Exhibit 99.(G)(4)
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
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DEFINITION...................................................................................1
ARTICLE I - CUSTODY..........................................................................5
1. Appointment of Custodian.............................................................5
2. Custody of Cash and Securities.......................................................5
3. Settlement of Fund Transactions.....................................................10
4. Lending of Securities...............................................................10
5. Persons Having Access to Assets of the Fund.........................................10
6. Standard of Care; Scope of Custodial Responsibilities...............................11
7. Appointment of Subcustodians........................................................13
8. Overdraft Facility and Security for Payment.........................................13
9. Tax Obligations.....................................................................14
ARTICLE II - FOREIGN CUSTODY MANAGER SERVICES...............................................14
1. Delegation..........................................................................14
2. Changes to Appendix C...............................................................15
3. Reports to Board....................................................................15
4. Monitoring System...................................................................15
5. Standard of Care....................................................................15
6. Use of Securities Depositories......................................................15
ARTICLE III - INFORMATION SERVICES..........................................................16
1. Risk Analysis.......................................................................16
2. Monitoring of Securities Depositories...............................................16
3. Use of Agents.......................................................................16
4. Exercise of Reasonable Care.........................................................16
5. Liabilities and Warranties..........................................................16
ARTICLE IV - GENERAL PROVISIONS.............................................................17
1. Compensation........................................................................17
2. Insolvency of Foreign Custodians....................................................17
3. Liability for Depositories..........................................................17
4. Damages.............................................................................17
5. Indemnification; Liability of the Fund..............................................18
6. Force Majeure.......................................................................18
7. Termination.........................................................................18
8. Inspection of Books and Records.....................................................19
9. Miscellaneous.......................................................................19
APPENDIX A.....Authorized Persons...........................................................23
APPENDIX B.....Fund Officers................................................................24
APPENDIX C.....Selected Countries...........................................................25
APPENDIX D.....Information Services Agreement...............................................26
APPENDIX E.....Self Custody Rider...........................................................
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
This AGREEMENT is effective as of _______________________, 2001, between
WM TRUST I, a Massachusetts business trust, WM Trust II, a Massachusetts
business trust, WM Strategic Asset Management Portfolios, LLC, a Massachusetts
limited liability company, and WM Variable Trust, a Massachusetts business
trust, each having its principal office and place of business at 0000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxx Xxxxxxxxxx 00000 (each a "Fund" and collectively,
the "Funds"), and BOSTON SAFE DEPOSIT AND TRUST COMPANY, (the "Custodian") a
Massachusetts trust company with its principal place of business at Xxx Xxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Funds and the Custodian desire to restate the terms of their
existing custody agreement to reflect the changes to Rules 17f-5 and Rule 17f-7,
and to set forth their agreement with respect to the custody of each Fund's
Securities and cash and the processing of Securities transactions;
WHEREAS, the Board desires to delegate certain of its responsibilities for
performing the services set forth in paragraphs (c)(1), (c)(2) and (c)(3) of
Rule 17f-5 to the Custodian as a Foreign Custody Manager; and
WHEREAS, the Custodian agrees to accept such delegation with respect to
Assets, including those held by Foreign Custodians in the Selected Countries as
set forth in jurisdictions listed on Appendix C as set forth in Article II;
WHEREAS, the Custodian agrees to perform the function of a Primary
Custodian under Rule 17f-7;
NOW THEREFORE, the Fund and the Custodian agree as follows:
DEFINITIONS
The following words and phrases, unless the context requires otherwise, shall
have the following meanings:
1. "ACT": the Investment Company Act of 1940 and the Rules and
Regulations thereunder, all as amended from time to time.
2. "AGREEMENT": this agreement and any amendments.
3. "ASSETS": any of a Fund's investments, including foreign
currencies and investments for which the primary market is
outside the United States, and such cash and cash equivalents as
are reasonably necessary to effect the Fund's transactions in
such investments.
4. "AUTHORIZED PERSON": the Lead Trustee of each Fund's Board, its
President, and any Vice President, Secretary, Treasurer or any
other person, whether or not any such person is an officer or
employee of the Fund, duly authorized by the Board to add or
delete jurisdictions pursuant to Article II and to give
Instructions on behalf of the Fund who is listed in the
Certificate annexed hereto as Appendix A or such other
Certificate as may be received by the Custodian from time to
time.
5. "BOARD": the Board of Trustees of each Fund.
6. "BOOK-ENTRY SYSTEM": the Federal Reserve/Treasury book-entry
system for United States and federal agency Securities, its
successor or successors and any nominee or nominees of the
Federal Reserve/Treasury (or its successor or successors) to act
on its behalf.
7. "BUSINESS DAY": any day on which the Funds, the Custodian, the
Book-Entry System and appropriate clearing corporation(s) are
open for business.
8. "CERTIFICATE": any notice, instruction or other instrument in
writing, authorized or required by this Agreement to be given to
the Custodian, which is actually received by the Custodian and
signed on behalf of a Fund by two Authorized Persons or Persons
designated by the Board to issue a Certificate.
9. Reserved.
10. "ELIGIBLE SECURITIES DEPOSITORY": the meaning of the term set
forth in Rule 17f-7(b)(1).
11. "FOREIGN CUSTODIAN": (a) a banking institution or trust company
incorporated or organized under the laws of a country other than
the United States, that is regulated as such by the country's
government or an agency of the country's government; (b) a
majority-owned direct or indirect subsidiary of a U.S. Bank or
bank-holding company; or (c) any entity other than a Securities
Depository with respect to which
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exemptive or no-action relief relating to the treatment of such
entity as an Eligible Foreign Custodian under Rule 17f-5 has been
granted by the Securities and Exchange Commission. For the
avoidance of doubt, the term "Foreign Custodian" shall not
include Euroclear, Clearstream, Bank One or any other
transnational system for the central handling of securities or
equivalent book-entries regardless of whether or not such
entities or their service providers are acting in a custodial
capacity with respect to Assets, Securities or other property of
the Fund.
12. "INSTRUCTIONS": directions and instructions to the Custodian from
an Authorized Person in writing by facsimile or electronic
transmission subject to the Custodian's practices or any other
method specifically agreed upon, provided that the Custodian may,
in its discretion, accept oral directions and instructions from
an individual it reasonably believes to be an Authorized Person
and may require confirmation in writing.
13. "PRIMARY CUSTODIAN": the meaning set forth in Rule 17f-7(b)(2).
14. "PROSPECTUS": each Fund's current prospectus and statement of
additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended.
15. "RISK ANALYSIS": the analysis required under Rule
17f-7(a)(1)(i)(A).
16. "RULES 17f-4, 17f-5 AND 17f-7": such Rules as promulgated under
Section 17(f) of the Act, as such rules (and any successor rules
or regulations) may be amended from time to time.
17. "SECURITY" or "SECURITIES": bonds, debentures, notes, stocks,
shares, evidences of indebtedness, and other securities,
commodities, interests and investments from time to time owned by
a Fund.
18. "SECURITIES DEPOSITORY": a system for the central handling of
securities as defined in Rule 17f-4(a).
19. "SELECTED COUNTRIES": the jurisdictions listed on Appendix C as
such may be amended from time to time in accordance with Article
II.
20. "SHARES": shares of a Fund, however designated.
21. "TRANSFER AGENT": the person which performs the transfer agent
functions for a Fund.
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ARTICLE I
CUSTODY PROVISIONS
1. APPOINTMENT OF CUSTODIAN. The Board has appointed the Custodian, and the
Custodian accepts appointment, as custodian of all the Securities and monies
from time to time owned by or in the possession of the Fund during the period of
this Agreement.
2. CUSTODY OF CASH AND SECURITIES.
(a) Receipt and Holding of Assets. The Fund will deliver or cause to
be delivered to the Custodian all Securities and monies owned by
it at any time during the period of this Custody Agreement. The
Custodian will not be responsible for such Securities and monies
until actually received. The Board specifically authorizes the
Custodian to hold Securities, Assets or other property of the
Fund with any domestic subcustodian, or Securities Depository;
and Foreign Custodians or Eligible Securities Depositories in the
Selected Countries as provided in Article II. Securities and
monies of the Fund deposited in a Securities Depository or
Eligible Securities Depositories will be reflected in an account
or accounts which include only assets held by the Custodian or a
Foreign Custodian for its customers.
(b) Disbursements of Cash and Delivery of Securities. The Custodian
shall disburse cash or deliver out Securities only for the
purposes listed below. Instructions must specify or evidence the
purpose for which any transaction is to be made and the Fund
shall be solely responsible to assure that Instructions are in
accord with any limitations or restrictions applicable to the
Fund.
(1) In payment for Securities purchased for the Fund;
(2) In payment of dividends or distributions with respect to
Shares;
(3) In payment for Shares which have been redeemed by the Fund;
(4) In payment of taxes;
(5) When Securities are sold, called, redeemed, retired, or
otherwise become payable;
(6) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment;
(7) Upon conversion of Securities pursuant to their terms into
other securities;
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(8) Upon exercise of subscription, purchase or other similar
rights represented by Securities;
(9) For the payment of interest, management or supervisory
fees, distributions or operating expenses;
(10) In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Fund;
(11) In connection with any borrowings by the Fund or short
sales of securities requiring a pledge of Securities, but
only against receipt of amounts borrowed;
(12) In connection with any loans, but only against receipt of
adequate collateral as specified in Instructions which
shall reflect any restrictions applicable to the Fund.
(13) For the purpose of redeeming shares of the capital stock of
the Fund and the delivery to, or the crediting to the
account of, the Custodian or the Fund's transfer agent,
such shares to be purchased or redeemed;
(14) For the purpose of redeeming in kind shares of the Fund
against delivery to the Custodian, its Subcustodian or the
Customer's transfer agent of such shares to be so redeemed;
(15) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund. The Custodian will act only in accordance with
Instructions in the delivery of Securities to be held in
escrow and, except as otherwise provided under that certain
Securities Lending Agency Agreement, dated February 17,
2000 as amended, among one or more of the Funds (or series
thereof) and Mellon Bank, N.A., and will have no
responsibility or liability for any such Securities which
are not returned promptly when due other than to make
proper requests for such return;
(16) For spot or forward foreign exchange transactions to
facilitate security trading, receipt of income from
Securities or related transactions;
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(17) Upon the termination of this Agreement;
(18) For other proper purposes as may be specified in
Instructions issued by an officer of the Fund which shall
include a statement of the purpose for which the delivery
or payment is to be made, the amount of the payment or
specific Securities to be delivered, the name of the person
or persons to whom delivery or payment is to be made, and a
Certificate stating that the purpose is a proper purpose
under the instruments governing the Fund;
(19) For delivery of Securities of the Fund to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation or recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery; and
(20) For the transfer or exchange of the assets specifically
allocated to the Fund and take such other action to be for
the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund.
(c) Actions Which May be Taken Without Instructions. Unless an
Instruction to the contrary is received, the Custodian shall:
(1) Collect all income due or payable, provided that the
Custodian shall not be responsible for the failure to
receive payment of (or late payment of) distributions or
other payments with respect to Securities or other property
held in the account;
(2) Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed, retired
or otherwise become payable. Notwithstanding the foregoing,
the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds or similar
instruments which are owned by the Fund and held by the
Custodian or its nominees where such dates are not
published in sources routinely used by the Custodian. Nor
shall the Custodian have any responsibility or liability to
the Fund for any loss by the Fund for any missed payments
or other defaults resulting therefrom, unless the Custodian
received timely notification from the Fund specifying the
time, place and manner for the
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presentment of any such put bond owned by the Fund and held
by the Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability for the accuracy or
completeness of any notification the Custodian may furnish
to the Fund with respect to put bonds or similar
instruments;
(3) Surrender Securities in temporary form for definitive
Securities;
(4) Hold directly, or through a Securities Depository with
respect to Securities therein deposited, for the account of
the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder
for the Fund;
(5) Submit or cause to be submitted to Fund or its investment
advisor as designated by Fund information actually received
by the Custodian regarding ownership rights pertaining to
property held for the Fund;
(6) Deliver or cause to be delivered any Securities held for
the Fund in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of
any corporation, or the exercise of any conversion
privilege;
(7) Deliver or cause to be delivered any Securities held for
the Fund to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other
instruments or documents as may be issued to it to evidence
such delivery where such action on the part of the
Custodian is ministerial in nature;
(8) Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the Fund and take such
other to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund where such
action on the part of the Custodian is ministerial in
nature;
(9) Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by the Fund;
(10) Deliver Securities owned by the Fund to the issuer thereof
or its agent when such Securities are called, redeemed,
retired or otherwise become payable;
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provided, however, that in any such case the cash or other
consideration is to be delivered to the Custodian.
Notwithstanding the foregoing, the Custodian shall have no
responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to
the put bonds or similar instruments which are owned by the
Fund and held by the Custodian or its nominee where such
dates are not published in sources routinely used by the
Custodian. Nor shall the Custodian have any responsibility
or liability to the Fund for any loss by the Fund for any
missed payment or other default resulting therefrom unless
the Custodian received timely notification from the Fund
specifying the time, place and manner for the presentment
of any such put bond owned by the Fund and held by the
Custodian or its nominee. The Custodian shall not be
responsible and assumes no liability to the Fund for the
accuracy or completeness of any notification the Custodian
may furnish to the Fund with respect to put bonds or
similar investments;
(11) Endorse and collect all checks, drafts or other orders for
the payment of money received by the Custodian for the
account of the Fund; and
(12) Generally, take all actions, whether or not expressly
authorized, which the Custodian may deem reasonably
necessary or desirable for the fulfillment of its duties
hereunder.
(d) Confirmation and Statements. Promptly after the close of business
on each day, the Custodian shall furnish each Fund with
confirmations and a summary of all transfers to or from the
account of the Fund during the day. Where securities purchased by
a Fund are in a fungible bulk of securities registered in the
name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of a Securities Depository, the
Custodian shall by book-entry or otherwise identify the quantity
of those securities belonging to the Fund. At least monthly, the
Custodian shall furnish each Fund with a detailed statement of
the Securities and monies held for the Fund under this Custody
Agreement.
(e) Registration of Securities. The Custodian is authorized to hold
all Securities, Assets, or other property of each Fund in nominee
name, in bearer form or in book-entry form. The Custodian may
register any Securities, Assets or other property of each Fund in
the name of the Fund, in the name of the Custodian, any domestic
subcustodian, or Foreign Custodian, in the name of any duly
appointed registered nominee of such entity, or in the name of a
Securities Depository or its successor or successors, or its
nominee or nominees. Each Fund agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name
of its registered nominee or in the name of a Securities
Depository, any Securities which it may
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hold for the account of the Fund and which may from time to time
be registered in the name of the Fund.
(f) Segregated Accounts. Upon receipt of Instructions, the Custodian
will, from time to time, segregate specified assets on behalf of
each Fund to hold and deal with such specified assets as shall be
directed.
3. SETTLEMENT OF FUND TRANSACTIONS.
(a) Customary Practices. Settlement of transactions may be effected
in accordance with trading and processing practices customary in
the jurisdiction or market where the transaction occurs. Each
Fund acknowledges that this may, in certain circumstances,
require the delivery of cash or Securities (or other property)
without the concurrent receipt of Securities (or other property)
or cash. In such circumstances, the Custodian shall have no
responsibility for nonreceipt of payments (or late payment) or
nondelivery of Securities or other property (or late delivery) by
the counterparty.
(b) Contractual Income. Unless the parties agree to the contrary, the
Custodian shall credit each Fund, in accordance with the
Custodian's standard operating procedure, with income and
maturity proceeds on securities, net of any taxes, on contractual
payment date or upon actual receipt. To the extent the Custodian
credits income on contractual payment date, the Custodian may
reverse, effective as of the contractual payment date, any entry
relating to such income credit, if the Custodian reasonably
believes that such amount will not be received.
(c) Contractual Settlement. Unless the parties agree to the contrary,
the Custodian will attend to the settlement of securities
transactions in accordance with the Custodian's standard
operating procedure, on the basis of either contractual
settlement date accounting or actual settlement date accounting.
To the extent the Custodian settles certain securities
transactions on the basis of contractual settlement date
accounting, the Custodian may reverse, effective as of the
contractual payment date, any entry relating to such contractual
settlement if the Custodian reasonably believes that such amount
will not be received.
4. LENDING OF SECURITIES. The Custodian may lend the assets of each Fund in
accordance with the terms and conditions of a separate securities lending
agreement with the Fund.
5. PERSONS HAVING ACCESS TO ASSETS OF THE FUND.
(a) No trustee or agent of a Fund, and no officer, director, employee
or agent of the Fund's investment adviser, of any sub-investment
adviser of the Fund, or of the Fund's administrator, shall have
physical access to the assets of the Fund held by
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the Custodian or be authorized or permitted to withdraw any
investments of the Fund, nor shall the Custodian deliver any
assets of the Fund to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position
with the Fund's investment adviser, with any sub-investment
adviser of the Fund or with the Fund's administrator shall have
access to the assets of the Fund.
(b) Nothing in this Section 5 shall prohibit any duly authorized
officer, employee or agent of a Fund, or any duly authorized
officer, director, employee or agent of the investment adviser,
of any sub-investment adviser of the Fund or of the Fund's
administrator, from giving Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery
of or access to assets of the Fund prohibited by paragraph (a) of
this Section 5.
6. STANDARD OF CARE; SCOPE OF CUSTODIAL RESPONSIBILITIES.
(a) Standard of Care. Custodian shall be required to exercise
reasonable care with respect to its duties under this Agreement
unless otherwise provided.
(1) Notwithstanding any other provision of this Custody
Agreement, the Custodian shall not be liable for any loss
or damage, including counsel fees, resulting from its
action or omission to act or otherwise, except for any such
loss or damage arising out of the negligence or willful
misconduct of the Custodian.
(2) The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the
Funds or of its own counsel, at the expense of the Funds,
and shall be fully protected with respect to anything done
or omitted by it in good faith in conformity with such
advice or opinion.
(b) Scope of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
(1) The acts or omissions of any agent appointed pursuant to
Instructions of the Fund or its investment advisor
including, but not limited to, any broker-dealer or other
entity holding any Securities or other property of the Fund
as collateral or otherwise pursuant to any investment
strategy.
(2) The validity of the issue of any Securities purchased by a
Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
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(3) The legality of the sale of any Securities by a Fund or the
propriety of the amount for which the same are sold;
(4) The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
(5) The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
(6) The legality of the declaration or payment of any
distribution of a Fund;
(7) The legality of any borrowing for temporary administrative
or emergency purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable
for, or considered to be the Custodian of, any money, whether or
not represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money, except to
the extent that the Custodian has acted with negligence or
willful misconduct with respect to the collection of such money.
(d) Amounts Due from Transfer Agent. The Custodian shall not be
required to effect collection of any amount due to the Fund from
the Transfer Agent nor be required to cause payment or
distribution by the Transfer Agent of any amount paid by the
Custodian to the Transfer Agent.
(e) Collection Where Payment Refused. The Custodian shall not be
required to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless
and until it shall be directed to take such action and it shall
be assured to its satisfaction of reimbursement of its related
costs and expenses.
(f) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any
time delivered to or held by it for the Fund are such as may
properly be held by the Fund under the provisions of its
governing instruments or Prospectus.
(g) Reliance on Instructions. The Custodian shall be entitled to rely
upon any Instruction, notice or other instrument in writing
received by the Custodian and reasonably believed by the
Custodian to be genuine and to be signed by an officer or
Authorized Person of the Fund. Where the Custodian is issued
Instructions orally, the Fund acknowledges that if written
confirmation is requested, the validity of the transactions or
enforceability of the transactions authorized by the
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Fund shall not be affected if such confirmation is not received
or is contrary to oral Instructions given. The Custodian shall be
under no duty to question any direction of an Authorized Person
to review any property held in the account, to make any
suggestions with respect to the investment of the assets in the
account, or to evaluate or question the performance of any
Authorized Person. The Custodian shall not be responsible or
liable for any diminution of value of any securities or other
property held by the Custodian.
7. APPOINTMENT OF SUBCUSTODIANS. The Custodian is hereby authorized to appoint
one or more domestic subcustodians (which may be an affiliate of the Custodian)
to hold Securities and monies at any time owned by a Fund; provided, however,
that Custodian shall remain liable for the acts or omissions of any such
domestic subcustodian selected and retained by the Custodian in its sole
discretion to the same extent as if the Custodian had taken or omitted to take
such actions itself; provided, further, that the Custodian shall not be liable
for any loss due to the insolvency of any subcustodian. The Custodian is also
hereby authorized when acting pursuant to Instructions to: 1) place assets with
any Foreign Custodian located in a jurisdiction which is not a Selected Country
and with Euroclear, Clearstream, Banc One or any other transnational depository;
and 2) place assets with a broker or other agent as subcustodian in connection
with futures, options, short selling or other transactions. When acting pursuant
to such Instructions, the Custodian shall not be liable for the acts or
omissions of any subcustodian so appointed.
8. OVERDRAFT FACILITY AND SECURITY FOR PAYMENT. In the event that the Custodian
receives Instructions to make payments or transfers of monies on behalf of a
Fund for which there would be, at the close of business on the date of such
payment or transfer, insufficient monies held by the Custodian on behalf of the
Fund, the Custodian may, in its sole discretion, provide an overdraft (an
"Overdraft") to the Fund in an amount sufficient to allow the completion of such
payment or transfer. Any Overdraft provided hereunder: (a) shall be payable on
the next Business Day, unless otherwise agreed by the Fund and the Custodian;
and (b) shall accrue interest from the date of the Overdraft to the date of
payment in full by the Fund at a rate agreed upon from time to time by the
Custodian and the Fund or, in the absence of specific agreement, at such rate as
may be charged to other customers of Custodian under procedures uniformly
applied. The Custodian and each Fund acknowledge that the purpose of such
Overdraft is to temporarily finance the purchase of Securities for prompt
delivery in accordance with the terms hereof, to meet unanticipated or unusual
redemptions, to allow the settlement of foreign exchange contracts or to meet
other unanticipated Fund expenses. The Custodian shall promptly notify the Fund
(an "Overdraft Notice") of any Overdraft. To secure payment of any Overdraft,
each Fund hereby grants to the Custodian a continuing security interest in and
right of setoff against the Securities and cash in the Fund's account from time
to time in the full amount of such Overdraft. Should a Fund fail to pay promptly
any amounts owed hereunder, the Custodian shall be entitled, upon notice to the
Fund, to use available cash in the Fund's account and to liquidate Securities in
the account as necessary to meet the Fund's obligations under the Overdraft. In
any such case, and without limiting the foregoing, the Custodian shall be
entitled to take such other actions(s) or exercise such other options, powers
and rights as the Custodian now or hereafter has
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as a secured creditor under the Massachusetts Uniform Commercial Code or any
other applicable law.
9. TAX OBLIGATIONS. For purposes of this Agreement, "Tax Obligations"
shall mean taxes, withholding, certification and reporting requirements, claims
for exemptions or refund, interest, penalties, additions to tax and other
related expenses. To the extent that the Custodian has received relevant and
necessary information with respect to the Account, the Custodian shall perform
the following services with respect to Tax Obligations:
a. the Custodian shall file claims for exemptions or refunds with respect
to withheld foreign (non-U.S.) taxes in instances in which such claims are
appropriate;
b. the Custodian shall withhold appropriate amounts, as required by U.S.
tax laws, with respect to amounts received on behalf of nonresident aliens; and
c. the Custodian shall provide to the Fund or the Authorized Person such
information received by the Custodian which could, in the Custodian's reasonable
belief, assist the Fund or the Authorized Person in the submission of any
reports or returns with respect to Tax Obligations. The Fund shall inform the
Custodian in writing as to which party or parties shall receive information from
the Custodian.
The Custodian shall provide such other services with respect to Tax Obligations,
including preparation and filing of tax returns and reports and payment of
amounts due (to the extent funded), as requested by the Fund and agreed to by
the Custodian in writing. The Custodian shall have no independent obligation to
determine the existence of any information with respect to, or the extent of,
any Tax Obligations now or hereafter imposed on the Fund or the Account by any
taxing authority. Except as specifically provided herein or agreed to in writing
by the Custodian, the Custodian shall have no obligations or liability with
respect to Tax Obligations, including, without limitation, any obligation to
file or submit returns or reports with any taxing authorities.
ARTICLE II
FOREIGN CUSTODY MANAGER SERVICES
1. DELEGATION. The Board has delegated to the Custodian, and the Custodian
hereby agrees to accept, responsibility as the Fund's Foreign Custody Manager
for selecting, contracting with and monitoring Foreign Custodians in Selected
Countries set forth in Appendix C (except as noted therein) in accordance with
Rule 17f-5(c).
13
2. CHANGES TO APPENDIX C. Appendix C may be amended by written agreement from
time to time to add or delete jurisdictions by written agreement signed by an
Authorized Person of the Funds and the Custodian, but the Custodian reserves the
right to delete jurisdictions upon reasonable notice to the Funds.
3. REPORTS TO BOARD. Custodian shall provide written reports notifying Fund of
the placement of Assets with a particular Foreign Custodian and of any material
change in a Fund's foreign custody arrangements. Such reports shall be provided
to the Board quarterly, except as otherwise agreed by the Custodian and the
Fund.
4. MONITORING SYSTEM. In each case in which the Custodian has exercised
delegated authority to place Assets with a Foreign Custodian, the Custodian
shall establish a system, to re-assess or re-evaluate selected Foreign
Custodians, at least annually in accordance with Rule 17f-5(c)(3).
5. STANDARD OF CARE. In exercising the delegated authority under this Article of
the Agreement, the Custodian agrees to exercise reasonable care, prudence and
diligence such as a person having responsibility for the safekeeping of the
Assets would exercise . Contracts with Foreign Custodians shall provide
reasonable care for Assets based on the standards applicable to Foreign
Custodians in the Selected Country. In making this determination, the Custodian
shall consider the provisions of Rule 17f-5(c)(2).
6. USE OF SECURITIES DEPOSITORIES. In exercising its delegated authority,
Custodian may assume, unless instructed in writing to the contrary, that the
Board or each Fund's investment adviser has determined, pursuant to Rule 17f-7,
to place and maintain foreign assets with any Securities Depository as to which
the Custodian has provided the Fund with a Risk Analysis.
14
ARTICLE III
INFORMATION SERVICES
1. RISK ANALYSIS. The Custodian will provide the Fund with a Risk Analysis with
respect to Securities Depositories operating in the countries listed in Appendix
C. If the Custodian is unable to provide a Risk Analysis with respect to a
particular Securities Depository, it will notify the Fund. If a new Securities
Depository commences operation in one of the Appendix C countries, the Custodian
will provide the Fund with a Risk Analysis in a reasonably practicable time
after such Securities Depository becomes operational. If a new country is added
to Appendix C, the Custodian will provide the Fund with a Risk Analysis with
respect to each Securities Depository in that country within a reasonably
practicable time after the addition of the country to Appendix C.
2. MONITORING OF SECURITIES DEPOSITORIES. The Custodian will monitor the custody
risks associated with maintaining assets with each Securities Depository for
which it has provided the Fund with a Risk Analysis as required under Rule
17f-7. The Custodian will promptly notify Fund or its investment adviser of any
material change in these risks.
3. USE OF AGENTS. The Custodian may employ agents, including, but not limited to
Foreign Custodians, to perform its responsibilities under Sections 1 and 2
above.
4. EXERCISE OF REASONABLE CARE. The Custodian will exercise reasonable care,
prudence, and diligence in performing its responsibilities under this Article
III.
5. LIABILITIES AND WARRANTIES. With respect to the Risk Analyses provided or
monitoring performed by an agent, the Custodian shall be entitled to rely upon
information provided by agents so selected in the performance of its duties and
responsibilities under this Article III, unless the Custodian knows or should
have known such information to be incorrect, incomplete or misleading. While the
Custodian will take reasonable precautions to ensure that information provided
is accurate, the Custodian shall have no liability with respect to information
provided to it by third parties, unless the Custodian knows or should have known
such information to be incorrect, incomplete or misleading. Except as provided
under this subsection 5, due to the nature and source of information, and the
necessity of relying on various information sources, most of which are external
to the Custodian, the Custodian shall have no liability for direct or indirect
use of such information.
15
ARTICLE IV
GENERAL PROVISIONS
1. COMPENSATION.
(a) Each Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in a
separate Fee Schedule which schedule may be modified by the
Custodian upon not less than sixty days prior written notice to
the Fund.
(b) The Custodian will xxxx each Fund as soon as practicable after
the end of each calendar month. Each Fund will promptly pay to
the Custodian the amount of such billing.
(c) If not paid directly or timely by the Fund, the Custodian may,
upon notice to the Fund, charge against assets held on behalf of
the Fund compensation and any expenses incurred by the Custodian
in the performance of its duties pursuant to this Agreement. The
Custodian shall also be entitled, upon notice to the Fund, to
charge against assets of the Fund the amount of any loss, damage,
liability or expense incurred with respect to the Fund, including
counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement. The expenses which the
Custodian may charge include, but are not limited to, the
expenses of domestic subcustodians and Foreign Custodians
incurred in settling transactions.
2. INSOLVENCY OF FOREIGN CUSTODIANS. The Custodian shall be responsible for
losses or damages suffered by the Fund arising as a result of the insolvency of
a Foreign Custodian only to the extent that the Custodian failed to comply with
the standard of care set forth in Article II with respect to the selection and
monitoring of such Foreign Custodian.
3. LIABILITY FOR DEPOSITORIES. The Custodian shall not be responsible for any
losses resulting from the deposit or maintenance of Securities, Assets or other
property of the Fund with a Securities Depository. The foregoing shall not
preclude damages for a breach of duties under Article III.
4. DAMAGES. Under no circumstances shall the Custodian be liable for any
indirect, consequential or special damages with respect to its role as Foreign
Custody Manager, Custodian or information vendor.
16
5. INDEMNIFICATION; LIABILITY OF THE FUND.
(a) Each Fund shall indemnify and hold the Custodian harmless from all
liability and expense, including reasonable counsel fees and
expenses, arising out of the performance of the Custodian's
obligations under this Agreement with respect to such Fund, except
as a result of the Custodian's negligence or willful misconduct.
(b) Each Fund and the Custodian agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the
Directors, Trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Fund, individually,
but are binding only upon the assets and property of the relevant
series of the Fund.
6. FORCE MAJEURE. Notwithstanding anything in this Agreement to the contrary,
the Custodian shall not be liable for any losses resulting from or caused by
events or circumstances beyond its reasonable control, including, but not
limited to, losses resulting from nationalization, strikes, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or the breakdown, failure or malfunction of any
utilities or telecommunications systems; or any order or regulation of any
banking or securities industry including changes in market rules and market
conditions affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or any other similar event.
7. TERMINATION.
(a) Either party may terminate this Agreement by giving the other
party sixty (60) days notice in writing, specifying the date of
such termination. In the event notice is given by a Fund, it
shall be accompanied by a Certificate evidencing the vote of the
Fund's Board to terminate this Agreement and designating a
successor.
(b) In the event notice of termination is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the
Custodian a Certificate evidencing the vote of the Board
designating a successor custodian. In the absence of such
designation, the Custodian may designate a successor custodian,
which shall be a person qualified to so act under the Act or the
Fund. If the Fund fails to designate a successor custodian, the
Fund shall, upon the date specified in the notice of termination,
and upon the delivery by the Custodian of all Securities and
monies then owned by the Fund, be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities under this Agreement, other than the duty with
respect to Securities held in the Book-Entry System which cannot
be delivered to the Fund, except for any unfulfilled duties or
17
responsibilities arising under this Agreement prior to such
delivery of such Securities and monies by the Custodian.
(c) Upon termination of the Agreement, the Custodian shall, upon
receipt of a notice of acceptance by the successor custodian,
deliver to the successor all Securities and monies then held by
the Custodian on behalf of the Fund, after deducting all fees,
expenses and other amounts owed.
(d) In the event of a dispute or claim following the termination of
this Agreement, all relevant provisions shall be deemed to
continue to apply to the obligations and liabilities of the
parties.
8. INSPECTION OF BOOKS AND RECORDS. The books and records of the Custodian shall
be open to inspection and audit at reasonable times by officers and auditors
employed by a Fund at its own expense and with prior written notice to the
Custodian, and by the appropriate employees of the Securities and Exchange
Commission.
9. MISCELLANEOUS.
(a) Appendix A is a Certificate signed by the Secretary of each Fund
setting forth the names and the signatures of Authorized Persons.
The Funds shall furnish a new Certificate when the list of
Authorized Persons is changed in any way. Until a new Certificate
is received, the Custodian shall treat as Authorized Persons
those persons set forth in the last delivered Certificate and
shall be fully protected in acting upon Instructions from such
Authorized Person.
(b) Appendix B is a Certificate signed by the Secretary of the Fund
setting forth the names and the signatures of the present
officers of the Fund. The Fund agrees to furnish to the Custodian
a new Certificate when any changes are made. Until a new
Certificate is received, the Custodian shall be fully protected
in relying upon the last delivered Certificate.
(c) Any required written notice or other instrument shall be
sufficiently given if addressed to the Custodian or the Fund as
the case may be and delivered to it at its offices at:
The Custodian:
Boston Safe Deposit and Trust Company
000 Xxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: ____________________________
18
The Funds:
----------------------------------
----------------------------------
----------------------------------
Attn. ____________________________
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
Attn: Xxxxx X. Xxxxxx
or at such other place as the parties may from time to time
designate to the other in writing.
(d) This Agreement may not be amended or modified except by a written
agreement executed by both parties.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and permitted
assigns; provided, however, that this Agreement shall not be
assignable by a Fund without the written consent of the
Custodian, or by the Custodian without the written consent of the
Fund authorized or approved by a vote of the Board (in either
case, such consent shall not be unreasonably withheld), provided,
however, that the Custodian may assign the Agreement or any
function thereof to any corporation or entity which directly or
indirectly is controlled by, or is under common control with, the
Custodian. Any attempted assignment, other than as described
under this subsection (e), without the written consent of the
Board or the Custodian, as applicable, shall be null and void.
(f) Nothing in this Agreement shall give or be construed to give or
confer upon any third party any rights hereunder.
(g) The Custodian represents that it is a U.S. Bank within the
meaning of paragraph (a)(7) of Rule 17f-5.
(h) Each Fund acknowledges and agrees that, except as expressly set
forth in this Agreement, the Fund is solely responsible to ensure
that the maintenance of the Fund's Securities and cash hereunder
complies with applicable laws and regulations, including without
limitation the Act and the rules and regulations promulgated
thereunder and applicable interpretations thereof or exemptions
therefrom. Each Fund represents that it has determined that it is
reasonable to rely on Custodian to perform the responsibilities
delegated pursuant to this Agreement.
19
(i) This Agreement shall be construed in accordance with the laws of
The Commonwealth of Massachusetts.
(j) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
(k) Reserved.
(l) Each party represents to the other that it has all necessary
power and authority, and has obtained any consent or approval
necessary to permit it, to enter into and perform this Agreement
and that this Agreement does not violate, give rise to a default
or right of termination under or otherwise conflict with any
applicable law, regulation, ruling, decree or other governmental
authorization or any contract to which it is a party or by which
any of its assets is bound.
(m) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective representatives duly authorized as of the day and year first
above written.
WM TRUST I, WM TRUST II, WM STRATEGIC
ASSET MANAGEMENT PORTFOLIOS, LLC and WM
VARIABLE TRUST
By: /s/ XXXXX X. XXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Title: First Vice President, Treasurer & CFO
--------------------------------------
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ XXXXXXXXXXX XXXXX
-----------------------------------------
Name: Xxxxxxxxxxx Xxxxx
Title: First Vice President
20
APPENDIX A
LIST OF AUTHORIZED PERSONS
I, ______________________, the Secretary of ______________________, a
[corporation/business trust] organized under the laws of the [State of
Maryland/Commonwealth of Massachusetts] (the "Fund"), do hereby certify that:
The following individuals have been duly authorized as Authorized Persons
to give Instructions on behalf of the Fund and the specimen signatures set forth
opposite their respective names are their true and correct signatures:
Name Signature
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
By:
------------------------------
Secretary
Dated:
00
XXXXXXXX X
FUND OFFICERS
I, ____________________________, the Secretary of
___________________________, a [corporation/business trust] organized under the
laws of the [State of Maryland/Commonwealth of Massachusetts] (the "Fund"), do
hereby certify that:
The following individuals serve in the following positions with the Fund
and each individual has been duly elected or appointed to each such position and
qualified therefor in conformity with the Fund's governing instrument and the
specimen signatures set forth opposite their respective names are their true and
correct signatures:
Name Position Signature
---- -------- ---------
Chairman of the Board
----------------------
President
----------------------
Treasurer
----------------------
Secretary
----------------------
Vice President and
Investment Officer
----------------------
Vice President and
Investment Officer
----------------------
-----------------------------------------
By:
------------------------------------
Secretary
Dated:
22
APPENDIX C
SELECTED COUNTRIES
[List]
"*Note, Custodian will not act as a Foreign Custody Manager with respect to
assets held in this country. Holding assets and use of Mellon's usual
subcustodian in this country is subject to Instructions by the Fund and its
execution of a separate letter-agreement pertaining to custody and market
risks."
23
APPENDIX D
ANCILLARY INFORMATION SERVICES AGREEMENT
Until Custodian provides a Risk Analysis pursuant to Article III of the
Agreement with respect to a Securities Depository operating in a particular
country as set forth on Appendix C, the following sets forth our agreement with
respect to the delivery of certain information to the Board or its agents as
requested by the Board from time to time. These terms shall control over the
provisions of Article III of this Agreement but shall cease to apply as to any
country for which Custodian provides a Risk Analysis for one or more Securities
Depositories operating therein. Otherwise, unless continued as provided below,
these provisions shall expire on July 2, 2001.
After expiration, the information set forth in Sections 2, A and B below
may be provided as agreed upon from time to time in writing between the Fund and
the Custodian subject to Section 3 hereof.
1. PROVISION OF INFORMATION. In accordance with the provisions of this
Information Services Agreement, the Custodian agrees to provide to the Board, or
at the direction of the Board, the Fund's investment advisors, the information
set forth in Section 2, below, with respect to Foreign Custodians and Securities
Depositories which hold Securities, Assets, or other property of the Fund and
the systems and environment for securities processing in the jurisdiction in
which such Foreign Custodians or Securities Depositories are located. The
Custodian shall provide only that portion of such information as is reasonably
available to it.
2. INFORMATION TO BE PROVIDED.
A. COUNTRY INFORMATION
- Settlement Environment
- Depository
- Settlement Period
- Trading
- Security Registration
- Currency
- Foreign Investment Restrictions
- Entitlements
- Proxy Voting
- Foreign Taxation
B. SUBCUSTODIAN INFORMATION
- Financial Information
24
- Regulator
- External Auditor
- How Securities are Held
- Operational Capabilities
- Insurance Coverage
C. Depository Information (if applicable to the Country)
- Name
- Information relative to Determining Compulsory or Voluntary Status of
the Facility
- Type of Entity
- Ownership Structure
- Operating History
- Eligible Instruments
- Security Form
- Financial Data
- Regulator
- External Auditor
D. INFORMATION ON THE FOLLOWING LEGAL QUESTIONS
- Would the applicable foreign law restrict the access afforded the
independent public accountants of the Fund to books and records kept
by a Foreign Custodian?
- Would the applicable foreign law restrict the ability of the Fund to
recover its assets in the event of bankruptcy of the Foreign
Custodian?
- Would the applicable foreign law restrict the ability of the Fund to
recover assets that are lost while under the control of the Foreign
Custodian?
- What are the foreseeable difficulties in converting the Fund's cash
into U.S. dollars?
3. LIABILITY AND WARRANTIES. While the Custodian will take reasonable
precautions to ensure that information provided is accurate the Custodian shall
have no liability with respect to information provided to it by third parties.
Due to the nature and source of information, and the necessity of relying on
various information sources, most of which are external to the Custodian, the
Custodian shall have no liability for direct or indirect use of such
information. The Custodian makes no other warranty or representation, either
express or implied, as to the merchantability or fitness for any particular
purpose of the information provided under this Appendix D
Acknowledged:
---------------------------- ---------------------------
Fund Custodian
25
