian.
In the event that any Sub-Custodian appointed pursuant to the provisions of
this Section 2 fails to perform any of its obligations under the terms and
conditions of the applicable Sub-Custodian Agreement, the Custodian shall use
its best efforts to cause such Sub-Custodian to perform such obligations. In the
event that the Custodian is unable to cause such Sub-Custodian to perform fully
its obligations thereunder, the Custodian shall forthwith terminate such
Sub-Custodian and, if necessary or desirable, appoint another Sub-Custodian in
accordance with the provisions of this Section 2. The Custodian may with the
approval of the Fund commence any legal or equitable action which it believes is
necessary or appropriate in connection with the failure by a Sub-Custodian to
perform its obligations under the applicable Sub-Custodian Agreement. Provided
the Custodian shall not have been negligent with respect to any such matter,
such action shall be at the expense of the Fund. The Custodian shall keep the
Fund fully informed regarding such action and the Fund may at any time upon
notice to the Custodian elect to take responsibility for prosecuting such
action. In such event the Fund shall have the right to enforce and shall be
subrogated to the Custodian's rights against any such Sub-Custodian for loss or
damage caused the Fund by such Sub-Custodian.
At the written request of the Fund, the Custodian will terminate any
Sub-Custodian appointed pursuant to the provisions of this Section 2 in
accordance with the termination provisions of the applicable Sub-Custodian
Agreement. The Custodian will not amend any Sub-Custodian Agreement in any
material manner except upon the prior written approval of the Fund and shall in
any case give prompt written notice to the Fund of any amendment to the
Sub-Custodian Agreement.
2
3. Duties of the Custodian with Respect to Property of the Fund Held by
Sub-Custodians.
3.1 Holding Securities - The Custodian shall cause one or more
Sub-Custodians to hold and, by book-entry or otherwise, identify as belonging to
the Fund all non-cash property delivered to such Sub-Custodian.
3.2 Delivery of Securities - The Custodian shall cause Sub-Custodians
holding securities of the Fund to release and deliver securities owned by the
Fund held by the Sub-Custodian or in a Securities System account of the
Sub-Custodian only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
3.2.1 Upon sale of such securities for the account of the Fund and
receipt of payment therefor; provided, however, that a
Sub-Custodian may release and deliver securities prior to
the receipt of payment therefor if (i) in the
Sub-Custodian's judgment, (A) release and delivery prior to
payment is required by the terms of the instrument
evidencing the security or (B) release and delivery prior to
payment is the prevailing method of settling securities
transactions between institutional investors in the
applicable market and (ii) release and delivery prior to
payment is in accordance with generally accepted trade
practice and with any pplicable governmental regulations and
the rules of Securities Systems or other securities
depositories and clearing agencies in the applicable market.
The Custodian agrees, upon request, to advise the Fund of
all pending transactions in which release and delivery will
be made prior to the receipt of payment therefor;
3.2.2 Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into
by the Fund;
3.2.3 In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 3.12 hereof;
3.2.4 To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the
Sub-Custodian;
3.2.5 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 Sub-Custodian;
3
3.2.6 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 Sub-Custodian or into the name or nominee name of any
agent appointed pursuant to Section 3.11 or any other name
permitted pursuant to Section 3.3; 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 Sub-Custodian;
3.2.7 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
Sub-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 Sub-Custodian's own negligence or willful
misconduct;
3.2.8 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
Sub-Custodian;
3.2.9 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 Sub-Custodian;
3.2.10 For delivery in connection with any loans of securities made
by the Fund, but only against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities; except that in connection with any loan
of securities held in a Securities System for which
collateral is to credited to the Sub-Custodian's account in
another Securities System, the Sub-Custodian will not be
held liable or responsible for delivery of the securities
prior to the receipt of such collateral.
3.2.11 For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, but
only against receipt of amounts borrowed;
4
3.2.12 Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the shareholders of the Fund in
connection with distributions in kind, as may be described
from time to time in the Fund's Declaration of Trust and
currently effective registration statement, if any, in
satisfaction of requests by Fund shareholders for repurchase
or redemption;
3.2.13 For delivery to another Sub-Custodian of the Fund; and
3.2.14 For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Clerk or an Assistant Clerk, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes
to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
3.3 Registration of Securities. Securities of the Fund held by the
Sub-Custodians hereunder (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 Sub-Custodians or any 17f-5 Sub-Custodian or Foreign Depository (as each
of those terms is defined in the Foreign Sub-Custodian Agreement, 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 having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 3.12.
Notwithstanding the foregoing, a Sub-Custodian, agent, 17f-5 Sub-Custodian or
Foreign Depository may hold securities of the Fund in a nominee name which is
used for its other clients provided that such name is not used by the
Sub-Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository for its own
securities and that securities of the Fund are, by book-entry or otherwise, at
all times identified as belonging to the Fund and distinguished from other
securities held for other clients using the same nominee name. In addition, and
notwithstanding the foregoing, a Sub-Custodian or agent thereof or 17f-5
Sub-Custodian or Foreign Depository may hold securities of the Fund in its own
name if such registration is the prevailing method in the applicable market by
which custodians register securities of institutional clients and provided that
securities of the Fund are, by book-entry or otherwise, at all times identified
as belonging to the Fund and distinguished from other securities held for other
clients or for the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository. All securities accepted by a Sub-Custodian under the terms
of a Sub-Custodian Agreement shall be in good delivery form.
3.4 Bank Accounts. The Custodian shall cause one or more Sub-Custodians
to open and maintain a separate bank account or accounts in the name of the Fund
or the Custodian, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of a Sub-Custodian Contract or by the Custodian acting
pursuant to this Agreement, and shall hold in such
5
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 by the Fund in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Sub-Custodian for the Fund may
be deposited by it to its credit as sub-custodian or to the Custodian's credit
as custodian in the Banking Department of the Sub-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 Investment Company Act of 1940 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
Trustees of the Fund. Such funds shall be deposited by the Sub-Custodian or the
Custodian in its capacity as sub-custodian or custodian, respectively, and shall
be withdrawable by the Sub-Custodian or the Custodian only in that capacity. The
Sub-Custodian shall be liable for actual losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to report accurate
cash availability information with respect to the Fund's or the Custodian's bank
accounts maintained by the Sub-Custodian or any of its agents.
3.5 Payments for Shares. The Custodian shall cause one or more
Sub-Custodians to deposit into the Fund's account amounts received from the
Transfer Agent of the Fund for shares of the Fund issued by the Fund and sold by
its distributor. The Custodian will provide timely notification to the Fund of
any receipt by the Sub-Custodian from the Transfer Agent of payments for shares
of the Fund.
3.6 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall cause one or more Sub-Custodians, upon
the receipt of Proper Instructions, to make federal funds available to the Fund
as of specified times agreed upon from time to time by the Fund and the
Custodian with respect to amounts received by the Sub-Custodians for the
purchase of shares of the Fund.
6
3.7 Collection of Income. The Custodian shall cause one or more
Sub-Custodians to collect on a timely basis all income and other payments with
respect to registered securities held hereunder, including securities held in a
Securities System, 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 Sub-Custodian or agent
thereof and shall credit such income, as collected, to the Fund's account.
Without limiting the generality of the foregoing, the Custodian shall cause the
Sub-Custodian to 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 under the applicable Sub-Custodian
Agreement. Arranging for the collection of income due the Fund on securities
loaned pursuant to the provisions of Section 3.2.10 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
Sub-Custodian of the income to which the Fund is properly entitled.
3.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties, the
Custodian shall cause one or more Sub-Custodians to pay out monies of the Fund
in the following cases only:
3.8.1 Upon the purchase of securities for the account of the Fund
but only (a) against the delivery of such securities to the
Sub-Custodian (or any bank, banking firm or trust company
doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by
the Sub-Custodian as its agent for this purpose) or any
17f-5 Sub-Custodian or any Foreign Depository registered in
the name of the Fund or in the name of a nominee of the
Sub-Custodian referred to in Section 3.3 hereof or in proper
form for transfer; provided, however, that the Sub-Custodian
may cause monies of the Fund to be paid out prior to
delivery of such securities if (i) in the Sub-Custodian's
judgment, (A) payment prior to delivery is required by the
terms of the instrument evidencing the security or (B)
payment prior to delivery is the prevailing method of
settling securities transactions between institutional
investors in the applicable market and (ii) payment prior to
delivery is in accordance with generally accepted trade
practice and with any applicable governmental regulations
and the rules of Securities Systems or other securities
depositories and clearing agencies in the applicable market;
the Custodian agrees, upon request, to advise the Fund of
all pending transactions in which payment will be made prior
to the receipt of securities in accordance with the
provision to the foregoing sentence; (b) in the case of a
purchase effected through a Securities System, in accordance
with the conditions set forth in Section 3.13 hereof; or
(c)(i) in the case of a repurchase agreement entered into
7
between the Fund and the Sub-Custodian, another bank, or a
broker-dealer against delivery of the securities either in
certificate form or through an entry crediting the
Sub-Custodian's account at the Federal Reserve Bank with
such securities or (ii) in the case of a repurchase
agreement entered into between the Fund and the
Sub-Custodian, against delivery of a receipt evidencing
purchase by the Fund of Securities owned by the
Sub-Custodian along with written evidence of the agreement
by the Sub-Custodian to repurchase such securities from the
Fund; or (d) for transfer to a time deposit account of the
Fund in any bank, whether domestic or foreign, which
transfer may be effected prior to receipt of a confirmation
of the deposit from the applicable bank or a financial
intermediary;
3.8.2 In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 3.2
hereof;
3.8.3 For the redemption or repurchase of Shares issued by the
Fund as set forth in Section 3.10 hereof;
3.8.4 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, including the
Custodian's fee; and operating expenses of the Fund whether
or not such expenses are to be in whole or part capitalized
or treated as deferred expenses;
3.8.5 For the payment of any dividends or other distributions
declared to shareholders of the Fund;
3.8.6 For transfer to another Sub-Custodian of the Fund;
3.8.7 For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by
its Clerk or an Assistant Clerk, 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
payments is to be made.
3.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as otherwise provided in this Agreement, in any and every case where
payment for purchase of securities for the account of the Fund is made by a
Sub-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 cause the Sub-Custodian to be absolutely liable to the Fund in
the
8
event any loss results to the Fund from the payment by the Sub-Custodian in
advance of delivery of such securities.
3.10 Payments for Repurchase or Redemptions of Shares of the Fund. From
such funds as may be available, the Custodian shall, upon receipt Proper
Instructions, cause one or more Sub-Custodians to make funds available for
payment to a shareholder who has delivered to the Transfer Agent a request for
redemption or repurchase of shares of the Fund. In connection with the
redemption or repurchase of shares of the Fund, the Custodian is authorized,
upon receipt of Proper Instructions, to cause one or more Sub-Custodian, to wire
funds to or through a commercial bank designated by the redeeming shareholder.
In connection with the redemption or repurchase of Shares of the Fund, the
Custodian, upon receipt of Proper Instructions, shall cause one or more
Sub-Custodians to honor checks drawn on the Sub-Custodian by a shareholder when
presented to the Sub-Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time among the Fund, the Custodian and
the Sub-Custodian.
3.11 Appointment of Agents. The Custodian may permit any Sub-Custodian at
any time or times in its discretion to appoint (and may at any time remove) any
other bank or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Section 3 as the Sub-Custodian may from time
to time direct; provided, however, that the appointment of any agent shall not
relieve the Custodian or any Sub-Custodian of its responsibilities or
liabilities hereunder and provided that any such agent shall have been approved
by vote of the Trustees of the Fund. The Custodian may also permit any
Sub-Custodian to which foreign securities of the Fund have been delivered to
direct such securities to be held by 17f-5 Sub-Custodians and to use the
facilities of Foreign Depositories, as those terms are defined in the Foreign
Sub-Custodian Agreement, in accordance with the terms of the Foreign
Sub-Custodian Agreement.
The agents which the Fund and the Custodian have approved to date are set
forth in Schedule B hereto. Schedule B shall be amended from time to time as
agents are changed, added or deleted. The Fund shall be responsible for
informing the Custodian, and the Custodian shall be responsible for informing
the appropriate Sub-Custodian, sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Sub-Custodian to complete the appropriate
contractual and technical arrangements with such agent. Any Sub-Custodian
Agreement shall provide that the engagement by the Sub-Custodian of one or more
agents shall not relieve the Sub-Custodian of its responsibilities or
liabilities thereunder.
3.12 Deposit of Fund Assets in Securities Systems. The Custodian may
permit any Sub-Custodian to deposit and/or maintain securities owned by the Fund
in a clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, 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 rules and
regulations (including Rule 17f-4 of the 0000 Xxx) and subject to the following
provisions:
9
3.12.1 The Sub-Custodian may, either directly or through one or
more agents, keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Sub-Custodian in the Securities
System which shall not include any assets of the
Sub-Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3.12.2 The records of the Sub-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;
3.12.3 The Sub-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 Sub-Custodian to reflect such payment and
transfer for the account of the Fund. The Sub-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 Sub-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 Sub-Custodian or such an agent and be provided
to the Fund at its request. The Sub-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 on the next
business day;
3.12.4 The Sub-Custodian shall provide the Fund with any report
obtained by the Sub-Custodian on the Securities System's
accounting system, internal accounting controls and
procedures for safeguarding securities deposited in the
Securities System;
3.12.5 The Sub-Custodian shall utilize only such Securities Systems
as are approved by the Board of Trustees of the Fund, and
included on a list maintained by the Custodian;
3.12.6 Anything to the contrary in this Agreement notwithstanding,
the Sub-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 Sub-Custodian or any of its agents or of
any of its or their employees or from failure of the
Sub-Custodian or any
10
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
Sub-Custodian with respect to any claim against the
Securities System or any other person which the
Sub-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.
3.12A Depositary Receipts. Only upon receipt of Proper Instructions, the
Sub-Custodian shall instruct a 17f-5 Sub-Custodian or an agent of the
Sub-Custodian appointed pursuant to the applicable Foreign Sub-Custodian
Agreement (an "Agent") to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities against a
written receipt therefor adequately describing such securities and written
evidence satisfactory to the 17f-5 Sub-Custodian or Agent that the depositary
has acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Sub-Custodian, or a nominee of the
Sub-Custodian, for delivery to the Sub-Custodian.
Only upon receipt of Proper Instructions, the Sub-Custodian shall surrender
ADRs to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to the
Sub-Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities underlying such
ADRs to a 17f-5 Sub-Custodian or an Agent.
3.12B Foreign Exchange Transactions and Futures Contracts. Only upon
receipt of Proper Instructions, the Sub-Custodian shall enter into foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf and for the account of the Fund or shall enter
into futures contracts or options on futures contracts. Such transactions may be
undertaken by the Sub-Custodian with such banking institutions, including the
Sub-Custodian and 17f-5 Sub-Custodian(s) appointed pursuant to the applicable
Foreign Sub-Custodian Agreement, as principals, as approved and authorized by
the Fund. Foreign exchange contracts, futures contracts and options, other than
those executed with the Sub-Custodian, shall for all purposes of this Agreement
be deemed to be portfolio securities of the Fund.
3.12C Option Transactions. Only upon receipt of Proper Instructions, the
Sub-Custodian shall enter into option transactions in accordance with the
provisions of any agreement among the Fund, the Custodian and/or the
Sub-Custodian and a broker-dealer.
3.13 Ownership Certificates for Tax Purposes. The Custodian shall cause one
or more Sub-Custodians as may be appropriate to 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 the Sub-Custodian and in connection with transfers of securities.
11
3.14 Proxies. The Custodian shall, with respect to the securities held by
the Sub-Custodians, cause to be promptly executed by the registered holder of
such securities, if the securities are registered other 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.
3.15 Communications Relating to Fund Portfolio Securities. The Custodian
shall cause the Sub-Custodians to transmit promptly to the Custodian, and the
Custodian shall transmit promptly to the Fund, all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Custodian shall cause the
Sub-Custodian to transmit promptly to the Fund, all written information received
by the Sub-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 desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall notify the Custodian of
the action the Fund desires such Sub-Custodian to take, provided, however,
neither the Custodian nor the Sub-Custodian shall be liable to the Fund for the
failure to take any such action unless such instructions are received by the
Custodian at least four business days prior to the date on which the
Sub-Custodian is to take such action or, in the case of foreign securities, such
longer period as shall have been agreed upon in writing by the Custodian and the
Sub-Custodian.
3.16 Proper Instructions. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or persons
who are authorized by the Trustees of the Fund and the Custodian. Each such
writing shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered Proper Instructions if the
Custodian or Sub-Custodian, as the case may be, reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. All oral instructions shall be confirmed in writing.
Proper Instructions also include communications effected directly between
electro-mechanical or electronic devices provided that the Trustees have
approved such procedures. Notwithstanding the foregoing, no Trustee, officer,
employee or agent of the Fund shall be permitted access to any securities or
similar investments of the Fund deposited with any Sub-Custodian or any agent of
any Sub-Custodian for any reason except in accordance with the provisions of
Rule 17f-2 under the 1940 Act.
3.17 Actions Permitted Without Express Authority. The Custodian may in its
discretion, and may permit one or more Sub-Custodians in their discretion,
without express authority from the Fund to:
3.17.1 make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Agreement, or in the case of a
Sub-Custodian, under the applicable Sub-Custodian
12
Agreement, provided that all such payments shall be
accounted for to the Fund;
3.17.2 surrender securities in temporary form for securities in
definitive form;
3.17.3 endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
3.17.4 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 Trustees of
the Fund.
3.18 Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed by or on
behalf of the Fund.
3.19 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 Fund, 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 By-Laws (or comparable documents) or votes or proceedings of the
shareholders or Trustees of the Fund. The Custodian shall in no event be liable
to the Fund and shall be indemnified by the Fund for any violation of any
investment limitations to which the Fund is subject or other limitations with
respect to the Fund's powers to expend funds, encumber securities, borrow or
take similar actions affecting its portfolio.
4. Performance Standards. The Custodian shall use its best efforts to
perform its duties hereunder in accordance with the standards set forth in
Schedule C hereto. Schedule C may be amended from time to time as agreed to by
the Custodian and the Trustees of the Fund.
5. Records. The Custodian shall create and maintain all records relating to
the Custodian's activities and obligations under this Agreement and cause all
Sub-Custodians to create and maintain all records relating to the
Sub-Custodian's activities and obligations under the appropriate Sub-Custodian
Agreement in such manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Sections 17(f) and 31 thereof and Rules 17f-2,
31a-1 and 31a-2 thereunder, applicable federal and state tax laws, and any other
law or administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian or during the regular business hours
of the Sub-Custodian, as the case may be, be open for inspection by duly
authorized officers, employees or agents of the Custodian and Fund and employees
and agents of the Securities and Exchange Commission. At the Fund's request, the
Custodian shall supply the Fund and cause one or more Sub-Custodians to supply
the Custodian with a tabulation of securities owned by the Fund and held under
this Agreement. When
13
requested to do so by the Fund and for such compensation as shall be agreed
upon, the Custodian shall include and cause one or more Sub-Custodians to
include certificate numbers in such tabulations.
6. Opinion and Reports of Fund's Independent Accountants. The Custodian
shall take all reasonable actions, as the Fund may from time to time request, to
furnish such information with respect to its activities hereunder as the Fund's
independent public accountants may request in connection with the accountant's
verification of the Fund's securities and similar investments as required by
Rule 17f-2 under the 1940 Act, the preparation of the Fund's registration
statement and amendments thereto, the Fund's reports to the Securities and
Exchange Commission, and with respect to any other requirements of such
Commission.
The Custodian shall also direct any Sub-Custodian to take all reasonable
actions, as the Fund may from time to time request, to furnish such information
with respect to its activities under the applicable Sub-Custodian Agreement as
the Fund's independent public accountant may request in connection with the
accountant's verification of the Fund's securities and similar investments as
required by Rule 17f-2 under the 1940 Act, the preparation of the Fund's
registration statement and amendments thereto, the Fund's reports to the
Securities and Exchange Commission, and with respect to any other requirements
of such Commission.
7. Reports of Custodian's and Sub-Custodians' Independent Accountants. The
Custodian shall provide the Fund, at such times as the Fund may reasonably
require, with reports by its independent public accountant on its accounting
system, internal accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in Securities Systems, relating
to services provided by the Custodian under this Agreement. The Custodian shall
also cause one or more of the Sub-Custodians to provide the Fund, at such time
as the Fund may reasonably require, with reports by independent public
accountants on their accounting systems, internal accounting controls and
procedures for safeguarding securities, including securities deposited and/or
maintained in Securities Systems, relating to services provided by those
Sub-Custodians under their respective Sub-Custody Agreements. Such reports,
which shall be of sufficient scope and in sufficient detail as may reasonably be
required by the Fund, shall provide reasonable assurance that any material
inadequacies would be disclosed by such examinations, and, if there is no such
inadequacies, shall so state.
8. Compensation. 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. Such expenses shall not include, however,
the fees paid by the Custodian to any Sub-Custodian.
9. Responsibility of Custodian. The Custodian shall exercise reasonable
care and diligence in carrying out the provisions of this Agreement and shall
not be liable to the Fund for any action taken or omitted by it in good faith
without negligence. So long as and to the extent that it is in the exercise of
reasonable care, neither the Custodian nor any Sub-Custodian shall be
responsible for the title, validity or genuineness of any property or evidence
of title thereto
14
received by it or delivered by it pursuant to this Agreement and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and, if in writing,
reasonably believed by it to be signed by the proper party or parties. It shall
be entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian or a Sub-Custodian with respect
to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund. It is also understood
that the Custodian shall not be liable for any loss resulting from a Sovereign
Risk. A "Sovereign Risk" shall mean nationalization, expropriation, devaluation,
revaluation, confiscation, seizure, cancellation, destruction or similar action
by any governmental authority, de facto or de jure; or enactment, promulgation,
imposition or enforcement by any such governmental authority of currency
restrictions, exchange controls, taxes, levies or other charges affecting the
Fund's property; or acts of war, terrorism, insurrection or revolution; or any
other similar act or event beyond the Custodian's control.
If the Fund requires the Custodian which in turn may require a
Sub-Custodian to take any action with respect to securities, which action
involves the payment of money or which action may, in the opinion of the
Custodian or the Sub-Custodian result in the Custodian or its nominee or a
Sub-Custodian or its nominee being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
Custodian or the Custodian requiring any Sub-Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
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 counsel fees) incurred or assessed against it or its
nominee or any Sub-Custodian or its nominee in connection with the performance
of this Agreement, or any Sub-Custodian Agreement except, as to the Custodian,
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, and as to a Sub-Custodian, such as may
arise from such Sub-Custodian's or its nominee's own negligent action, negligent
failure to act or willful misconduct. The negligent action, negligent failure to
act or willful misconduct of the Custodian shall not diminish the Fund's
obligation to indemnify the Custodian in the amount, but only in the amount, of
any indemnity required to be paid to a Sub-Custodian under its Sub-Custodian
Agreement. The Custodian may assign this indemnity from the Fund directly to,
and for the benefit of, any Sub-Custodian. The Custodian is authorized, and may
authorize any Sub-Custodian, to charge any account of the Fund for such items
and such fees. To secure any such authorized charges and any advances of cash or
securities made by the Custodian or any Sub-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 (except a Fund specified in Schedule D to this Agreement)
hereby grants to the Custodian a security interest in and pledges to the
Custodian securities up to a maximum of 10% of the value of the Fund's net
assets for the purpose of securing payment of any such advances and hereby
authorizes the Custodian on behalf of the Fund to grant to any Sub-Custodian a
security interest
15
in and pledge of securities held for the Fund (including those which may be held
in a Securities System) up to a maximum of 10% of the value of the net assets
held by such Sub-Custodian. The specific securities subject to such security
interest may be designated in writing from time to time by the Fund or its
investment adviser. In the absence of any designation of securities subject to
such security interest, the Custodian or the Sub-Custodian, as the case may be,
may designate securities held by it. Should the Fund fail to repay promptly any
authorized charges or advances of cash or securities, the Custodian or the
Sub-Custodian shall be entitled to use such available cash and to dispose of
pledged securities and property as is necessary to repay any such authorized
charges or advances and to exercise its rights as a secured party under the
U.C.C. The Fund agrees that a Sub-Custodian shall have the right to proceed
directly against the Fund and not solely as subrogee to the Custodian with
respect to any indemnity hereunder assigned to a Sub-Custodian, and in that
regard, the Fund agrees that it shall not assert against any Sub-Custodian
proceeding against it any defense or right of set-off the Fund may have against
the Custodian arising out of the negligent action, negligent failure to act or
willful misconduct of the Custodian, and hereby waives all rights it may have to
object to the right of a Sub-Custodian to maintain an action against it.
10. Successor Custodian. If a successor custodian shall be appointed by the
Trustees of the Fund, the Custodian shall, upon termination, cause to be
delivered to such successor custodian, duly endorsed and in the form for
transfer, all securities, funds and other properties then held by the
Sub-Custodians and all instruments held by the Sub-Custodians relative thereto
and cause the transfer to an account of the successor custodian all of the
Fund's securities held in any 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 Trustees of the
Fund, cause to be delivered 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 Trustees 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 meets the requirements of the 1940 Act and the rules and regulations
thereunder, such securities, funds and other properties. Thereafter, such bank
or trust company shall be the successor of the Custodian under this Agreement.
In the event that such securities, funds and other properties remain in the
possession of the Custodian or any Sub-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 Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period as
the Sub-Custodians retain possession of such securities, funds and other
properties and the provisions of this Agreement relating to the duties and
obligations of the Custodian shall remain in full force and effect.
16
11. Effective Period, Termination and Amendment. This Agreement 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 thirty (30) days after the date
of such delivery or mailing; provided either party may at any time immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for the other party or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction. No provision of this Agreement may be amended or terminated except
by a statement in writing signed by the party against which enforcement of the
amendment or termination is sought.
Upon termination of the Agreement, 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 and through the Custodian any Sub-Custodian for its
costs, expenses and disbursements.
12. Interpretation. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. In
connection with the operation of this Agreement, the Custodian and the Fund may
from time to time agree in writing on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
13. Governing Law. This instrument is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the internal laws of said Commonwealth, without regard to principles of
conflicts of law.
14. Notices. Notices and other writings delivered or mailed postage prepaid
to the Fund addressed to the Fund attention: Xxxx Xxxxxx, or to such other
person or address as the Fund may have designated to the Custodian in writing,
or to the Custodian at Xxx Xxxx Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000
attention: Xxxxxx Xxxxx, or to such other address as the Custodian may have
designated to the Fund in writing, shall be deemed to have been properly
delivered or given hereunder to the respective addressee.
15. Binding Obligation. This Agreement shall be binding on and shall inure
to the benefit of the Fund and the Custodian and their respective successors and
assigns, provided that neither party hereto may assign this Agreement or any of
its rights or obligations hereunder without the prior written consent of the
other party.
16. Declaration of Trust. A copy of the Declaration of Trust of each of the
Funds is on file with the Secretary of The Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Trustees of each of the Funds as Trustees and not
17
individually and that the obligations of this instrument are not binding on any
of the Trustees or officers or shareholders individually, but are binding only
on the assets and property of each Fund with respect to its obligations
hereunder.
18
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf as of the day and year first above written.
THE XXXXXX FUNDS LISTED
IN SCHEDULE A
By /s/ Xxxx X. Xxxxxx
------------------
Vice President and Treasurer
XXXXXX FIDUCIARY TRUST COMPANY
By /s/ Xxxxxx X. Xxxxx
-------------------
President
Xxxxxx Investments, Inc. ("Xxxxxx"), the sole owner of the Custodian,
agrees that Xxxxxx shall be the primary obligor with respect to compensation due
the Sub-Custodians pursuant to the Sub-Custodian Agreements in connection with
the Sub-Custodians' performance of their responsibilities thereunder and agrees
to take all actions necessary and appropriate to assure that the Sub-Custodians
shall be compensated in the amounts and on the schedules agreed to by the
Custodian and the Sub-Custodians pursuant to those Agreements.
XXXXXX INVESTMENTS, INC.
By /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
19
EXHIBIT 1
MASTER SUB-CUSTODIAN AGREEMENT
AGREEMENT made this [ ] day of [ ], 200[ ], between Xxxxxx Fiduciary Trust
Company, a Massachusetts-chartered trust company (the "Custodian"), and [ ], a [
] (the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that it is eligible
to serve as a custodian for a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian Agreement between it
and each of the Xxxxxx Funds listed in Schedule A, each of such Funds acting on
its own behalf separately from all the other Funds and not jointly or jointly
and severally with any of the other Funds (each of the Funds being hereinafter
referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-custodians for
the purpose of holding cash and securities of the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the Fund's
Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Appointment of Custodian. The Custodian hereby employs and appoints
the Sub-Custodian as a Sub-Custodian for the Fund for the term and subject to
the provisions of this Agreement. Upon request, the Custodian shall deliver to
the Sub-Custodian such proxies, powers of attorney or other instruments as may
be reasonably necessary or desirable in connection with the performance by the
Sub-Custodian of its obligations under this Agreement on behalf of the Fund.
2. Duties of the Sub-Custodian with Respect to Property of the Fund Held
by It. The Custodian may from time to time deposit securities or cash owned by
the Fund with the Sub-Custodian. The Sub-Custodian shall have no responsibility
or liability for or on account of securities, funds or other property of the
Fund not so delivered to it. The Sub-Custodian shall hold and dispose of the
securities hereafter held by or deposited with the Sub-Custodian as follows:
2.1 Holding Securities. The Sub-Custodian shall hold and physically
segregate for the account of the Fund all non-cash property, including all
securities owned by the Funds, other than securities which are maintained
pursuant to Section 2.13 in a Securities System. All such
20
securities are to be held or disposed of for, and subject at all times to the
instructions of, the Custodian pursuant to the terms of this Agreement. The
Sub-Custodian shall maintain adequate records identifying the securities as
being held by it as Sub-Custodian of the Fund.
2.2 Delivery of Securities. The Sub-Custodian shall release and deliver
securities of the Fund held by it hereunder (or in a Securities System account
of the Sub-Custodian) only upon receipt of Proper Instructions (as defined in
Section 2.17), 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 2.13 hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
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 Sub-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 Sub-Custodian or
into the name or nominee name of any agent appointed pursuant to Section 2.12;
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 Sub-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
Sub-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 Sub-Custodian's own negligence or
willful misconduct;
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 Sub-Custodian;
21
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 Sub-Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as agreed upon from
time to time by the Custodian and the Sub-Custodian, which may be in the form of
cash or obligations issued by the United States government, its agencies or
instrumentalities;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) Upon receipt of instructions from the transfer agent for the Fund
(the "Transfer Agent"), for delivery to such Transfer Agent or to the
shareholders of the Fund in connection with distributions in kind, as may be
described from time to time in the Fund's Declaration of Trust and currently
effective registration statement, if any, in satisfaction of requests by
shareholders for repurchase or redemption;
13) For delivery to another Sub-Custodian of the Fund; and
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the Fund signed by an officer of the
Fund and certified by its Clerk or an Assistant Clerk, specifying the securities
to be delivered, setting forth the purpose for which such delivery is to be
made, declaring such purposes to be proper corporate purposes, and naming the
person or persons to whom delivery of such securities is to be made.
2.3 Registration of Securities. Securities of the Fund held by the
Sub-Custodian hereunder (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 Sub-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 having the same
investment adviser as the Fund, or in the name or nominee name of any agent
appointed pursuant to Section 2.12. Notwithstanding the foregoing, a
Sub-Custodian or agent thereof may hold securities of the Fund in a nominee name
which is used for its other clients provided such name is not used by the
Sub-Custodian or agent for its own securities and that securities of the Fund
are physically segregated at all times from other securities held for other
clients using the same nominee name. All securities accepted by the
Sub-Custodian under the terms of this Agreement shall be in "street name" or
other good delivery form.
22
2.4 Bank Accounts. The Sub-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 Sub-Custodian acting pursuant to the terms of this Agreement, and shall
hold in such account or accounts, subject to the provisions hereof, all cash
received for the account of the Funds, other than cash maintained by the Fund in
a bank account established and used in accordance with Rule 17f-3 under the 1940
Act. Funds held by the Sub-Custodian for the Fund shall be deposited by it to
its credit as Sub-Custodian of the Fund in the Banking Department of the
Sub-Custodian or other banks. Such funds shall be deposited by the Sub-Custodian
in its capacity as Sub-Custodian and shall be withdrawable by the Sub-Custodian
only in that capacity. The Sub-Custodian shall be liable for losses incurred by
the Fund attributable to any failure on the part of the Sub-Custodian to report
accurate cash availability information with respect to the Fund's bank accounts
maintained by the Sub-Custodian or any of its agents, provided that such
liability shall be determined solely on a cost-of-funds basis.
2.5 Payments for Shares. The Sub-Custodian shall receive from any
distributor of the Fund's shares or from the Transfer Agent of the Fund and
deposit into the Fund's account such payments as are received for shares of the
Fund issued or sold from time to time by the Fund. The Sub-Custodian will
provide timely notification to the Custodian, and the Transfer Agent of any
receipt by it of payments for shares of the Fund.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the
receipt of Proper Instructions,
1) invest in such instruments as may be set forth in such instructions
on the same day as received all federal funds received after a time agreed upon
between the Sub-Custodian and the Custodian; and
2) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Custodian and the Sub-Custodian in the
amount of checks, when cleared within the Federal Reserve System, received in
payment for shares of the Fund which are deposited into the Fund's account or
accounts.
2.7 Collection of Income. The Sub-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 hereunder and shall credit such
income, as collected, to the Fund's account. Without limiting the generality of
the foregoing, the Sub-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. Arranging
for 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 Custodian. The
Sub-Custodian will have no duty or responsibility in connection therewith, other
than to provide the Custodian
23
with such information or data as may be necessary to assist the Custodian in
arranging for the timely delivery to the Sub-Custodian of the income to which
the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Sub-Custodian shall cause monies of a Fund to be paid out in the following cases
only:
1) Upon the purchase of securities for the account of the Fund but
only (a) against the delivery of such securities to the Sub-Custodian (or any
bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act, as amended, to act as a custodian
and has been designated by the Sub-Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee 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 2.13 hereof; or (c) in the case of repurchase agreements
entered into between the Fund and the Sub-Custodian, or another bank, (i)
against delivery of the securities either in certificate form or through an
entry crediting the Sub-Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt evidencing purchase by
the Fund of securities owned by the Sub-Custodian along with written evidence of
the agreement by the Sub-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 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, custodian and Sub-Custodian, transfer
agent and legal fees, including the Custodian's fee; 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 declared pursuant to the governing
documents of the Fund;
6) For transfer to another Sub-Custodian of the Fund; and
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the Trustees or of
the Executive Committee of the Fund signed by an officer of the Fund and
certified by its Clerk or an Assistant Clerk, 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.
24
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 a Fund is made by the Sub-Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Custodian to
so pay in advance, the Sub-Custodian shall be absolutely liable to the Fund and
the Custodian in the event any loss results to the Fund or the Custodian from
the failure of the Sub-Custodian to make such payment against delivery of such
securities, except that in the case of repurchase agreements entered into by the
Fund with a bank which is a member of the Federal Reserve System, the
Sub-Custodian may transfer funds to the account of such bank prior to the
receipt of written evidence that the securities subject to such a repurchase
agreement have been transferred by book-entry into a segregated non-proprietary
account of the Sub-Custodian maintained with any Federal Reserve Bank or of the
safe-keeping receipt, provided that such securities have in fact been so
transferred by book-entry.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available for the purpose but subject to the limitations of
the Declaration of Trust and By-Laws and any applicable votes of the Trustees of
the Fund pursuant thereto, the Sub-Custodian shall, upon receipt of instructions
from the Custodian, make funds available for payment to shareholders of the Fund
who have delivered to the Transfer Agent a request for redemption or repurchase
of their shares. In connection with the redemption or repurchase of shares of
the Fund, the Sub-Custodian, upon receipt of Proper Instructions, is authorized
to wire funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of shares of the
Fund, the Sub-Custodian, upon receipt of Proper Instructions, shall honor checks
drawn on the Sub-Custodian by a shareholder, when presented to the Sub-Custodian
in accordance with such procedures and controls as are mutually agreed upon from
time to time among the Fund, the Custodian and the Sub-Custodian.
2.11 Variances. The Sub-Custodian may accept securities or cash delivered
in settlement of trades notwithstanding variances between the amount of
securities or cash so delivered and the amount specified in the instructions
furnished to it by the Custodian, provided that the variance in any particular
transaction does not exceed (i) $25 in the case of transactions of $1,000,000 or
less, and (ii) $50 in the case of transactions exceeding $1,000,000. The
Sub-Custodian shall maintain a record of any such variances and notify the
Custodian of such variances in periodic transaction reports submitted to the
Custodian. The Sub-Custodian will not advise any party with whom the Fund
effects securities transactions of the existence of these variance provisions
without the consent of the Fund and the Custodian.
2.12 Appointment of Agents. Without limiting its own responsibility for its
obligations assumed hereunder, the Sub-Custodian may at any time and from time
to time engage, at its own cost and expense, as an agent to act for the Fund on
the Sub-Custodian's behalf with respect to any such obligations any bank or
trust company which meets the requirements of the 1940 Act, and the rules and
regulations thereunder, to perform services delegated to the Sub-Custodian
hereunder, provided that the Fund shall have approved in writing any such bank
or trust company and the Sub-Custodian shall give prompt written notice to the
25
Custodian and the Fund of any such engagement. All agents of the Sub-Custodian
shall be subject to the instructions of the Sub-Custodian and not the Custodian.
The Sub-Custodian may, at any time in its discretion, and shall at the
Custodian's direction, remove any bank or trust company which has been appointed
as an agent, and shall in either case promptly notify the Custodian and the Fund
in writing of the completion of any such action.
The agents which the Fund has approved to date are set forth in Schedule B
hereto. Schedule B shall be amended from time to time as approved agents are
changed, added or deleted. The Custodian shall be responsible for informing the
Sub-Custodian sufficiently in advance of a proposed investment which is to be
held at a location not listed on Schedule B, in order that there shall be
sufficient time for the Fund to give the approval required by the preceding
paragraph and for the Sub-Custodian to complete the appropriate contractual and
technical arrangements with such agent. The engagement by the Sub-Custodian of
one or more agents to carry out such of the provisions of this Section 2 shall
not relieve the Sub-Custodian of its responsibilities or liabilities hereunder.
2.13 Deposit of Fund Assets in Securities Systems. The Sub-Custodian may
deposit and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities depository, or in
the book-entry system authorized by the U.S. Department of the Treasury
(collectively referred to herein as "Securities System") in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission rules
and regulations (including Rule 17f-4 of the 1940 Act), and subject to the
following provisions:
1) The Sub-Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an account ("Account")
of the Sub-Custodian in the Securities System which shall not include any assets
other than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-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 Sub-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 Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-Custodian shall transfer securities sold
for the account of the Fund upon (a) receipt of advice from the Securities
System that payment for such securities has been transferred to the Account, and
(b) the making of an entry on the records of the Sub-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 Sub-Custodian and be
provided to the Fund or the Custodian at the Custodian's request. The
Sub-Custodian shall furnish the Custodian confirmation of each transfer to or
from the account of the Fund in
26
the form of a written advice or notice and shall furnish to the Custodian copies
of daily transaction sheets reflecting each day's transactions in the Securities
System for the account of the Fund on the next business day;
4) The Sub-Custodian shall provide the Custodian with any report
obtained by the Sub-Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Securities System;
5) The Sub-Custodian shall have received the initial or annual
certificate, as the case may be, required by Section 2.10 hereof;
6) Anything to the contrary in this Agreement notwithstanding, the
Sub-Custodian shall be liable to the Fund and the Custodian for any loss or
damage to the Fund or the Custodian resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or
any of its agents or of any of its or their employees or from failure of the
Sub-Custodian or any such agent to enforce effectively such rights as it may
have against the Securities System; at the election of the Custodian, it shall
be entitled to be subrogated to the rights of the Sub-Custodian with respect to
any claim against the Securities System or any other person which the
Sub-Custodian may have as a consequence of any such loss or damage if and to the
extent that the Fund and the Custodian have not been made whole for any such
loss or damage.
2.14 Ownership Certificates for Tax Purposes. The Sub-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 held by it hereunder and in connection with transfers of
securities.
2.15 Proxies. The Sub-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 a
Fund, all proxies, without indication of the manner in which such proxies are to
be voted, and shall promptly deliver to the Custodian such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities. The
Sub-Custodian shall transmit promptly to the Custodian all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Sub-Custodian shall transmit promptly
to the Custodian all written information received by the Sub-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 desires to take
action with respect to any tender offer, exchange offer or any other similar
transactions, the Custodian shall notify the Sub-Custodian of the action the
Fund desires the Sub-Custodian to take; provided, however, that the
Sub-Custodian shall not be liable to the Fund or the Custodian for the failure
to take any such action unless such
27
instructions are received by the Sub-Custodian at least two business days prior
to the date on which the Sub-Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more persons who are
authorized by the Trustees of the Fund and by vote of the Board of Directors of
the Custodian. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Sub-Custodian reasonably believes them to have been given by
a person authorized to give such instructions with respect to the transaction
involved. The Custodian shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Clerk or an Assistant Clerk as to
the authorization by the Trustees of the Funds accompanied by a detailed
description of procedures approved by the Trustees, Proper Instructions may
include communications effected directly between electro-mechanical or
electronic devices, provided that the Trustees, the Custodian and the
Sub-Custodian are satisfied that such procedures afford adequate safeguards for
the Fund's assets. Notwithstanding the foregoing, no Trustee, officer, employee
or agent of the Fund shall be permitted access to any securities or similar
investments of the Fund deposited with the Sub-Custodian or any agent for any
reason except in accordance with the provisions of Rule 17f-2 under the 0000
Xxx.
2.18 Actions Permitted without Express Authority. The Sub-Custodian may in
its discretion, without express authority from the Custodian:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Fund and the
Custodian;
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 held by the Sub-Custodian hereunder
except as otherwise directed by the Custodian or the Trustees of the Fund.
2.19 Evidence of Authority. The Sub-Custodian shall be protected in acting
upon any instruction, notice, request, consent, certificate or other instrument
or paper reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Fund or the Custodian as custodian of the Fund.
The Sub-Custodian may receive and accept a certified copy of a vote of the
Trustees of the Fund or the Board of Directors of the Custodian, as conclusive
evidence (a) of the authority of any person to act in accordance with such vote
or (b) of any determination or of any action by the Trustees pursuant to the
Declaration of Trust and By-Laws
28
and the Board of Directors of the Custodian, as the case may be as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Sub-Custodian of written notice to the contrary.
3. Performance Standards; Protection of the Fund. The Sub-Custodian shall
use its best efforts to perform its duties hereunder in accordance with the
standards set forth in Schedule C hereto. Schedule C may be amended from time to
time as agreed to by the Custodian and the Trustees of the Fund.
4. Records. The Sub-Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trustees of the Fund to
keep the books of account of the Funds or, if directed in writing to do so by
the Custodian, shall itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of the Custodian
under its Custodian Agreement with the Fund under the 1940 Act, with particular
attention to Sections 17(f) and 31 thereof and Rules 17f-2, 31a-1 and 31a-2
thereunder, applicable federal and state tax laws, and any other law or
administrative rules or procedures which may be applicable to the Fund or the
Custodian. All such records shall be the property of the Fund and shall at all
times during the regular business hours of the Sub-Custodian be open for
inspection by duly authorized officers, employees or agents of the Custodian and
the Fund and employees and agents of the Securities and Exchange Commission. The
Sub-Custodian shall, at the Custodian's request, supply the Custodian with a
tabulation of securities owned by the Fund and held under this Agreement and
shall, when requested to do so by the Custodian and for such compensation as
shall be agreed upon between the Custodian and Sub-Custodian, include
certificate numbers in such tabulations.
5. Opinion and Reports of the Fund's Independent Accountants. The
Sub-Custodian shall take all reasonable actions, as the Custodian may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent public accountants with respect to its activities hereunder in
connection with the preparation of the Fund's registration statements and
amendments thereto, the Fund's reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
6. Reports of Sub-Custodian's Independent Accountants. The Sub-Custodian
shall provide the Custodian, at such times as the Custodian may reasonably
require, with reports by independent public accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this Agreement;
such reports, which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Custodian, shall provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, shall so state.
29
7. Compensation. The Sub-Custodian shall be entitled to reasonable
compensation for its services and expenses as Sub-Custodian, as agreed upon from
time to time between the Custodian and the Sub-Custodian.
8. Responsibility of Sub-Custodian. The Sub-Custodian shall exercise
reasonable care and diligence in carrying out the provisions of this Agreement
and shall not be liable to the Fund or the Custodian for any action taken or
omitted by it in good faith without negligence. So long as and to the extent
that it is in the exercise of reasonable care, the Sub-Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received by it or delivered by it pursuant to this Agreement
and shall be held harmless in acting upon any notice, request, consent,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice. Notwithstanding the foregoing, the responsibility of
the Sub-Custodian with respect to redemptions effected by check shall be in
accordance with a separate agreement entered into between the Custodian and the
Sub-Custodian.
The Sub-Custodian shall protect the Fund and the Custodian from direct
losses to the Fund resulting from any act or failure to act of the Sub-Custodian
in violation of its duties hereunder or of law and shall maintain customary
errors and omissions and fidelity insurance policies in an amount not less than
$25 million to cover losses to the Fund resulting from any such act or failure
to act.
If the Custodian requires the Sub-Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Sub-Custodian, result in the Sub-Custodian's being liable
for the payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to take such action,
shall provide indemnity to the Sub-Custodian in an amount and form satisfactory
to it.
The Custodian agrees to indemnify and hold harmless the Sub-Custodian from
and against all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or its nominee in
connection with the performance of this Agreement, except such as may arise from
its own negligent action, negligent failure to act or willful misconduct. To
secure any such authorized charges and any advances of cash or securities made
by the Sub-Custodian to or for the benefit of the Fund for any purpose which
results in the Fund's incurring an overdraft at the end of any business day or
for extraordinary or emergency purposes during any business day, the Custodian
on behalf of the Fund, unless prohibited from doing so by one or more of the
Fund's fundamental investment restrictions, hereby represents that it has
obtained from the Fund authorization to apply available cash in any account
maintained by the Sub-Custodian on behalf of the Fund and a security interest in
and pledge to it of securities held for the Fund by the Sub-Custodian, in an
amount not to exceed the amount not prohibited by such restrictions, for the
purposes of securing payment of any such
30
advances, and that the Fund has agreed, from time to time, to designate in
writing, or to cause its investment adviser to designate in writing, the
specific securities subject to such security interest and pledge. The Custodian
hereby assigns the benefits of such security interest and pledge to the
Sub-Custodian, and agrees that, should the Fund or the Custodian fail to repay
promptly any advances of cash or securities, the Sub-Custodian shall be entitled
to use such available cash and to dispose of such pledged securities as is
necessary to repay any such advances.
9. Successor Sub-Custodian. If a successor Sub-Custodian shall be
appointed by the Custodian, the Sub-Custodian shall, upon termination, cause to
be delivered to such successor Sub-Custodian, duly endorsed and in the form for
transfer, all securities then held by it, shall cause the transfer to an account
of the successor Sub-Custodian all of the Fund's securities held in a Securities
System and shall cause to be delivered to such successor Sub-Custodian all funds
and other property held by it or any of its agents.
If no such successor Sub-Custodian shall be appointed, the Sub-Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Trustees of the Fund, cause to be delivered at the office of the Sub-Custodian
and transfer such securities, funds and other properties in accordance with such
vote.
In the event that no written order designating a successor Sub-Custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Sub-Custodian on or before the date when such termination shall become
effective, then the Sub-Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the 1940 Act, doing business in
Boston, Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other properties held by the
Sub-Custodian and its agents and all instruments held by the Sub-Custodian and
its agents relative thereto and all other property held by it and its agents
under this Agreement and to cause to be transferred to an account of such
successor Sub-Custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Sub-Custodian under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Custodian to obtain the certified copy of vote referred to or of
the Trustees to appoint a successor Sub-Custodian, the Sub-Custodian shall be
entitled to fair compensation for its services during such period as the
Sub-Custodian retains possession of such securities, funds and other properties
and the provisions of this Agreement relating to the duties and obligations of
the Sub-Custodian shall remain in full force and effect.
Upon termination, the Sub-Custodian shall, upon receipt of a certified copy
of a vote of the Trustees of the Fund, cause to be delivered to any other
Sub-Custodian designated in such vote such assets, securities and other property
of the Fund as are designated in such vote, or pursuant to Proper Instructions,
cause such assets, securities and other property of the Fund as
31
are designated by the Custodian to be delivered to one or more of the
sub-custodians designated on Schedule D hereto, as from time to time amended.
10. Effective Period; Termination and Amendment. This Agreement 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 thirty (30) days after the date
of mailing; provided, however, that the Sub-Custodian shall not act under
Section 2.13 hereof in the absence of receipt of an initial certificate of the
Clerk or an Assistant Clerk that the Trustees of the Fund have approved the
initial use of a particular Securities System and the receipt of an annual
certificate of the Clerk or an Assistant Clerk that the Trustees have reviewed
the use by the Fund of such Securities System, as required in each case by Rule
17f-4 under the Investment Company Act of 1940; and provided, further, however,
that the Custodian shall not amend or terminate this Agreement in contravention
of any applicable federal or state regulations or any provision of the
Declarations of Trust or By-Laws of the Fund; and provided, further, that the
Custodian may at any time, by action of its Board of Directors, or the Trustees
of the Fund, as the case may be, immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Sub-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 this Agreement, the Custodian shall pay to the
Sub-Custodian such compensation as may be due as of the date of such termination
and shall likewise reimburse the Sub-Custodian for its reimbursable costs,
expenses and disbursements.
11. Amendment and Interpretation. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof. No provision of this Agreement may be amended or terminated
except by a statement in writing signed by the party against which enforcement
of the amendment or termination is sought.
In connection with the operation of this Agreement, the Sub-Custodian and
the Custodian may from time to time agree in writing on such provisions
interpretive of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
12. Governing Law. This Agreement is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the laws of said Commonwealth.
13. Notices. Notices and other writings delivered or mailed postage
prepaid to the Custodian addressed to the Custodian attention: [ ], or to such
other person or address as the Custodian may have designated to the
Sub-Custodian in writing, or to the Sub-Custodian at [ ],
32
or to such other address as the Sub-Custodian may have designated to the
Custodian in writing, shall be deemed to have been properly delivered or given
hereunder to the respective addressee.
14. Binding Obligation. This Agreement shall be binding on and shall inure
to the benefit of the Custodian and the Sub-Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
15. Prior Agreements. This Agreement supersedes and terminates, as of the
date hereof, all prior contracts between the Fund or the Custodian and the
Sub-Custodian relating to the custody of the Fund's assets.
16. Declaration of Trust. A copy of the Agreement and Declaration of Trust
of the Fund is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that the obligations of or arising out of this
instrument are not binding upon any of the Trustees or beneficiaries
individually but binding only upon the assets and property of the Funds.
33
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 [ ] day of [ ], 200[ ].
XXXXXX FIDUCIARY TRUST COMPANY
By _______________________
(SUB-CUSTODIAN)
By _______________________
34
EXHIBIT 1(A)
MASTER FOREIGN SUB-CUSTODIAN AGREEMENT
AGREEMENT made this [ ] day of [ ], 200[ ], between Xxxxxx Fiduciary Trust
Company, a Massachusetts-chartered trust company (the "Custodian"), and [ ],
(the "Sub-Custodian").
WHEREAS, the Sub-Custodian represents to the Custodian that it is eligible
to serve as a custodian for a management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
WHEREAS, the Custodian has entered into a Custodian Agreement between it
and each of the Xxxxxx Funds listed in Schedule A to this Agreement, each of
such Funds acting on its own behalf separately from all the other Funds and not
jointly or jointly and severally with any of the other Funds (each of the Funds
being hereinafter referred to as the "Fund"), and
WHEREAS, the Custodian and the Fund desire to utilize sub-custodians for
the purpose of holding cash and securities of the Fund, and
WHEREAS, the Custodian wishes to appoint the Sub-Custodian as the Fund's
Sub-Custodian,
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Appointment of Sub-Custodian. The Custodian hereby employs and appoints
the Sub-Custodian as a sub-custodian for safekeeping of securities and other
assets of the Fund for the term and subject to the provisions of this Agreement.
Upon request, the Custodian shall deliver to the Sub-Custodian such proxies,
powers of attorney or other instruments as may be reasonably
35
necessary or desirable in connection with the performance by the Sub-Custodian
of its obligations under this Agreement on behalf of the Fund.
2. Duties of the Sub-Custodian with Respect to Property of the Fund Held by
It. The Custodian may from time to time deposit or direct the deposit of
securities or cash owned by the Fund with the Sub-Custodian. The Sub-Custodian
shall have no responsibility or liability for or on account of securities, funds
or other property of the Fund not so delivered to it. Except for securities and
funds held by 17f-5 Sub-Custodians (as defined in Section 2.11(b)) the
Sub-Custodian shall hold and dispose of the securities or cash hereafter held by
or deposited with the Sub-Custodian as follows:
2.1 Holding Securities. The Sub-Custodian shall hold and, by book-entry or
otherwise, identify as belonging to the Fund all non-cash property which has
been delivered to the Sub-Custodian. All such securities are to be held or
disposed of for, and subject at all times to the instructions of, the Custodian
pursuant to the terms of this Agreement. The Sub-Custodian shall maintain
adequate records identifying the securities as being held by it as sub-custodian
of the Fund.
2.2. Delivery of Securities. The Sub-Custodian shall release and deliver
securities of the Fund held by it hereunder (or in a Securities System account
of the Sub-Custodian) only upon receipt of Proper Instructions (as defined in
Section 2.19), 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, provided, however, that the Sub-Custodian may
release and deliver securities prior to the receipt of payment therefor if (i)
in the Sub-Custodian's judgment, (A) release and delivery prior to payment is
required by the terms of the instrument evidencing the security or (B) release
and delivery prior to payment is the prevailing method of settling securities
transactions between institutional investors in the applicable market and (ii)
release and delivery prior to payment is in accordance with generally accepted
trade practice and with any applicable governmental regulations and the rules of
Securities Systems or other securities depositories and clearing agencies in the
applicable market. The Sub-Custodian agrees, upon request, to advise the
Custodian of all pending transactions in which release and delivery will be made
prior to the 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 such securities; provided that, in any such case, the cash or other
consideration is thereafter to be delivered to the Sub-Custodian;
36
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 thereafter to be delivered to the
Sub-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 Sub-Custodian or
into the name or nominee name of any agent appointed pursuant to Section 2.11 or
any other name permitted pursuant to Section 2.3; 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 thereafter to be delivered to the Sub-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
Sub-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 Sub-Custodian's own negligence or
willful misconduct;
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, thereafter
are to be delivered to the Sub-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 now securities and cash, if
any, are thereafter to be delivered to the Sub-Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of collateral the adequacy and timing of
receipt of which shall be as agreed upon from time to time in writing by the
Custodian and the Sub-Custodian, which may be in the form of cash or obligations
issued by the United States government, its agencies or instrumentalities;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) Upon receipt of instructions from the transfer agent for the Fund
(the "Transfer Agent"), for delivery to such Transfer Agent or to the
shareholders of the Fund in connection with distributions in kind, in
satisfaction of requests by shareholders for repurchase or redemption;
13) For delivery to the Custodian or another sub-custodian of the
Fund; and
14) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Trustees or of the Executive Committee of the
37
Fund signed by an officer of the Fund and certified by its Clerk or an Assistant
Clerk, specifying the securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes to be proper
corporate purposes, and naming the person or persons to whom delivery of such
securities is to be made.
2.3 Registration of Securities. Securities of the Fund held by the
Sub-Custodian hereunder (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 Sub-Custodian or any 17f-5 Sub-Custodian or Foreign Depository (as each
of those terms is defined in Section 2.11(b)), 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 having the same investment adviser as the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11(a). Notwithstanding
the foregoing, the Sub-Custodian or agent thereof or any 17f-5 Sub-Custodian or
Foreign Depository may hold securities of the Fund in a nominee name which is
used for its other clients provided that such name is not used by the
Sub-Custodian, agent, 17f-5 Sub-Custodian or Foreign Depository for its own
securities and that securities of the Fund are, by book-entry or otherwise, at
all times identified as belonging to the Fund and distinguished from other
securities held for other clients using the same nominee name. In addition, and
notwithstanding the foregoing, the Sub-Custodian or agent thereof or 17f-5
Sub-Custodian or Foreign Depository may hold securities of the Fund in its own
name if such registration is the prevailing method in the applicable market by
which custodians register securities of institutional clients and provided that
securities of the Fund are, by book-entry or otherwise, at all times identified
as belonging to the Fund and distinguished from other securities held for other
clients or for the Sub-Custodian or agent thereof or 17f-5 Sub-Custodian or
Foreign Depository. All securities accepted by the Sub-Custodian under the terms
of this Agreement shall be in good delivery form.
2.4 Bank Accounts. The Sub-Custodian shall open and maintain a separate
bank account or accounts in the name of the Fund or of the Custodian for the
benefit of the Fund, subject only to draft or order by the Sub-Custodian acting
pursuant to the terms of this Agreement or by the Custodian acting pursuant to
the Custodian Agreement, and shall hold in such account or accounts, subject to
the provisions hereof, to the Sub-Custodian's credit as sub-custodian of the
Fund or the Custodian's credit as custodian for the Fund, cash received for the
account of the Fund other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act or cash
held as deposits with 17f-5 Sub-Custodians in accordance with the following
paragraph. The responsibilities of the Sub-Custodian for cash, including foreign
currency, of the Fund accepted on the Sub-Custodian's books as a deposit shall
be that of a U.S. bank for a similar deposit.
The Sub-Custodian may open a bank account on the books of a 17f-5
Sub-Custodian in the name of the Fund or of the Sub-Custodian as a sub-custodian
for the Fund, and may deposit cash, including foreign currency, of the Fund in
such account, and such funds shall be withdrawable only pursuant to draft or
order of the Sub-Custodian. The records for such account will be maintained by
the Sub-Custodian but such account shall not constitute a deposit liability of
the Sub-Custodian. The responsibilities of the Sub-Custodian for deposits
maintained in such account
38
shall be the same as and no greater than the Sub-Custodian's responsibility in
respect of other portfolio securities of the Fund.
The Sub-Custodian shall be liable for actual losses incurred by the Fund
attributable to any failure on the part of the Sub-Custodian to report accurate
cash availability information with respect to the bank accounts referred to in
this Section 2.4.
2.5 Payments for Shares. The Sub-Custodian shall maintain custody of
amounts received from the Transfer Agent of the Fund for shares of the Fund
issued by the Fund and sold by its distributor and deposit such amounts into the
Fund's account. The Sub-Custodian will provide timely notification to the
Custodian and the Transfer Agent of any receipt by it of payments for shares of
the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Custodian and the Sub-Custodian, the Sub-Custodian shall, upon the receipt of
Proper Instructions, make federal funds available to the Custodian for the
account of the Fund as of specified times agreed upon from time to time by the
Custodian and the Sub-Custodian with respect to amounts received by the
Sub-Custodian for the purchase of shares of the Fund.
2.7 Collection of Income. The Sub-Custodian shall collect on a timely
basis all income and other payments with respect to registered securities held
hereunder, including securities held in a Securities System, 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 hereunder and shall credit such income, as collected, to the
Fund's account. Without limiting the generality of the foregoing, the
Sub-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. Arranging for 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 Custodian. The Sub-Custodian will
have no duty or responsibility in connection therewith, other than to provide
the Custodian with such information or data as may be necessary to assist the
Custodian in arranging for the timely delivery to the Sub-Custodian of the
income to which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Sub-Custodian shall cause monies of the Fund to be paid out in the following
cases only:
1) Upon the purchase of securities for the account of the Fund but
only (a) against the delivery of such securities to the Sub-Custodian (or any
bank, banking firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act, as amended, to act as a custodian
and has been designated by the Sub-Custodian as its agent for this purpose) or
any 17f-5 Sub-Custodian or any Foreign Depository (as each of those terms is
defined in Section 2.11(b)) registered in the name of the Fund or in the name of
a nominee referred to in Section 2.3 hereof or in proper form for transfer,
provided, however, that the Sub-Custodian may cause monies of the Fund to be
paid out prior to delivery of such securities if (i) in the Sub-
39
Custodian's judgment, (A) payment prior to delivery is required by the terms of
the instrument evidencing the security or (B) payment prior to delivery is the
prevailing method of settling securities transactions between institutional
investors in the applicable market and (ii) payment prior to delivery is in
accordance with generally accepted trade practice and with any applicable
governmental regulations and the rules of Securities Systems or other securities
depositories and clearing agencies in the applicable market. The Sub-Custodian
agrees, upon request, to advise the Custodian of all pending transactions in
which payment will be made prior to the receipt of securities in accordance with
the proviso to the foregoing sentence; (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) (i) in the case of a repurchase agreement entered
into between the Fund and the Sub-Custodian, another bank or a broker-dealer,
against delivery of the securities either in certificate form or through an
entry crediting the Sub-Custodian's or its agent's non-proprietary account at
any Federal Reserve Bank with such securities or (ii) in the case of a
repurchase agreement entered into between the Fund and the Sub-Custodian,
against delivery of a receipt evidencing purchase by the Fund of securities
owned by the Sub-Custodian along with written evidence of the agreement by the
Sub-Custodian to repurchase such securities from the Fund; or (d) for transfer
to a time deposit account of the Fund in any bank, whether domestic or foreign,
which transfer may be effected prior to receipt of a confirmation of the deposit
from the applicable bank or a financial intermediary;
2) In connection with conversion, exchange or surrender or tender or
exercise of securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of shares 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, custodian and sub-custodian, transfer
agent and legal fees, including the Custodian's fee; 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 or other distributions declared to
shareholders of the Fund;
6) For transfer to the Custodian or another sub-custodian of the Fund;
and
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the Trustees or of
the Executive Committee of the Fund signed by an officer of the Fund and
certified by its Clerk or Assistant Clerk, 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.
40
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as otherwise provided in this Agreement, in any and every case where
payment for purchase of securities for the account of the Fund is made by the
Sub-Custodian in advance of receipt of the securities purchased in the absence
of Proper Instructions from the Custodian to so pay in advance, the
Sub-Custodian shall be absolutely liable to the Fund and the Custodian in the
event any loss results to the Fund or the Custodian from the payment by the
Sub-Custodian in advance of delivery of such securities.
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From
such funds as may be available, the Sub-custodian shall, upon receipt of Proper
Instructions, make funds available for payment to a shareholder of the Fund who
has delivered to the Transfer Agent a request for redemption or repurchase of
shares of the Fund. In connection with the redemption or repurchase of shares of
the Fund, the Sub-Custodian, upon receipt of Proper Instructions, is authorized
to wire funds to or through a commercial bank designated by the redeeming
shareholder. In connection with the redemption or repurchase of shares of the
Fund, the Sub-Custodian, upon receipt of Proper Instructions, shall honor checks
drawn on the Sub-Custodian by a shareholder, when presented to the Sub-Custodian
in accordance with such procedures and controls as are mutually agreed upon from
time to time among the Fund, the Custodian and the Sub-Custodian.
2.11 Appointment of Agents and Sub-Custodians Pursuant to Rule 17f-5.
(a) Agents. Without limiting its own responsibility for its
obligations assumed hereunder, the Sub-Custodian may at any time and from time
to time engage, at its own cost and expense, as an agent to act for the Fund on
the Sub-Custodian's behalf with respect to any such obligations any bank or
trust company which meets the requirements of the 1940 Act, and the rules and
regulations thereunder, to perform services delegated to the Sub-Custodian
hereunder, provided that the Fund and the Custodian shall have approved in
writing any such bank or trust company. All agents of the Sub-Custodian shall be
subject to the instructions of the Sub-Custodian and not the Custodian. The
Sub-Custodian may, at any time in its discretion, and shall at the Custodian's
direction, remove any bank or trust company which has been appointed as an
agent, and shall in either case promptly notify the Custodian and the Fund in
writing of the completion of any such action.
The agents which the Fund has approved to date are set forth in
Schedule B hereto. Schedule B shall be amended from time to time as approved
agents are changed, added or deleted. The Custodian shall be responsible for
informing the Sub-Custodian sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule B, in order that there
shall be sufficient time for the Fund to give the approval required by the
preceding paragraph and for the Sub-Custodian to complete the appropriate
contractual and technical arrangements with such agent. The engagement by the
Sub-Custodian of one or more agents shall not relieve the Sub-Custodian of its
responsibilities or liabilities hereunder.
(b) 17f-5 Sub-Custodians. Securities, funds and other property of the
Fund may be held by sub-custodians appointed pursuant to the provisions of this
Section 2.11 (each, a "17f-5 Sub-Custodian"). The Sub-Custodian may, at any time
and from time to time, appoint any
41
bank or trust company (that meets the requirements of a custodian or a foreign
custodian under the Investment Company Act of 1940 and the rules and regulations
thereunder, including without limitation Rule 17f-5 thereunder, or that has
received an order of the Securities and Exchange Commission ("SEC") exempting it
from any of such requirements that it does not meet) to act as a 17f-5
Sub-Custodian for the Fund, provided that the Fund shall have approved in
writing (1) any such bank or trust company and the sub-custodian agreement to be
entered into between such bank or trust company and the Sub-Custodian, and (2)
the 17f-5 Sub-Custodian's offices or branches at which the 17f-5 Sub-Custodian
is authorized to hold securities, cash and other property of the Fund. Upon such
approval by the Fund, the Sub-Custodian is authorized on behalf of the Fund to
notify each 17f-5 Sub-Custodian of its appointment as such. The Sub-Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a 17f-5 Sub-Custodian.
Those 17f-5 Sub-Custodians and their offices or branches which the
Fund has approved to date are set forth on Schedule C hereto. Such Schedule C
shall be amended from time to time as 17f-5 Sub-Custodians, branches or offices
are changed, added or deleted. The Custodian shall be responsible for informing
the Sub-Custodian sufficiently in advance of a proposed investment which is to
be held at a location not listed on Schedule C, in order that there shall be
sufficient time for the Fund to give the approval required by the preceding
paragraph and for the Sub-Custodian to put the appropriate arrangements in place
with such 17f-5 Sub-Custodian pursuant to such sub-custodian agreement.
With respect to the securities and funds held by a 17f-5
Sub-Custodian, either directly or indirectly, including demand and interest
bearing deposits, currencies or other deposits and foreign exchange contracts,
the Sub-Custodian shall be liable to the Custodian and the Fund if and only to
the extent that such 17f-5 Sub-Custodian is liable to the Sub-Custodian and the
Sub-Custodian recovers under the applicable sub-custodian agreement, provided,
however, that the foregoing limitation shall not apply if such 17f-5
Sub-Custodian's liability to the Sub-Custodian is limited because the applicable
sub-custodian agreement does not contain provisions substantially similar to the
provisions of Section 2 (but not including Section 2.12) of this Agreement. The
Sub-Custodian shall also be liable to the Custodian and the Fund for its own
negligence in transmitting any instructions received by it from the Fund or the
Custodian and for its own negligence in connection with the delivery of any
securities or funds held by it to any such 17f-5 Sub-Custodian.
The Custodian or the Fund may authorize the Sub-Custodian or one or
more of the 17f-5 Sub-Custodians to use the facilities of one or more foreign
securities depositories or clearing agencies (each, a "Foreign Depository") that
is permitted to be used by registered investment companies by a Rule or Rules of
the SEC or that has received an order of the SEC exempting it from any of such
requirements that it does not meet. The records of the Sub-Custodian or a 17f-5
Sub-Custodian employing a Foreign Depository or clearing agency shall identify
those securities belonging to the Fund which are maintained in such a Foreign
Depository. The engagement by the Sub-Custodian of one or more Foreign
Depositories shall not relieve the Sub-Custodian of its responsibilities or
liabilities hereunder. The Foreign Depositories which the Fund has approved to
date are set forth in Schedule C hereto. Schedule C shall be amended from time
to time as approved Foreign Depositories are changed, added or deleted. The
Custodian shall be responsible
42
for informing the Sub-Custodian sufficiently in advance of a proposed investment
which is to be held at a location not listed on Schedule C, in order that there
shall be sufficient time for the Fund to give the approval required by the
preceding paragraph and for the Sub-Custodian to complete the appropriate
contractual and technical arrangements with such Foreign Depository.
In the event that any 17f-5 Sub-Custodian appointed pursuant to the
provisions of this Section 2.11 fails to perform any of its obligations under
the terms and conditions of the applicable sub-custodian agreement, the
Sub-Custodian shall use its best efforts to cause such 17f-5 Sub-Custodian to
perform such obligations. In the event that the Sub-Custodian is unable to cause
such 17f-5 Sub-Custodian to perform fully its obligations thereunder, the
Sub-Custodian shall forthwith upon the Custodian's request terminate such 17f-5
Sub-Custodian as a sub-custodian for the Fund and, if necessary or desirable,
appoint another 17f-5 Sub-Custodian in accordance with the provisions of this
Section 2.11. At the election of the Custodian, it shall have the right to
enforce and shall be subrogated to the Sub-Custodian's rights against any such
17f-5 Sub-Custodian for loss or damage caused the Fund by such 17f-5
Sub-Custodian.
At the written request of the Fund, the Sub-Custodian will terminate
as a sub-custodian for the Fund any 17f-5 Sub-Custodian appointed pursuant to
the provisions of this Section 2.11 in accordance with the termination
provisions under the applicable sub-custodian agreement. The Sub-Custodian will
not amend any sub-custodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the Sub-Custodian makes any payment to a 17f-5
Sub-Custodian under the indemnification provisions of any sub-custodian
agreement, no more than thirty days after written notice to the Custodian of the
Sub-Custodian's having made such payment, the Custodian will reimburse the
Sub-Custodian the amount of such payment except in respect of any negligence or
misconduct of the Sub-Custodian.
2.13 Deposit of Fund Assets in Securities Systems. The Sub-Custodian may
deposit and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities depository, or in
the book-entry system authorized by the U.S. Department of the Treasury or by a
federal agency (collectively referred to herein as "Securities System") in
accordance with applicable rules and regulations (including Rule 17f-4 of the
1940 Act), and subject to the following provisions:
1) The Sub-Custodian may, either directly or through one or more
agents, keep securities of the Fund in a Securities System provided that such
securities are represented in an account ("Account") of the Sub-Custodian or
such an agent in the Securities System which shall not include any assets other
than assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Sub-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;
43
3) The Sub-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 Sub-Custodian to reflect such payment and transfer
for the account of the Fund. The Sub-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 Sub-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 Sub-Custodian or such an
agent and be provided to the Fund or the Custodian at the Custodian's request.
The Sub-Custodian shall furnish the Custodian 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 Custodian copies of daily transaction statements reflecting
each day's transactions in the Securities System for the account of the Fund on
the next business day;
4) The Sub-Custodian shall provide the Custodian with any report
obtained by the Sub-Custodian on the Securities System's accounting system,
internal accounting controls and procedures for safeguarding securities
deposited in the Securities System;
5) The Sub-Custodian shall utilize only such Securities Systems as are
set forth in a list provided by the Custodian of Securities Systems approved for
use by the Board of Trustees of the Fund, which list will be amended from time
to time by the Custodian as may be necessary to reflect any subsequent action
taken by the Trustees of the Fund;
6) Anything to the contrary in this Agreement notwithstanding, the
Sub-Custodian shall be liable to the Fund and the Custodian for any loss or
damage to the Fund or the Custodian resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Sub-Custodian or
any of its agents or of any of its or their employees or from failure of the
Sub-Custodian or any such agent or employee to enforce effectively such rights
as it may have against the Securities System. At the election of the Custodian,
it shall be entitled to be subrogated to the rights of the Sub-Custodian with
respect to any claim against the Securities System or any other person which the
Sub-Custodian may have as a consequence of any such loss or damage if and to the
extent that the Fund and the Custodian have not been made whole for any such
loss or damage.
2.14 Depositary Receipts. Only upon receipt of Proper Instructions, the
Sub-Custodian shall instruct a 17f-5 Sub-Custodian appointed pursuant to Section
2.11(b) hereof or an agent of the Sub-Custodian appointed pursuant to Section
2.11(a) hereof (an "Agent") to surrender securities to the depositary used by an
issuer of American Depositary Receipts or International Depositary Receipts
(hereinafter collectively referred to as "ADRs") for such securities against a
written receipt therefor adequately describing such securities and written
evidence satisfactory to the 17f-5 Sub-Custodian or Agent that the depositary
has acknowledged receipt of instructions to issue with respect to such
securities ADRs in the name of the Sub-Custodian, or a nominee of the
Sub-Custodian, for delivery to the Sub-Custodian in Boston, Massachusetts, or at
such other place as the Sub-Custodian may from time to time designate.
44
Only upon receipt of Proper Instructions, the Sub-Custodian shall surrender
ADRs to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to the
Sub-Custodian that the issuer of the ADRs has acknowledged receipt of
instructions to cause its depository to deliver the securities underlying such
ADRs to a 17f-5 Sub-Custodian or an Agent.
2.15 Foreign Exchange Transactions and Futures Contracts. Only upon receipt
of Proper Instructions, the Sub-Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf and for the account of the Fund or shall enter into futures
contracts or options on futures contracts. Such transactions may be undertaken
by the Sub-Custodian with such banking institutions, including the Sub-Custodian
and 17f-5 Sub-Custodian(s) appointed pursuant to Section 2.11(b), as principals,
as approved and authorized by the Fund. In connection with such transaction, the
Sub-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, futures contract or option thereon or confirmation that the
countervalue currency completing the foreign exchange contract or futures
contract has been delivered or received or that the option has been delivered or
received. Foreign exchange contracts, futures contracts and options, other than
those executed with the Sub-Custodian as principal, shall for all purposes of
this Agreement be deemed to be portfolio securities of the Fund.
2.16 Option Transactions. Only upon receipt of Proper Instructions, the
Sub-Custodian shall enter into option transactions in accordance with the
provisions of any agreement among the Fund, the Custodian, and/or the
Sub-Custodian and a broker-dealer.
2.17 Ownership Certificates for Tax Purposes. The Sub-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 held by it hereunder and in connection with transfers of
securities.
2.18 Proxies. The Sub-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 other than in the name of the Fund,
all proxies that are received by the Sub-Custodian, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Custodian such proxies, all proxy soliciting materials and all notices relating
to such securities.
2.19 Communications Relating to Fund Portfolio Securities. The
Sub-Custodian shall transmit promptly to the Custodian all written information
(including, without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith) received by the Sub-Custodian
from issuers of the securities being held for the account of the Fund. With
respect to tender or exchange offers, the Sub-Custodian shall transmit promptly
to the Custodian all written information received by the Sub-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 desires to take
action with respect to any tender offer, exchange offer or any other similar
transactions, the Custodian shall notify the Sub-Custodian of the action the
45
Fund desires the Sub-Custodian to take; provided, however, that the
Sub-Custodian shall not be liable to the Fund or the Custodian for the failure
to take any such action unless Proper Instructions are received by the
Sub-Custodian at least two business days prior to the date on which the
Sub-Custodian is to take such action, or in the case of foreign securities, such
longer periods as shall have been agreed upon in writing by the Custodian and
the Sub-Custodian, which may be in the form of written operating procedures or
standards.
2.20 Proper Instructions. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more persons who are
authorized by the Trustees of the Fund and by the Custodian. Each such writing
shall set forth the specific transaction or type of transaction involved. Oral
instructions will be considered Proper Instructions if the Sub-Custodian
reasonably believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Custodian shall cause
all oral instructions to be confirmed in writing. Proper Instructions shall also
include communications effected directly between the Custodian and Sub-Custodian
by electro-mechanical or electronic devices, provided that the Custodian and the
Sub-Custodian have approved such procedures. Notwithstanding the foregoing, no
Trustee, officer, employee or agent of the Fund shall be permitted access to any
securities or similar investments of the Fund deposited with the Sub-Custodian
or any agent for any reason except in accordance with the provisions of Rule
17f-2 under the 0000 Xxx.
2.21 Actions Permitted without Express Authority. The Sub-Custodian may in
its discretion, without express authority from the Custodian:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the Custodian;
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 held by the Sub-Custodian hereunder
except as otherwise directed by the Custodian.
2.22 Evidence of Authority. The Sub-Custodian shall be protected in acting
upon any instruction, notice, request, consent, certificate or other instrument
or paper reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Fund or the Custodian as custodian of the Fund.
2.23 Performance Standards. The Sub-Custodian shall use its best efforts to
perform its duties hereunder in accordance with such standards as are agreed
upon from time to time by the Custodian and the Sub-Custodian.
46
3. Records. The Sub-Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Trustees of the Fund to
keep the books of account of the Fund or, if directed in writing to do so by the
Custodian, shall itself keep such books of account. The Sub-Custodian shall
create and maintain all records relating to its activities and obligations under
this Agreement in such manner as will meet the obligations of the Fund under the
1940 Act, with particular attention to Sections 17(f) and 31 thereof and Rules
17f-2, 31a-1 and 31a-2 thereunder; the Sub-Custodian shall also create and
maintain such records as are required by applicable federal and state tax laws,
and any other law or administrative rules or procedures which may be applicable
to the Fund or the Custodian, such laws, rules or procedures to be specified by
the Custodian from time to time. All such records shall be the property of the
Fund and shall at all times during the regular business hours of the
Sub-Custodian be open for inspection by duly authorized officers, employees or
agents of the Custodian and the Fund and employees and agents of the Securities
and Exchange Commission. The Sub-Custodian shall, at the Custodian's request,
supply the Custodian with a tabulation of securities owned by the Fund and held
under this Agreement and shall, when requested to do so by the Custodian and for
such compensation as shall be agreed upon between the Custodian and
Sub-Custodian, include certificate numbers in such tabulations.
4. Opinion and Reports of the Fund's Independent Accountant. The
Sub-Custodian shall take all reasonable actions, as the Custodian may from time
to time request, to furnish such information with respect to its activities
hereunder as the Fund's independent public accountant may request in connection
with the accountant's verification of the Fund's securities and similar
investments as required by Rule 17f-2 under the 1940 Act, the preparation of the
Fund's registration statement and amendments thereto, the Fund's reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.
5. Reports of Sub-Custodian's Independent Accountant. The Sub-Custodian
shall provide the Custodian, at such times as the Custodian may reasonably
require, with reports by an independent public accountant on the accounting
system, internal accounting controls and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Sub-Custodian under this Agreement;
such reports, which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Custodian, shall provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and if there
are no such inadequacies, shall so state.
6. Compensation. The Sub-Custodian shall be entitled to reasonable
compensation for its services and expenses as sub-custodian, as agreed upon from
time to time between the Custodian and the Sub-Custodian.
7. Responsibility of Sub-Custodian. The Sub-Custodian shall exercise
reasonable care and diligence in carrying out the provisions of this Agreement
and shall not be liable to the Fund or the Custodian for any action taken or
omitted by it in good faith without negligence or willful misconduct. So long as
and to the extent that it is in the exercise of reasonable care, the
Sub-Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably
47
believed by it to be genuine and, if in writing, reasonably believed to be
signed by the proper party or parties. It shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Fund) on all matters and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. Notwithstanding the foregoing, the responsibility of the
Sub-Custodian with respect to redemptions effected by check shall be in
accordance with a separate agreement entered into between the Custodian and the
Sub-Custodian. It is also understood that the Sub-Custodian shall not be liable
for any loss resulting from a Sovereign Risk. A "Sovereign Risk" shall mean
nationalization, expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or enforcement by any
such governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Fund's property; or acts of war,
terrorism, insurrection or revolution; or any other similar act or event beyond
the Sub-Custodian's control.
The Sub-Custodian shall protect the Fund and the Custodian from losses to
the Fund resulting from any act or failure to act of the Sub-Custodian in
violation of its duties hereunder or of any law applicable to the
Sub-Custodian's duties hereunder.
If the Custodian requires the Sub-Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Sub-Custodian, result in the Sub-Custodian's being liable
for the payment of money or incurring liability of some other form, the
Custodian, as a prerequisite to requiring the Sub-Custodian to take such action,
shall provide indemnity to the Sub-Custodian in an amount and form satisfactory
to the Sub-Custodian.
The Custodian agrees to indemnify and hold harmless the Sub-Custodian from
and against all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) (collectively, "Authorized Charges") incurred or
assessed against it or its nominee in connection with the performance of this
Agreement, except such as may arise from its own negligent action, negligent
failure to act or willful misconduct. The Sub-Custodian is authorized to charge
any account of the Fund for such items and such fees. To secure any such
Authorized Charges and any advances of cash or securities made by the
Sub-Custodian to or for the benefit of the Fund for any purpose which results in
the Fund's incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the Custodian on
behalf of the Fund hereby represents that it has obtained from the Fund
authorization to apply available cash in any account maintained by the
Sub-Custodian on behalf of the Fund and a security interest in and pledge to the
Sub-Custodian of securities of the Fund held by the Sub-Custodian (including
those which may be held in a Securities System) up to a maximum of 10% of the
value of the net assets held by the Sub-Custodian for the purposes of securing
payment of any Authorized Charges and any advances of cash or securities, and
that the Fund has agreed, from time to time, to designate in writing, or to
cause its investment adviser to, or permit the Custodian to, designate in
writing, the securities subject to such security interest and pledge with such
specificity and detail as the Sub-Custodian may reasonably request (and in the
absence of such designation to permit the Sub-Custodian so to designate
securities). The Custodian hereby grants on behalf of the Fund a security
interest and pledge to the Sub-Custodian, as aforesaid, in securities and
available cash, as security for any Authorized Charges and any advances of cash
or securities and agrees that, should
48
the Fund or the Custodian fail to repay promptly any Authorized Charges and any
advances of cash or securities, the Sub-Custodian shall be entitled to use such
available cash and to dispose of such pledged securities as is necessary to
repay any such Authorized Charges or any advances of cash or securities and to
exercise the rights of a secured party under the Uniform Commercial Code.
The Custodian agrees not to amend the third paragraph of Section 9 of the
Custodian Agreement unless it provides the Sub-Custodian with at least thirty
(30) days' prior written notice of the substance of any proposed amendments,
provided that the foregoing shall not be construed to in any way to provide that
the Sub-Custodian's consent shall be required to make such an amendment
effective or that the Sub-Custodian's failure to give such consent shall in any
way affect its obligations under this Agreement.
8. Successor Sub-Custodian. If a successor sub-custodian shall be appointed
by the Custodian, the Sub-Custodian shall, upon termination and upon receipt of
Proper Instructions, cause to be delivered to such successor sub-custodian, duly
endorsed and in the form for transfer, all securities, funds and other property
of the Fund then held by it and all instruments held by the Sub-Custodian
related thereto and cause the transfer to an account of the successor
sub-custodian all of the Fund's securities held in any Securities Systems.
If no such successor sub-custodian shall be appointed, the Sub-Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Trustees of the Fund, cause to be transferred such securities, funds and other
property in accordance with such vote.
In the event that no written order designating a successor sub-custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Sub-Custodian on or before the date when such termination shall become
effective, then the Sub-Custodian shall have the right to deliver to a bank or
trust company, which meets the requirements of the 1940 Act and the rules and
regulations thereunder, all securities, funds and other properties of the Fund.
Thereafter, such bank or trust company shall be the successor of the
Sub-Custodian under this Agreement.
In the event that securities, funds and other property remain in the
possession of the Sub-Custodian after the date of termination hereof owing to
failure of the Custodian to obtain a certified copy of the Trustees appointing a
successor sub-custodian, the Sub-Custodian shall be entitled to fair
compensation for its services during such period as the Sub-Custodian retains
possession of such securities, funds and other property and the provisions of
this Agreement relating to the duties and obligations of the Sub-Custodian shall
remain in full force and affect.
9. Effective Period; Termination and Amendment. This Agreement 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 thirty (30) days after the date
of mailing; provided, that either party may at any time immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
the other party or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
49
No provision of this Agreement may be amended or terminated except by a
statement in writing signed by the party against which enforcement of the
amendment or termination is sought.
Upon termination of this Agreement, the Custodian shall pay to the
Sub-Custodian such compensation as may be due as of the date of such termination
and shall likewise reimburse the Sub-Custodian for its reimbursable costs,
expenses and disbursements. The provisions of Section 7, including, until any
Authorized Charges and any advances of cash or securities referred to therein
are repaid, all liens and security interests created pursuant thereto, and all
rights to indemnification, shall survive any termination of this Agreement.
10. Interpretation. This Agreement constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof. In
connection with the operation of this Agreement, the Sub-Custodian and the
Custodian may from time to time agree in writing on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. No interpretive
or additional provisions made as provided in the preceding sentence shall be
deemed to be an amendment of this Agreement.
11. Governing Law. This Agreement is executed and delivered in The
Commonwealth of Massachusetts and shall be governed by and construed according
to the internal laws of said Commonwealth, without regard to principles of
conflicts of law.
12. Notices. Notices and other writings delivered or mailed postage prepaid
to the Custodian addressed to the Custodian attention: Xxxxxx X. Xxxxx, Senior
Vice President, The Xxxxxx Companies, 00 Xxxx Xxxxxx, Xxxxxx, XX 00000 or to
such other person or address as the Custodian may have designated to the
Sub-Custodian in writing, or to the Sub-Custodian attention: [ ] or to such
other address as the Sub-Custodian may have designated to the Custodian in
writing, shall be deemed to have been properly delivered or given hereunder to
the respective addressee.
13. Binding Obligation. This Agreement shall be binding on and shall inure
to the benefit of the Custodian and the Sub-Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights or obligations hereunder without the prior
written consent of the other party.
14. Prior Agreements. This Agreement supersedes and terminates, as of the
date hereof, all prior contracts between the Fund or the Custodian and the
Sub-Custodian relating to the custody of the Fund's assets.
15. Declaration of Trust. A copy of the Declaration of Trust of the Fund is
on file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that the obligations of or arising out of this instrument are not
binding upon any of the Trustees or beneficiaries individually but binding only
upon the assets and property of the Fund.
50
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 [ ] day of [ ], 200[ ].
XXXXXX FIDUCIARY TRUST COMPANY
By _______________________________
Name:
Title:
(SUB-CUSTODIAN)
By ________________________________
Name:
Title:
The Sub-Custodian and Xxxxxx Investments, Inc. ("Xxxxxx"), the sole owner
of the Custodian, agree that Xxxxxx shall be the primary obligor with respect to
compensation due the Sub-Custodian pursuant to Section 6 of this Agreement in
connection with the Sub-Custodian's performance of its responsibilities
hereunder. The Custodian and Xxxxxx agree to take all actions necessary and
appropriate to assure that the Sub-Custodian shall be compensated in the amounts
and on the schedule agreed to by the Custodian and the Sub-Custodian pursuant to
Section 6.
XXXXXX INVESTMENTS, INC.
By _________________________________
Name:
Title:
XXXXXX FIDUCIARY TRUST COMPANY
By __________________________________
Title:
(SUB-CUSTODIAN)
By __________________________________
Name:
Title:
NF-24.2000
51
