MUTUAL FUND CUSTODY AND SERVICES AGREEMENT
TABLE OF CONTENTS
SECTION | PAGE | |||||
DEFINITIONS | 1 | |||||
ARTICLE I — CUSTODY PROVISIONS | 3 | |||||
1. |
Appointment of Custodian | 4 | ||||
2. |
Custody of Cash and Securities | 4 | ||||
3. |
Settlement of Series Transactions | 8 | ||||
4. |
Lending of Securities | 8 | ||||
5. |
Persons Having Access to Assets of the Series | 8 | ||||
6. |
Standard of Care; Scope of Custodial Responsibilities | 9 | ||||
7. |
Appointment of Subcustodians | 11 | ||||
8. |
Overdraft Facility and Security for Payment | 11 | ||||
9. |
Tax Obligations | 11 | ||||
ARTICLE II — FOREIGN CUSTODY MANAGER SERVICES | 12 | |||||
1. |
Delegation | 12 | ||||
2. |
Changes to Appendix C | 12 | ||||
3. |
Reports to Board | 12 | ||||
4. |
Monitoring System | 13 | ||||
5. |
Standard of Care | 13 | ||||
6. |
Use of Securities Depositories | 13 | ||||
ARTICLE III — INFORMATION SERVICES | 13 | |||||
1. |
Risk Analysis | 13 | ||||
2. |
Monitoring of Securities Depositories | 13 | ||||
3. |
Use of Agents | 13 | ||||
4. |
Exercise of Reasonable Care | 13 | ||||
5. |
Liabilities and Warranties | 14 | ||||
ARTICLE IV — GENERAL PROVISIONS | 14 | |||||
1. |
Compensation | 14 | ||||
2. |
Insolvency of Foreign Custodians | 14 | ||||
3. |
Liability for Depositories | 14 | ||||
4. |
Damages | 14 | ||||
5. |
Indemnification; Liability of the Series | 15 | ||||
6. |
Force Majeure | 15 | ||||
7. |
Termination | 15 | ||||
8. |
Inspection of Books and Records | 15 | ||||
9. |
Miscellaneous | 16 | ||||
APPENDIX A. AUTHORIZED PERSONS | 19 | |||||
APPENDIX B. FUND OFFICERS | 20 | |||||
APPENDIX C. SELECTED COUNTRIES | 21 | |||||
APPENDIX D. SELF CUSTODY RIDER | 22 | |||||
EXHIBIT A. CUSTOMER IDENTIFICATION PROGRAM NOTICE | 23 |
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[AMENDED AND RESTATED]
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
MUTUAL FUND CUSTODY AND
SERVICES AGREEMENT
This AGREEMENT, effective as of the day of , 200 , and is between
, (the “Fund”) [a business trust/ corporation] organized under the laws
of the [Commonwealth of Massachusetts/State of Maryland] having its principal office and place of
business at , and [MELLON BANK, N.A./MELLON TRUST OF NEW ENGLAND, N.A.], (the
“Custodian”) a national banking association with its principal place of business at [MELLON BANK
ADDRESS/MELLON TRUST ADDRESS].
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue shares in separate series with each such series
representing interests in a separate portfolio of securities and other assets, and the Fund has
made the Series listed on Appendix F subject to this Agreement (each such series, together with all
other series subsequently established by the Fund and made subject to the Agreement in accordance
with the terms hereof, shall be referred to as a “Series” and collectively as the “Series”);
WHEREAS, the Fund and the Custodian desire [to restate the terms of their existing custody
agreement to reflect the changes to Rules 17f-5 and 17f-7, and] to set forth their agreement with
respect to the custody of the Series’ 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;
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; and
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
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thereunder, all as amended from time to time.
2. “Agreement”: this agreement and any amendments.
3. “Assets”: any of the Series’ 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 Series’ transactions in such investments.
4. “Authorized Person”: the Chairman of the 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 a Series which 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 Managers (or the body authorized to exercise authority similar to that of
the board of directors of a corporation) of the Fund.
6. “Book-Entry System”: the Federal Reserve/Treasury book-entry system for United States and
federal agency Securities, its successor or successors and its nominee or nominees.
7. “Business Day”: any day on which the Series, 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 Series by an Authorized Person or Persons designated by the Board to issue a
Certificate.
9. “Eligible Securities Depository”: the meaning of the term set forth in Rule 17f-7(b)(1).
10. “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 exemptive or no-action relief 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 Series.
11. “Foreign Custody Manager”: the meaning set forth in Rule 17f-5(a)(3).
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12. “Instructions”: (i) all directions to the Custodian from an Authorized Person pursuant to the
terms of this Agreement; (ii) all directions by or on behalf of the Fund to the Custodian in its
corporate capacity (or any of its affiliates) with respect to contracts for foreign exchange; (iii)
all directions by or on behalf of the Fund pursuant to an agreement with Custodian (or any of its
affiliates) with respect to benefit disbursement services or information or transactional services
provided via a web site sponsored by the Custodian (or any of its affiliates) (e.g., the “Workbench
web site”) and (iv) all directions by or on behalf of the Fund pursuant to any other agreement or
procedure between the Custodian (or any of its affiliates) and the Fund, if such agreement or
procedure specifically provides that authorized persons thereunder are deemed to be authorized to
give instructions under this Agreement. Instructions shall be in writing, transmitted by first
class mail, overnight delivery, private courier, facsimile, or shall be an electronic transmission
subject to the Custodian’s policies and procedures, other institutional delivery systems or trade
matching utilities as directed by an Authorized Person and supported by the Custodian, or other
methods agreed upon in writing by the Fund and Custodian. The Custodian may, in its discretion,
accept oral directions and instructions from an Authorized Person and may require confirmation in
writing. However, where the Custodian acts on an oral direction prior to receipt of a written
confirmation, the Custodian shall not be liable if a subsequent written confirmation fails to
conform to the oral direction.
13. “Primary Custodian”: the meaning set forth in Rule 17f-7(b)(2).
14. “Prospectus”: a Series’ current prospectus and statement of additional information relating to
the registration of the 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 the Series.
18. “Securities Depository”: a system for the central handling of securities as defined in Rule
17f-4.
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 each Series, however designated.
ARTICLE I. — CUSTODY PROVISIONS
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1. Appointment of Custodian. The Board appoints, and the Custodian accepts appointment as
custodian of all the Securities and monies at the time owned by or in the possession of the Series
during the period of this Agreement.
2. Custody of Cash and Securities.
a. Receipt and Holding of Assets. The Series 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 Series 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 Series 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 Series shall be solely
responsible to assure that Instructions are in accord with any limitations or restrictions
applicable to the Series
(1) In payment for Securities purchased for the applicable Series;
(2) In payment of dividends or distributions with respect to Shares;
(3) In payment for Shares which have been redeemed by the applicable Series;
(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 or merger, consolidation, reorganization, recapitalization or
readjustment;
(7) Upon conversion of Securities pursuant to their terms into other securities;
(8) Upon exercise of subscription, purchase or other similar rights represented by Securities;
(9) For the payment of interest, management or supervisory fees,
4
distributions or operating expenses;
(10) In payment of fees and in reimbursement of the expenses and liabilities of the Custodian
attributable to the applicable Series;
(11) In connection with any borrowings by the applicable Series 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 Series.
(13) For the purpose of redeeming Shares of the capital stock of the applicable Series and the
delivery to, or the crediting to the account of, the Custodian or the applicable Series’ transfer
agent, such Shares to be purchased or redeemed;
(14) For the purpose of redeeming in kind Shares of the applicable Series against delivery to
the Custodian, its Subcustodian or the Customer Series’ 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 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;
(17) Upon the termination of this Agreement; and
(18) For other proper purposes as may be specified in Instructions issued by an Authorized
Person 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 or monies of the Fund as set forth under Article I, Section 7.
c. Actions Which May be Taken Without Instructions. Unless an Instruction
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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 Series for monitoring or ascertaining any call,
redemption or retirement dates with respect to put bonds or similar instruments which are owned by
the Series 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 Series for any loss by the Series for any missed payments or other defaults resulting
therefrom, unless the Custodian received timely notification from the Series specifying the time,
place and manner for the presentment of any such put bond owned by the Series 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 Series 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 applicable Series all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for that Series;
(5) Submit or cause to be submitted to the applicable Series or its investment advisor as
designated by the Fund information actually received by the Custodian regarding ownership rights
pertaining to property held for the applicable Series;
(6) Deliver or cause to be delivered any Securities held for the applicable Series 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 applicable Series 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;
(8) Make or cause to be made such transfers or exchanges of the assets specifically allocated
to the applicable Series and take such other steps as shall be stated in Instructions to be for the
purpose of effectuating any duly authorized plan of
6
liquidation, reorganization, merger,
consolidation or recapitalization of the applicable Series;
(9) Deliver Securities upon the receipt of payment in connection with any repurchase agreement
related to such Securities entered into by the Series;
(10) Deliver Securities owned by the applicable Series to the issuer thereof or its agent when
such Securities are called, redeemed, retired or otherwise become payable; 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 Series for
monitoring or ascertaining any call, redemption or retirement dates with respect to the put bonds
or similar instruments which are owned by the Series 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 Series for any loss by the Series for any missed
payment or other default resulting therefrom unless the Custodian received timely notification from
the Series specifying the time, place and manner for the presentment of any such put bond owned by
the Series and held by the Custodian or its nominee. The Custodian shall not be responsible and
assumes no liability to the Series for the accuracy or completeness of any notification the
Custodian may furnish to the applicable Series 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 applicable Series; and
(12) Execute any and all documents, agreements or other instruments as may be necessary or
desirable for the accomplishment of the purposes of this Agreement.
d. Confirmation and Statements. Promptly after the close of business on each day, the
Custodian shall furnish each Series with confirmations and a summary of all transfers to or from
the account of the Series during the day. Where securities purchased by a Series 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 that Series. At least monthly,
the Custodian shall furnish each Series with a detailed statement of the Securities and monies held
for the Series under this Custody Agreement.
e. Registration of Securities. The Custodian is authorized to hold all Securities,
Assets, or other property of each Series in nominee name, in bearer form or in book-entry form.
The Custodian may register any Securities, Assets or other property of each Series in the name of
the Fund or the Series, 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. The 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
7
Securities Depository, any Securities
which it may hold for the account of the applicable Series and which may from time to time be
registered in the name of the Fund or the applicable Series.
f. Segregated Accounts. Upon receipt of Instructions, the Custodian will, from time
to time establish segregated accounts on behalf of the applicable Series to hold and deal with
specified assets as shall be directed.
3. Settlement of Series 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. The 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. The Custodian shall credit the applicable Series, in
accordance with the Custodian’s standard operating procedure, with income and maturity proceeds on
securities on contractual payment date net of any taxes or upon actual receipt. To the extent the
Custodian credits income on contractual payment date, the Custodian may reverse such accounting
entries to the contractual payment date if the Custodian reasonably believes that such amount will
not be received.
c. Contractual Settlement. 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 to the contractual settlement 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 the Series in
accordance with the terms and conditions of a separate securities lending agreement, approved by
the Fund.
5. Persons Having Access to Assets of the Series.
a. No trustee or agent of the 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 Series held by the Custodian or be
authorized or permitted to withdraw any investments of the Series, nor shall the Custodian deliver
any assets of the Series 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 Series.
8
b. Nothing in this Section 5 shall prohibit any duly authorized officer, employee or agent of
the Fund, or any duly authorized officer, director, employee or agent of the investment adviser, of
any sub-investment adviser of the Series or of the Series’ 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 Series 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 Fund or of its own counsel, at the expense of the Fund, 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 to hold 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 the Series, the legality of the
purchase thereof, or the propriety of the amount paid therefor;
(3) The legality of the sale of any Securities by the Series 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
therefore
(6) The legality of the declaration or payment of any distribution of the Series;
(7) The legality of any borrowing for temporary administrative or emergency purposes.
9
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 Series until the Custodian
actually receives and collects such money.
d. Amounts Due from Transfer Agent. The Custodian shall not be required to effect
collection of any amount due to the Series from the Series’ transfer agent nor be required to cause
payment or distribution by such 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
Series are such as may properly be held by the Series 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
Series. Where the Custodian is issued Instructions orally, the Series acknowledge that if written
confirmation is requested, the validity of the transactions or enforceability of the transactions
authorized by the Series shall not be affected if such confirmation is not received or is contrary
to oral Instructions given. The Custodian shall be fully protected in acting in accordance with all
such Instructions and in failing to act in the absence thereof. The Custodian shall be under no
duty to question any direction of an Authorized Person with respect to the portion of the account
over which such Authorized Person has authority, to review any property held in the account, to
make any suggestions with respect to the investment and reinvestment 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 or its subcustodians pursuant to Instructions. In following Instructions, the Custodian
shall be fully protected and shall not be liable for
the acts or omissions of any person or entity not selected or retained by the Custodian in its
sole discretion, including but not limited to, any broker-dealer or other entity designed by the
Fund or Authorized Person to hold property of the account as collateral or otherwise pursuant to an
investment strategy.
7. Appointment of Subcustodians; Transfer of Assets to Subcustodians or Brokers. 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 the Series. The
Custodian is also hereby authorized when acting pursuant to Instructions to: 1) place assets with
any Foreign Custodian located in a
10
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
any such domestic subcustodian or Foreign Custodian 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 such broker, subcustodian or Foreign Custodian.
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 the Series 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 Series, the Custodian may, in its sole discretion, provide an
overdraft (an “Overdraft”) to the Series 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 Series and the Custodian; and (b) shall accrue interest from
the date of the Overdraft to the date of payment in full by the Series at a rate agreed upon from
time to time by the Custodian and the Series or, in the absence of specific agreement, by such rate
as charged to other customers of Custodian under procedures uniformly applied. The Custodian and
the Series 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 Series expenses. The Custodian shall promptly notify the Series (an “Overdraft
Notice”) of any Overdraft. To secure payment of any Overdraft and related interest and expenses,
the Series hereby grants to the Custodian a first priority security interest in and right of setoff
against the Securities and cash in the Series’ account, including all income, substitutions and
proceeds, whether now owned or hereafter acquired (the “Collateral”), in the full amount of such
Overdraft, interest and expenses; provided that the Series does not grant the Custodian a security
interest in any Securities issued by an affiliate of the Custodian (as defined in Section 23A of
the Federal Reserve Act). The Custodian and the Series intend that, as the securities intermediary
with respect to the Collateral, the Custodian’s security interest shall automatically be perfected
when it attaches. Should the Series fail to pay promptly any amounts owed hereunder, the Custodian
shall be entitled to use available cash in the Series’ account and to liquidate Securities in the
account as necessary to meet the Series’ obligations relating to such Overdraft, interest and
expenses. 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 as a secured creditor under the [PA/MA] 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:
11
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 upon receipt of sufficient
information;
b. The Custodian shall withhold appropriate amounts, as required by U.S. tax laws, with
respect to amounts received on behalf of nonresident aliens upon receipt of Instructions; 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.
In making payments to service providers pursuant to Instructions, the Fund acknowledges that
the Custodian is acting as a paying agent and not as the payor, for tax information reporting and
withholding purposes.
ARTICLE II. — FOREIGN CUSTODY MANAGER SERVICES
1. Delegation. The Board delegates to, 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 in accordance with Rule 17f-5(c).
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 Fund and
the Custodian, but the Custodian reserves the right to delete jurisdictions upon reasonable notice
to the Series.
3. Reports to Board. Custodian shall provide written reports notifying the Board of the
placement of Assets with a particular Foreign Custodian and of any material change in a Series’
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
12
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 II 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 in like
circumstances. Contracts with Foreign Custodians shall provide for 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, the Custodian
may assume that the Series and its investment adviser have determined, pursuant to Rule 17f-7, that
the depository provides reasonable safeguards against custody risks, if a Series decides to place
and maintain foreign assets with any Securities Depository as to which the Custodian has provided
the Fund on behalf of such Series with a Risk Analysis.
ARTICLE III. — INFORMATION SERVICES
1. Risk Analysis. The Custodian will provide the Fund on behalf of the Series 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 on behalf of the Series. If a new Securities Depository
commences operation in one of the Appendix C countries, the Custodian will provide the Fund on
behalf of the Series 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 on behalf of the Series 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 on behalf of the Series with a Risk Analysis as required under Rule 17f-7. The Custodian will
promptly notify the Fund on behalf of the Series 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. With respect to the Risk
Analyses provided or monitoring performed by an agent, the Custodian will exercise reasonable care
in the selection of such agent, and shall be entitled to rely upon information provided by agents
so selected in the performance of its duties and responsibilities under this Article III.
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5. Liabilities 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.
ARTICLE IV. — GENERAL PROVISIONS
1. Compensation.
a. The 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 the Fund as soon as practicable after the end of each calendar
month. The 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 charge against assets held
on behalf of the Series compensation and any expenses incurred by the Custodian in the performance
of its duties pursuant to this Agreement. The Custodian shall also be entitled to charge against
assets of the Series the amount of any loss, damage, liability or expense incurred with respect to
the Series, 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 Series 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 Series
with a Securities Depository.
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.
5. Indemnification; Liability of the Series.
a. The Fund shall indemnify and hold the Custodian harmless from all liability
14
and costs,
including reasonable counsel fees and expenses, relating to or arising out of the performance of
the Custodian’s obligations under this Agreement except to the extent resulting from the
Custodian’s negligence or willful misconduct. This provision shall survive the termination of this
Agreement.
b. The Series and the Custodian agree that the obligations of the Fund under this Agreement
shall not be binding upon any of the trustees, shareholders, nominees, officers, employees or
agents, whether past, present or future, of the Series, individually, but are binding only upon the
assets and property of the Fund.
6. Force Majeure. Notwithstanding anything in this Agreement to the contrary contained
herein, the Custodian shall not be responsible or liable for its failure to perform under this
Agreement or for any losses to the account resulting from any event beyond the reasonable control
of the Custodian, its agents or subcustodians. This provision shall survive the termination of
this Agreement
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 the 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 Series. 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 Series, be deemed to be its own custodian and the Custodian
shall thereby be relieved of all duties and or the Series responsibilities under this Agreement
other than the duty with respect to Securities held in the Book-Entry System which cannot be
delivered to the Series.
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 Series, after deducting all fees, expenses and other amounts
owed.
d. In the event of a dispute 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 directly
related to the Fund shall be open to inspection and audit at reasonable times by officers and
auditors employed by the Fund at its own expense and with prior written notice to the Custodian,
and by the appropriate employees of the Securities and Exchange
15
Commission.
9. Miscellaneous.
a. Appendix A is a Certificate signed by the Secretary of the Fund setting forth the
names and the signatures of Authorized Persons. The Fund shall furnish a new Certificate when the
list of Authorized Persons is changed in any way. Until a new certification is received, the
Custodian shall be fully protected in acting upon Instructions from Authorized Persons as set forth
in the last delivered Certificate.
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:
[MELLON ADDRESS/MELLON TRUST ADDRESS]
Attn: |
The Fund:
Attn. |
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 assigns; provided, however, that this Agreement shall not be assignable
by the 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, 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 and any
other attempted assignment without written consent shall be null and void.
16
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. The Fund acknowledges and agrees that, except as expressly set forth in this Agreement, the
Fund is solely responsible to assure that the maintenance of the Series’ 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. The Fund represents that it has determined that it is reasonable to rely on
Custodian to perform the responsibilities delegated pursuant to this Agreement.
i. This Agreement shall be construed in accordance with the laws of The Commonwealth of
[PA/MA].
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. 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. Each party represents and warrants that the individual executing this Agreement
on its behalf has the requisite authority to bind the Fund or the Custodian to this Agreement. The
Fund has received and read the “Customer Identification Program Notice”, a copy of which is
attached to this Agreement as Exhibit A.
l. 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.
[Remainder of page intentionally left blank]
17
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.
B=
By: |
Name:
Title:
Title:
[MELLON BANK/MELLON TRUST]
By: |
Name:
Title:
Title:
18
APPENDIX A
LIST OF AUTHORIZED PERSONS
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 each Series thereof and the specimen signatures set forth opposite their
respective names are their true and correct signatures:
Name | Signature | |||
By: | ||||
Secretary | ||||
Dated: |
19
APPENDIX B
FUND OFFICERS
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 Series 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: |
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APPENDIX C
SELECTED COUNTRIES
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.”
21
[USE ONLY FOR AFFILIATES]
APPENDIX D
SELF CUSTODY RIDER
SELF CUSTODY RIDER
Notwithstanding any other provisions of this Agreement to the contrary, the following provisions
shall apply to this Agreement as being subject to Rule 17f-2 under the Act.
1. Physical Separations of Securities. Except as permitted by Rule 17f-2 or Rule 17f-4,
the Custodian shall hold all Securities deposited with it physically segregated at all times from
those of any other person.
2. Access to Securities. Except as otherwise provided by law, no person shall be
authorized or permitted to have access to the Securities deposited with the Custodian except
pursuant to a Board resolution. Each such resolution shall designate not more than five persons
who shall be either officers or responsible employees of the Fund and shall provide that access to
such investments shall be only by two or more such persons jointly, at least one of whom shall be
an officer; except that access to such investments shall be permitted (1) to properly authorized
officers and employees of the Custodian and (2) to the Fund’s independent public accountant jointly
with any two persons so designated or with such officer or employee of the Custodian.
3. Deposits and Withdrawals. Each person when depositing such securities or similar
investments in or withdrawing them from a Securities Depository or when ordering their withdrawal
and delivery from the safekeeping of the Custodian, shall comply with the requirements of Rule
17f-2(e).
4. Examination. The Fund shall comply with the requirements of Rule 17f-2(f) with regard
to examination by an independent public accountant.
Acknowledged:
Fund
|
Custodian |
22
EXHIBIT A
CUSTOMER IDENTIFICATION PROGRAM NOTICE
CUSTOMER IDENTIFICATION PROGRAM NOTICE
MELLON
CUSTOMER IDENTIFICATION PROGRAM NOTICE
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
To help the government fight the funding of terrorism and money laundering activities, all
financial institutions are required by law to obtain, verify and record information that identifies
each individual or entity that opens an account.
What this means for you: When you open an account, we will ask you for your name, address,
taxpayer or other government identification number and other information, such as date of birth for
individuals, that will allow us to identify you. We may also ask to see identification documents
such as a driver’s license, passport or documents showing existence of the entity.
Rev. 09/03
23