CUSTODIAN CONTRACT
This Contract between Xxxxxxxx Capital Funds (Delaware), a business
trust organized and existing under the laws of the State of Delaware, having its
principal place of business at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (the "Fund"), and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000 (the "Custodian"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares ("Interests") in
separate series of beneficial interests, with each such series representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Fund currently offers shares in eight (8) series, Xxxxxxxx
International Fund, Xxxxxxxx Emerging Markets Fund, Xxxxxxxx International
Smaller Companies Fund, Xxxxxxxx U.S. Diversified Growth Fund, Xxxxxxxx U.S.
Smaller Companies Fund, Xxxxxxxx Micro Cap Fund, Xxxxxxxx Greater China Fund,
and Xxxxxxxx Emerging Markets Fund Institutional Portfolio (such series together
with each other series subsequently established by the Fund and made subject to
this Contract in accordance with Article 18, being herein referred to as
"Portfolios");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's Trust
Instrument (as further amended or restated, the "Trust Instrument"). The Fund on
behalf of the Portfolios agrees to deliver to the Custodian all securities and
cash of the Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Portfolios from time to time, and the cash consideration received by it for such
new Interests in the Portfolios as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Portfolio and not delivered to the Custodian. With respect to
uncertificated shares (the "Underlying Shares") of registered investment
companies in the same "group of investment companies" (as defined in Section
12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended, and the rules
and regulations thereunder (the "1940 Act")) as the Fund (the "Xxxxxxxx Funds"),
the holding of
confirmation statements that identify the Underlying Shares as being recorded in
the Custodian's name on behalf of the Portfolios will be deemed custody for
purposes hereof.
Upon receipt of "Proper Instructions" (within the meaning of Article
6), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A and B hereto, but only in accordance with the provisions of Articles
3 and 4.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities maintained in a U.S. Securities
System as defined in Section 2.9; (b) commercial paper of an issuer for
which State Street Bank and Trust Company acts as issuing and paying
agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper System")
pursuant to Section 2.10; and (c) the Underlying Shares owned by the
Fund which are maintained pursuant to Section 2.11 in an account with
Boston Financial Data Services, Inc. or such other entity which may
from time to time act as a transfer agent for the Xxxxxxxx Funds and
with respect to which the Custodian is provided with Proper
Instructions (the "Xxxxxxxx Transfer Agent").
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book entry system account ("Direct Paper System Account")
or in an account with the Xxxxxxxx Transfer Agent only upon receipt of
Proper Instructions from the Fund on behalf of the applicable
Portfolio, 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 Portfolio
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
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.9
hereof;
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4) To the depository agent in connection with tender or other
similar offers for securities held by the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.8 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1, in each case to the extent permitted by 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 to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; PROVIDED that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
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 Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; PROVIDED that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, 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 loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian, absent its negligence, misfeasance or misconduct,
will not be held liable or responsible for the delivery of
securities owned by the Portfolio prior to the receipt of such
collateral in accordance with standard market practice;
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11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, 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 similar arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
a Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of Interests in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectuses and statements of
additional information for the Fund, related to the relevant
Portfolios (together, the "Prospectus"), in satisfaction of
requests by holders of Interests for repurchase or redemption;
15) In the case of a sale processed through the Xxxxxxxx Transfer
Agent of Underlying Shares, in accordance with Section 2.11
hereof; and
16) For any other proper corporate purpose, BUT ONLY upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board of Trustees or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies or other investment pools or accounts
having the same investment adviser as the
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Portfolio, or has authorized in writing that such securities may be
registered in the name or nominee name of any agent appointed pursuant
to Section 2.8 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of any Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Fund directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, and tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the 1940 Act. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
PROVIDED, however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board of Trustees of the Fund.
Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio 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 domestic securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent and shall credit such income, as collected, to
such Portfolio's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the
Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
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1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio, but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the 1940 Act
to act us custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions set
forth in Section 2.9 hereof; (c) in the case of a purchase of
Underlying Shares, in accordance with the conditions set forth
in Section 2.11 hereof; (d) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10; (e) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of the NASD, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (f) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant
to Proper Instructions from the Fund as defined in Article 6;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section
2.2 hereof;
3) For the redemption or repurchase of Interests issued by the
Portfolio as set forth in Article 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Interests in the
Portfolio declared pursuant to the governing documents of
the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Trustees or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary,
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specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.7 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.8 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which itself is qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; PROVIDED,
however, that the appointment of any such agent shall not relieve the
Custodian of its responsibilities or liabilities hereunder and the
Custodian shall be as responsible for the acts of such agent as if the
Custodian performed them itself. The Xxxxxxxx Transfer Agent shall not
be deemed an agent or subcustodian of the Custodian for purposes of
this Section 2.8 or any other provision of this Contract.
2.9 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Exchange Act which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each a "U.S. Securities System")
in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System ("U.S. Securities System Account") which
shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
(i)
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receipt of advice from the U.S. Securities System that payment
for such securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the U.S. Securities
System of transfers of securities for the account of the
Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form of a written
advice or notice and shall furnish to the Fund on behalf of
the Portfolio copies of daily transaction sheets reflecting
each day's transactions in the U.S. Securities System for the
account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the U.S.
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 15 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees, or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
2.10 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account of the Custodian in the Direct Paper System
("Direct Paper System Account") which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
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3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Direct Paper System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control and procedures for safeguarding securities deposited
in the Direct Paper System as the Fund may reasonably request
from time to time.
2.11 DEPOSIT OF FUND ASSETS WITH THE XXXXXXXX TRANSFER AGENT. The Custodian
shall verify that Underlying Shares are deposited and/or maintained in
an account or accounts maintained with the Xxxxxxxx Transfer Agent. The
Xxxxxxxx Transfer Agent shall be deemed to be acting as if it is a
"securities depository" for purposes of Rule 17f-4 under the 1940 Act.
The Fund hereby directs the Custodian to deposit and/or maintain such
securities with the Xxxxxxxx Transfer Agent, subject to the following
provisions:
1) The Custodian shall keep Underlying Shares owned by a
Portfolio with the Xxxxxxxx Transfer Agent provided that such
securities are maintained in an account or accounts on the
books and records of the Xxxxxxxx Transfer Agent in the name
of the Custodian as custodian for the Portfolio and the
account includes only assets held in the name of the Custodian
for its customers.
2) The records of the Custodian with respect to Underlying Shares
which are maintained with the Xxxxxxxx Transfer Agent shall
identify by book-entry those Underlying Shares belonging to
each Portfolio;
3) The Custodian shall pay for Underlying Shares purchased for
the account of a Portfolio upon (i) receipt of advice from the
Portfolio's investment adviser that such Underlying Shares
have been purchased and will be transferred to the account of
the Custodian, on behalf of the Portfolio, on the books and
records of the Xxxxxxxx Transfer Agent, and (ii) the making of
an entry on the records of the Custodian to
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reflect such payment and transfer for the account of the
Portfolio. The Custodian shall receive confirmation from the
Xxxxxxxx Transfer Agent of the purchase of such securities and
the transfer of such securities to the Custodian's account
with the Xxxxxxxx Transfer Agent only after such payment is
made. The Custodian shall transfer Underlying Shares redeemed
for the account of a Portfolio (i) upon receipt of an advice
from the Portfolio's investment adviser that such securities
have been redeemed and that payment for such securities will
be transferred to the Custodian and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. The Custodian
will receive confirmation from the Xxxxxxxx Transfer Agent of
the redemption of such securities and payment therefor only
after such securities are redeemed. Copies of all advices from
the Portfolio's investment adviser of purchases and sales of
Underlying Shares for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian, and be provided to the investment adviser at its
request. The Custodian shall promptly send to the Fund reports
it receives from the Xxxxxxxx Transfer Agent on its system of
internal accounting control;
4) The Custodian shall be not be liable to the Fund or any
Portfolio for any loss or damage to the Fund or any Portfolio
resulting from maintenance of Underlying Shares with Xxxxxxxx
Transfer Agent except for losses resulting directly from the
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.9 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other similar arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased,
sold or written by the Portfolio, (iii) for the purpose of compliance
by the Portfolio with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies, and (iv) for
other proper corporate purposes, BUT ONLY, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose
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or purposes of such segregated account and declaring such purposes to
be proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange offers
or any other similar transaction, the Custodian shall transmit promptly
to the Portfolio all written information received by the Custodian from
issuers of the securities whose tender or exchange is sought and from
the party (or his agents) making the tender or exchange or similar
offer. If the Portfolio desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian of the action the Portfolio
desires the Custodian to take at least three business days prior to the
date on which the Custodian is to take such action.
3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
3.1 DEFINITIONS. The following capitalized terms shall have the indicated
meanings:
"Country Risk" means all factors reasonably related to the systemic
risk of holding Foreign Assets in a particular country including, but
not limited to, such country's political environment; economic and
financial infrastructure (including any Mandatory Securities
Depositories operating in the country); prevailing or developing
custody and settlement practices; and laws and regulations applicable
to the safekeeping and recovery of Foreign Assets held in custody in
that country.
"Eligible Foreign Custodian" has the meaning set forth in section
(a)(1) of Rule 17f-5 under the 1940 Act, including a majority-owned
direct or indirect subsidiary of a U.S. Bank (as defined in Rule
17f-5), a bank holding company meeting the requirements of an Eligible
Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of
11
the SEC), or a foreign branch of a Bank (as defined in Section 2(a)(5)
of the 0000 Xxx) meeting the requirements of a custodian under Section
17(f) of the 1940 Act, except that the term does not include Mandatory
Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including
foreign currencies) for which the primary market is outside the United
States and such cash and cash equivalents as are reasonably necessary
to effect the Portfolios' transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2)
of Rule 17f-5.
"Mandatory Securities Depository" means a foreign securities depository
or clearing agency that, either as a legal or practical matter, must be
used if the Fund, on the Portfolios' behalf, determines to place
Foreign Assets in a country outside the United States (i) because
required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency;
or (iii) because maintaining or effecting trades in securities outside
the foreign securities depository or clearing agency is not consistent
with applicable prevailing or developing custodial or market practices.
3.2 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The Fund, in
accordance with a resolution adopted by its Board of Trustees, hereby
delegates to the Custodian with respect to the Portfolios, subject to
Section (b) of Rule 17f-5, the responsibilities set forth in this
Article 3 with respect to Foreign Assets of the Portfolios held outside
the United States, and the Custodian hereby accepts such delegation, as
Foreign Custody Manager with respect to the Portfolios.
3.3 COUNTRIES COVERED. The Foreign Custody Manager shall be responsible for
performing the delegated responsibilities defined below only with
respect to the countries and custody arrangements for each such country
listed on Schedule A to this Contract, which list of countries may be
amended from time to time by the Fund with the agreement of the Foreign
Custody Manager. The Foreign Custody Manager shall list on Schedule A
the Eligible Foreign Custodians selected by the Foreign Custody Manager
to maintain the assets of the Portfolios in each such country, which
list of Eligible Foreign Custodians may be amended from time to time in
the sole discretion of the Foreign Custody Manager. Mandatory
Securities Depositories and the countries in which each is located are
listed on Schedule B to this Contract, which Schedule B may be amended
from time to time by the Foreign Custody Manager by adding or removing
Mandatory Securities Depositories. The Foreign Custody Manager will
provide to the Fund amended versions of Schedules A and B in accordance
with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions
to open an account or to place or maintain Foreign Assets in a country
listed on Schedule A, and the fulfillment by the Fund on behalf of the
Portfolios of the applicable account opening requirements for such
country, the Foreign Custody Manager shall be deemed to have
12
been delegated by the Board on behalf of the Portfolios responsibility
as Foreign Custody Manager with respect to that country and to have
accepted such delegation. Following the receipt of Proper Instructions
directing the Foreign Custody Manager to close the account of a
Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board of
Trustees on behalf of the Portfolios to the Custodian as Foreign
Custody Manager for that country shall be deemed to have been withdrawn
and the Custodian shall immediately cease to be the Foreign Custody
Manager of the Portfolios with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written
notice to the Fund. Sixty days (or such longer period as to which the
parties agree in writing) after receipt of any such notice by the Fund,
the Custodian shall have no further responsibility as Foreign Custody
Manager to the Fund with respect to the country as to which the
Custodian's acceptance of delegation is withdrawn.
3.4 SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Article 3, the Portfolios' Foreign Custody
Manager may place and maintain Foreign Assets in the care of
the Eligible Foreign Custodian selected by the Foreign Custody
Manager in each country listed on Schedule A, as amended from
time to time. In performing its delegated responsibilities as
Foreign Custody Manager to place or maintain Foreign Assets
with an Eligible Foreign Custodian, the Foreign Custody
Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable
to custodians in the relevant market, after considering all
factors relevant to the safekeeping of such assets, including,
without limitation, the factors specified in Rule 17f-5(c)(1),
as amended from time to time.
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign
Custody Manager shall ensure that a written contract (or rules
or established practices or procedures in the case of an
Eligible Foreign Custodian that is a foreign securities
depository or clearing agency) is or are in place governing
the foreign custody arrangements with each Eligible Foreign
Custodian selected by the Foreign Custody Manager and will
determine that such contract, rules or established practices
or procedures provide reasonable care for the Portfolio's
Foreign Assets based on the standards specified in Rule
17f-5(c)(1) and that the written contract satisfies all
requirements of Rule 17f-5(c)(2), each as amended from time to
time.
3.4.3. MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian
selected by the Foreign Custody Manager, the Foreign Custody
Manager shall establish a system to monitor the
appropriateness of (i) maintaining the Foreign Assets with
such Eligible Foreign Custodian under Rule 17f-5(c)(1) and
(ii) the contract governing
13
the custody arrangements established by the Foreign Custody
Manager with the Eligible Foreign Custodian (or the rules or
established practices and procedures in the case of an
Eligible Foreign Custodian selected by the Foreign Custody
Manager which is a foreign securities depository or clearing
agency that is not a Mandatory Securities Depository) under
17f-5(c)(2). In the event the Foreign Custody Manager
determines that the custody arrangements with an Eligible
Foreign Custodian it has selected are no longer appropriate
or no longer meet the requirements of Rule 17f-5, the Foreign
Custody Manager shall notify the Fund's Board of Trustees in
accordance with Section 3.7 hereunder and assist the
Portfolios in withdrawing their assets from such Eligible
Foreign Custodian as soon as reasonably practicable.
3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of
this Article 3, the Fund's Board of Trustees, or at its delegation the
Fund's investment adviser, shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and
maintaining the Foreign Assets in each country for which the Custodian
is serving as Foreign Custody Manager of the Portfolios. The Fund, on
behalf of the Portfolios, and the Fund's Board of Trustees, or at its
delegation the funds investment adviser, shall be deemed to be
monitoring on a continuing basis such Country Risk to the extent that
they consider necessary or appropriate. The Fund and the Custodian each
expressly acknowledge that the Foreign Custody Manager shall not be
delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories.
3.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS. In
performing the responsibilities delegated to it, the Foreign Custody
Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of
management investment companies registered under the 1940 Act would
exercise.
3.7 REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the
withdrawal of the Foreign Assets from an Eligible Foreign Custodian and
the placement of such Foreign Assets with another Eligible Foreign
Custodian by providing to the Board amended Schedules A or B at the end
of the calendar quarter in which an amendment to either Schedule has
occurred or at such other times as the Board deems reasonable or
appropriate. The Foreign Custody Manager shall make written reports
notifying the Board of any other material change in the foreign custody
arrangements of the Portfolios described in this Article 3 as soon as
practicable after the occurrence of the material change.
3.8 OTHER REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody
Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that
the Fund's Board of Trustees has determined that it is reasonable for
the Board to rely on the Custodian to perform the responsibilities
delegated pursuant to this Contract to the Custodian as the Foreign
Custody Manager of the Portfolios.
14
3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY
MANAGER. The Board's delegation to the Custodian as Foreign Custody
Manager of the Portfolios shall be effective as of the date of
execution of this Contract and shall remain in effect until terminated
at any time, without penalty, by written notice from the terminating
party to the non-terminating party, or upon the termination of this
Contract in accordance with its terms by either party, if earlier.
Except as expressly provided elsewhere in this Contract, termination
will become effective no less than thirty (30) days after receipt by
the non-terminating party of such notice. The provisions of Section 3.3
hereof shall govern the delegation to and termination of the Custodian
as Foreign Custody Manager of the Portfolios with respect to designated
countries.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD
OUTSIDE OF THE UNITED STATES
4.1 DEFINITIONS. Capitalized terms in this Article 4 shall have the
following meanings:
"Foreign Securities System" means either a clearing agency or a
securities depository listed on Schedule A hereto or a Mandatory
Securities Depository listed on Schedule B hereto. Foreign Securities
Systems and U.S. Securities Systems are collectively referred to herein
as the "Securities Systems"
"Foreign Sub-Custodian" means a foreign banking institution serving as
an Eligible Foreign Custodian.
4.2 HOLDING SECURITIES. The Custodian shall identify on its books as
belonging to each Portfolio the respective foreign securities held by
each Foreign Sub-Custodian or Foreign Securities System. The Custodian
may hold foreign securities for all of its customers, including each
Portfolio, with any Foreign Sub-Custodian in an account that is
identified as belonging to the Custodian for the benefit of its
customers, PROVIDED HOWEVER, that (i) the records of the Custodian with
respect to the foreign securities of each Portfolio which are
maintained in such account shall identify those securities as belonging
to such Portfolio and (ii), to the extent permitted and customary in
the market in which the account is maintained, the Custodian shall
require that securities so held by the Foreign Sub-Custodian be held
separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian. The books and records of the
Custodian shall at all times indicate the beneficial ownership of the
applicable Portfolio.
4.3 FOREIGN SECURITIES SYSTEMS. Foreign Assets shall be maintained in a
Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country
pursuant to the terms of this Contract. Where possible, such
arrangements shall include entry into agreements containing the
provisions referenced in Section 3.4.2 hereof.
15
4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN SECURITIES. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of
the Portfolios held by such Foreign Sub-Custodian, or in a
Foreign Securities System account, only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the
Portfolios in accordance with commercially reasonable
market practice in the country where such foreign
securities are held or traded, including, without
limitation: (A) delivery against expectation of
receiving later payment; or (B) in the case of a sale
effected through a Foreign Securities System in
accordance with the rules governing the operation of
the Foreign Securities System;
(ii) in connection with any repurchase agreement related
to foreign securities;
(iii) to the depository agent in connection with tender or
other similar offers for foreign securities of the
Portfolios;
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise
become payable;
(v) to the issuer thereof, or its agent, for transfer
into the name of the Custodian (or the name of the
respective Foreign Sub-Custodian or of any nominee of
the Custodian or such Foreign Sub-Custodian) or for
exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing
agents for examination or trade execution in
accordance with market custom; PROVIDED that in any
such case the Foreign 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 Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) 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;
(viii) in the case of warrants, rights or similar
foreign securities, the surrender thereof in the
exercise of such warrants, rights or similar
securities or the
16
surrender of interim receipts or temporary securities
for definitive securities;
(ix) for delivery as security in connection with any
borrowing by a Portfolio requiring a pledge of assets
by such Portfolio;
(x) in connection with trading in options and futures
contracts, including delivery as original margin and
variation margin;
(xi) in connection with the lending of foreign securities;
and
(xii) for any other proper purpose, BUT ONLY upon receipt
of Proper Instructions specifying the foreign
securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such
purpose to be a proper Fund purpose, and naming the
person or persons to whom delivery of such securities
shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out, or
direct the respective Foreign Sub-Custodian or the respective
Foreign Securities System to pay out, monies of a Portfolio in
the following cases only:
(i) upon the purchase of foreign securities for the
Portfolio, unless otherwise directed by Proper
Instructions, by (A) delivering money to the seller
thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving
later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign
Securities System, in accordance with the rules
governing the operation of such Foreign Securities
System;
(ii) in connection with the conversion, exchange or
surrender of foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of
the Portfolio, including but not limited to the
following payments: interest, taxes, investment
advisory fees, transfer agency fees, fees under this
Contract, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or
foreign exchange contracts for the Portfolio,
including transactions executed with or through the
Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures
contracts, including delivery as original margin and
variation margin;
17
(vi) in connection with the borrowing or lending of
foreign securities;
(vii) for payment of part or all of the dividends received
in respect of securities sold short; and
(viii) for any other proper purpose, BUT ONLY upon receipt
of Proper Instructions 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 Fund purpose, and naming the person or
persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this
Contract to the contrary, settlement and payment for Foreign
Assets received for the account of the Portfolios and delivery
of Foreign Assets maintained for the account of the Portfolios
may be effected in accordance with the customary established
securities trading or processing practices and procedures in
the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering Foreign Assets to
the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) with the expectation of receiving
later payment for such Foreign Assets from such purchaser or
dealer.
The Custodian shall provide to the Fund's Board of Trustees
the information with respect to custody and settlement
practices in countries in which the Custodian employs a
Foreign Sub-Custodian, including without limitation
information relating to Foreign Securities Systems, described
on Schedule C hereto at the time or times set forth on such
Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board
of Trustees being provided with substantively less information
than had been previously provided hereunder.
4.5 REGISTRATION OF FOREIGN SECURITIES. The Portfolio's foreign securities
maintained in the custody of a Foreign Sub-Custodian or Foreign
Securities System (other than bearer securities) shall be registered in
the name of the applicable Portfolio or in the name of the Custodian or
in the name of any Foreign Sub-Custodian or in the name of any nominee
of the foregoing (provided, however, that such registration indicates
such securities as having been held for the benefit of customers, and
not, in any event, for the benefit of a Foreign Sub-Custodian, and the
Fund on behalf of such Portfolio agrees to hold any such nominee
harmless from any liability as a holder of record of such foreign
securities absent such nominee's negligence, misfeasance, bad faith or
breach of obligation. The Custodian or a Foreign Sub-Custodian shall
not be obligated to accept securities on behalf of a Portfolio under
the terms of this Contract unless the form of such securities and the
manner in which they are delivered are in accordance with reasonable
market practice.
18
4.6 BANK ACCOUNTS. The Custodian shall identify on its books as belonging
to the Fund cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to
maintain, or market practice does not facilitate the maintenance of,
cash on the books of the Custodian, a bank account or bank accounts
opened and maintained outside the United States on behalf of a
Portfolio with a Foreign Sub-Custodian shall be subject only to draft
or order by the Custodian or such Foreign Sub-Custodian, acting
pursuant to the terms of this Contract to hold cash received by or from
or for the account of the Portfolio.
4.7 COLLECTION OF INCOME. The Custodian shall use reasonable commercial
efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled
and shall credit such income, as collected, to the applicable
Portfolio. In the event that extraordinary measures are required to
collect such income, the Fund and the Custodian shall consult as to
such measures and as to the compensation and expenses of the Custodian
relating to such measures.
4.8 SHAREHOLDER RIGHTS. With respect to the foreign securities held
pursuant to this Contract, the Custodian will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder
rights, subject always to the laws, regulations and practical
constraints that may exist in the country where such securities are
issued. The Fund acknowledges that local conditions, including lack of
regulation, onerous procedural obligations, lack of notice and other
factors may have the effect of severely limiting the ability of the
Fund to exercise shareholder rights.
4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The Custodian shall
transmit promptly to the Fund written information (including, without
limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign
securities being held for the account of the Portfolios. With respect
to tender or exchange offers, the Custodian shall transmit promptly to
the Fund written information so received by the Custodian from issuers
of the foreign securities whose tender or exchange is sought or from
the party (or its agents) making the tender or exchange offer. Absent
the Custodian's negligence, misfeasance or misconduct, the Custodian
shall not be liable for any untimely exercise of any tender, exchange
or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the
Custodian or the respective Foreign Sub-Custodian is in actual
possession of such foreign securities or property and (ii) the
Custodian receives Proper Instructions with regard to the exercise of
any such right or power, and both (i) and (ii) occur at least three
business days prior to the date on which the Custodian is to take
action to exercise such right or power.
4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a Foreign Sub-Custodian shall specify, to the
extent possible in accordance with that jurisdiction's legal
nomenclature, that the Foreign Sub-Custodian will exercise reasonable
care in the performance of its duties and, to the extent possible, to
indemnify,
19
and hold harmless, the Custodian and each Portfolio from and against
any loss, damage, cost, expense, liability or claim arising out of or
in connection with the Foreign Sub-Custodian's performance of such
obligations. At the Fund's election, the Portfolios shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claims against a Foreign Sub-Custodian as a consequence of any such
loss, damage, cost, expense, liability or claim if and to the extent
that the Fund and any applicable Portfolios have not been made whole
for any such loss, damage, cost, expense, liability or claim.
4.11 TAX LAW. The Custodian shall be responsible to use reasonable
professional efforts to assist each Portfolio with respect to any claim
for exemption or refund under the tax law of jurisdictions in which the
Portfolio has invested. The Custodian and each Portfolio shall consult
and cooperate to facilitate the appropriate administration of tax
matters connected with the income and securities of each Portfolio to
which this Contract relates. The Custodian will be entitled to rely
without separate duty of inquiry on any representation or information
relating to tax status that it is supplied by a Portfolio.
4.12 CONFLICT. If the Custodian is delegated the responsibilities of Foreign
Custody Manager pursuant to the terms of Article 3 hereof, in the event
of any conflict between the provisions of Article 3 and 4 hereof, the
provisions of Article 3 shall prevail.
5. PAYMENTS FOR SALES, REPURCHASES, REDEMPTIONS OR WITHDRAWALS OF
INTERESTS IN THE FUND
The Custodian shall receive from the distributor, or placement agent
for the Interests or from the Transfer Agent of the Fund and deposit into the
account of the appropriate Portfolio such payments as are received for Interests
in that Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such Portfolio
and the Transfer Agent of any receipt by it of payments for Interests in such
Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Trust Instrument and the Bylaws of the Fund and any
applicable votes of the Board of Trustees of the Fund pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of Interests which have delivered to the
Transfer Agent a request for redemption, repurchase or withdrawal of all or a
portion of their Interest(s). In connection with the redemption, repurchase or
withdrawal of all or a portion of the Interest(s) in a Portfolio, the Custodian
is authorized upon receipt of instructions from the Transfer Agent to wire funds
to or through a commercial bank designated by the redeeming holders of
Interests.
6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialed by one or more person or persons as the Board of Trustees of
the Fund shall have from time to time authorized. 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 reasonably
believes them to
20
have been given by a person authorized to give Proper Instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing (but the failure to provide such confirmation shall not
effect the validity of an oral instruction). Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
procedures are in place that afford adequate safeguards for the Portfolios'
assets. For purposes of this Section, Proper Instructions shall include
instructions received by the Custodian pursuant to any three-party agreement
which requires a segregated asset account in accordance with Section 2.12.
7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, 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 Portfolio except as otherwise directed by the Board of
Trustees of the Fund.
8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of the Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action by the Board of Trustees pursuant to the Trust Instrument as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
Interest of the outstanding Interests in each Portfolio or, if directed in
writing to do so by the Fund on behalf of the Portfolio, shall itself keep
21
such books of account and/or compute such net asset value per Interest. If so
directed, the Custodian shall also calculate daily the net income of the
Portfolio as described in the Fund's Prospectus related to such Portfolio and
shall advise the Fund and the Transfer Agent daily of the total amounts of such
net income and, if instructed in writing by an officer of the Fund to do so,
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The Fund acknowledges and agrees that, with
respect to investments maintained with the Xxxxxxxx Transfer Agent, the Xxxxxxxx
Transfer Agent is the sole source of information on the number of Underlying
Shares held by it on behalf of a Portfolio and that the Custodian has the right
to reasonably rely on holdings information furnished by the Xxxxxxxx Transfer
Agent to the Custodian in performing its duties under this Contract, including
without limitation, the duties set forth in this Article 9 and in Article 10
hereof; PROVIDED, however, that the Custodian shall be obligated to reconcile
information as to purchases and sales of Underlying Shares contained in trade
instructions and confirmations received by the Custodian and to report promptly
any discrepancies to the Xxxxxxxx Transfer Agent. The calculations of the net
asset value per Interest and the daily income of each Portfolio shall be made by
the Custodian at the time or times described from time to time in the Fund's
Prospectus related to such Portfolio.
10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such a manner as will meet the Fund's obligations under Section 31 of the 1940
Act, with particular attention to Rules 31a-1, 31a-2, and 31a-3 thereunder. All
such records shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and agents of the
Securities and Exchange Commission. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by each Portfolio and held
by the Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder including, without limitation, in connection with
the preparation of the Fund's Form N-1A, and Form N-SAR, or other annual reports
to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities
22
System, relating to the services provided by the Custodian under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract 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,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence in carrying out
the provisions of this Contract. The Custodian 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. The Custodian shall be without liability to the Fund
and the Portfolios for any loss, liability, claim or expense to the extent that
it results from or is caused by a Country Risk.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent
of the Custodian, the Custodian shall be without liability to the Fund for any
loss, liability, claim or expense resulting from or caused by: (i) events or
circumstances beyond the reasonable control of the Custodian or any
sub-custodian or Securities System or any agent or nominee of any of the
foregoing, including, without limitation, nationalization or expropriation,
imposition of currency controls or restrictions, the interruption, suspension or
restriction of trading on or the closure of any securities market, power or
other mechanical or technological failures or interruptions, computer viruses or
communications disruptions, acts of war or terrorism, riots, revolutions, work
stoppages, natural disasters or other similar events or acts; (ii) errors by the
Fund or any investment adviser of the Fund in its instructions to the Custodian
provided such instructions have been in accordance with this Contract; (iii) the
insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) delays or inability to perform its duties due to any
disorder in market infrastructure with respect to any particular security or
Securities System; and (vi) any provision of any present or future law or
regulation or order of the United States of
23
America, or any state thereof, or any other country, or political subdivision
thereof or of any court of competent jurisdiction.
The Custodian shall not be liable to the Fund for any loss resulting
from: (i) the insolvency of any Foreign Sub-Custodian (as defined in Article 4
hereof) which is not a branch or an affiliate of the Custodian; or (ii) any act
of any Foreign Sub-Custodian, except where such loss results from an error or
omission by the Foreign Sub-Custodian or the failure by the Sub-Custodian to use
reasonable care in the performance of its duties based on the standards
applicable to custodians in the relevant market, or from the fraud, willful
default or negligence (measured in accordance with the standards prevailing in
the relevant market) of such Foreign Sub-Custodian in the provision of custodial
services by it.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money
other than cash held by the Custodian on behalf of the Fund pursuant to this
Contract or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money other than cash held by the Custodian on behalf of the Fund
pursuant to this Contract or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities other than cash or securities held by the
Custodian on behalf of the Fund pursuant to this Contract for any purpose for
the benefit of a Portfolio (including but not limited to securities settlements,
foreign exchange contracts and assumed settlement) or in the event that the
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect, unless
expressly provided otherwise in this Contract, not sooner than thirty (30) days
after the date of such delivery or mailing; PROVIDED, however that the Custodian
shall not with respect to a Portfolio act under Section 2.9 hereof in the
absence of receipt of a certificate of the Secretary or an Assistant Secretary
that the Board of Trustees of the Fund has approved the initial use of a
particular U.S. Securities System by such Portfolio or any changes thereto, and
that the Custodian shall not with respect to a
24
Portfolio act under Section 2.10 hereof in the absence of receipt of a
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System by such
Portfolio or any changes thereto; PROVIDED FURTHER, however, that the Fund shall
not amend or terminate this Contract in contravention of any applicable federal
or state regulations, or any provision of the Fund's Trust Instrument, and
further provided, that the Fund on behalf of one or more of the Portfolios may
at any time by action of its Board of Trustees (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
reasonable costs, expenses and disbursements pursuant to this Contract.
16. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a U.S. Securities System or at the Xxxxxxxx Transfer Agent.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of 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 is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts or New York, New York, 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 Custodian on behalf of each applicable Portfolio and all instruments held by
the Custodian relative thereto and all other property held by it under this
Contract on behalf of each applicable Portfolio and to transfer to an account of
such successor custodian all of the securities of each such Portfolio held in
any U.S. Securities System or at the Xxxxxxxx Transfer Agent. Thereafter, such
bank or trust company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the
25
Custodian shall be entitled to fair compensation for its services (at a rate not
greater than the rate of compensation in effect immediately prior to
termination) during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall remain in full
force and effect.
17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Trust Instrument of the
Fund. No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
18. ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of Interests
in addition to Xxxxxxxx International Fund, Xxxxxxxx Emerging Markets Fund,
Xxxxxxxx International Smaller Companies Fund, Xxxxxxxx U.S. Diversified Growth
Fund, Xxxxxxxx U.S. Smaller Companies Fund, Xxxxxxxx Micro Cap Fund, Xxxxxxxx
Greater China Fund, and Xxxxxxxx Emerging Markets Fund Institutional Portfolio
with respect to which it desires to have the Custodian render services as
custodian under the terms hereof, it shall so notify the Custodian in writing,
and if the Custodian agrees in writing to provide such services, such series of
Interests shall become a Portfolio hereunder.
19. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
21. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the
26
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
22. YEAR 2000
Custodian will take reasonable steps to ensure that its products (and
those of its third-party suppliers) reflect the available state of the art
technology to offer products that are Year 2000 compliant, including, but not
limited to, century recognition of dates, calculations that correctly compute
same century and multi- century formulas and date values, and interface values
that reflect the date issues arising between now and the next one hundred years.
If any changes are required, Custodian will make the changes to its products at
no cost to the Fund and in a commercially reasonable time frame and will require
third-party suppliers to do likewise.
23. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ X ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
24. LIMITATION OF INTERESTHOLDER AND TRUSTEE LIABILITY
The Trustees and officers of the Fund and the Interest holders of the
Portfolios shall not be liable for any obligations of the Fund or of the
Portfolios under this Contract, and the Custodian agrees that, in asserting any
rights or claims under this Contract, it shall look only to the assets and
property of the Fund or the Portfolio(s) to which the Custodian's rights or
claims relate in settlement of such rights or claims, and not to the Trustees or
officers of the Fund or to the Interest holders of any Portfolio.
27
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 31st day of May, 1999.
ATTEST XXXXXXXX CAPITAL FUNDS (DELAWARE)
By
--------------------------- ------------------------------
Name: Name:
Title: Title:
ATTEST STATE STREET BANK AND TRUST COMPANY
By
--------------------------- ---------------------------------
Xxxx X. Xxxxxxx Xxxxxx X. Xxxxx
Associate Counsel Vice Chairman
28
