Exhibit (g)(2)
CUSTODIAN AGREEMENT
AGREEMENT made as of this 1st day of September, 2001, between The
Glenmede Fund, Inc., a company organized under the laws of the State of Maryland
(the "Fund"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust company
(the "Bank").
WHEREAS, the Fund is registered under the Investment Company Act of
1940 (the "1940 Act) as an open-end management investment company, on behalf of
the portfolios/series listed on Appendix A hereto (as such Appendix A may be
amended from time to time) (each a "Portfolio" and collectively, the
"Portfolios"), desires to place and maintain all of its portfolio securities and
cash in the custody of the Bank. The Bank has at least the minimum
qualifications required by Section 17(f)(1) of the Investment Company Act of
1940 (the "1940 Act") to act as custodian of the portfolio securities and cash
of the Fund, and has indicated its willingness to so act, subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Fund agrees to pay to the Bank fees as may be agreed to from time
to time in writing between the parties.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the persons
duly authorized to give Proper Instructions or otherwise act on behalf of the
Fund by appropriate resolution of its Board, and set forth in a certificate as
required by Section 4 hereof.
2.2 Board. Board will mean the Board of Directors or the Board of
Trustees of the Fund, as the case may be.
2.3 Security. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any profit
sharing agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.
2.4 Portfolio Security. Portfolio Security will mean any security owned
by a Portfolio of the Fund.
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2.5 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed by any two Authorized Persons of the Fund.
2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.
2.7 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.
2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the Fund
shall agree upon from time to time, and (ii) instructions (which may be
continuing instructions) regarding other matters signed or initialed by an
Authorized Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
All oral instructions are to be promptly confirmed in writing by the Fund. The
Bank shall act upon and comply with any subsequent Proper Instruction that
modifies a prior instruction and the sole obligation of the Bank with respect to
any follow-up or confirming instruction shall be to make reasonable efforts to
detect any discrepancy between the original instruction and such confirmation
and to report such discrepancy to the Fund. The Fund shall be responsible, at
the Fund's expense, for taking any action, including any reprocessing, necessary
to correct any such discrepancy or error, and to the extent such action requires
the Bank to act, the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt by the Bank of an Officers' Certificate as to
the authorization by the Board accompanied by a detailed description of
procedures approved by the Fund, Proper Instructions may include communication
effected directly between electro-mechanical or electronic devices provided that
the Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund's assets.
3. Separate Accounts. The Bank will segregate the assets of each
Portfolio to which this Agreement relates into a separate account for each such
Portfolio containing the assets of such Portfolio (and all investment earnings
thereon). Unless the context otherwise requires, any reference in this Agreement
to any actions to be taken by the Fund shall be deemed to refer to the Fund
acting on behalf of one or more of its Portfolios, any reference in this
Agreement to any assets of the Fund, including, without limitation, any
Portfolio Securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable Portfolio, any duty or obligation of the Bank
hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to such individual Portfolio and any obligation or liability of the Fund
hereunder shall be binding only with respect to such individual Portfolio, and
shall be discharged only out of the assets of such Portfolio.
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or
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Assistant Secretary of the Fund will sign a new or amended certification setting
forth the change and the new, additional or omitted names or signatures. The
Bank will be entitled to rely and act upon any Officers' Certificate given to it
by the Fund which has been signed by Authorized Persons named in the most recent
certification received by the Bank.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of each Portfolio of the
Fund or in the name of the Bank, as Custodian of the Fund's Portfolio, and will
deposit to the account of such Portfolio all of the cash of the Fund, except for
cash held by a subcustodian appointed pursuant to Sections 14.2 or 14.3 hereof,
including borrowed funds, delivered to the Bank, subject only to draft or order
by the Bank acting pursuant to the terms of this Agreement. Pursuant to the
Bank's internal policies regarding the management of cash accounts, the Bank may
segregate certain portions of the cash of a Portfolio into a separate savings
deposit account upon which the Bank reserves the right to require seven (7) days
notice prior to withdrawal of cash from such an account. Upon receipt by the
Bank of Proper Instructions (which may be continuing instructions) or in the
case of payments for redemptions and repurchases of outstanding shares of common
stock of a Portfolio, notification from the Fund's transfer agent as provided in
Section 7, requesting such payment, designating the payee or the account or
accounts to which the Bank will release funds for deposit, and stating that it
is for a purpose permitted under the terms of this Section 5, specifying the
applicable subsection, the Bank will make payments of cash held for the accounts
of the Portfolio, insofar as funds are available for that purpose, only as
permitted in subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for each
Portfolio, against contemporaneous receipt of such securities by the Bank or
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in which
the transaction occurs registered in the name of the Portfolio or in the name
of, or properly endorsed and in form for transfer to, the Bank, or a nominee of
the Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof)) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the repurchase
or redemption of common shares of each Portfolio offered for repurchase or
redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the account
of each Portfolio of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management,
administrative or supervisory fees, distribution fees, fees of the Bank for its
services hereunder and reimbursement of the expenses and liabilities of the Bank
as provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of such Portfolio.
5.4 Payment in Respect of Securities. For payments in connection with
the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Portfolio held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to a Portfolio,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
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5.6 Repayment of Cash. To repay the cash delivered to a Portfolio for
the purpose of collateralizing the obligation to return to the Portfolio
certificates borrowed from the Portfolio representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions.
(a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements") which may be entered into by the
Bank on behalf of a Portfolio upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or banking institution (which
may be the Bank, or any other subcustodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Bank shall have no
duty with respect to the selection of such currency brokers or banking
institutions with which a Portfolio deals or for their failure to comply with
the terms of any contract or option.
(b) In order to secure any payments in connection with Foreign
Exchange Agreements that may be entered into by the Bank pursuant to Proper
Instructions, each Portfolio agrees that the Bank shall have a continuing lien
and security interest, to the extent of any payment due under any Foreign
Exchange Agreement, in and to any property at any time held by the Bank for the
Portfolio's benefit or in which the Portfolio has an interest and which is then
in the Bank's possession or control (or in the possession or control of any
third party acting on the Bank's behalf). The Portfolio authorizes the Bank, in
the Bank's sole discretion, at any time to charge any such payment due under any
Foreign Exchange Agreement against any balance of account standing to the credit
of such Portfolio on the Bank's books.
5.8 Other Authorized Payments. For other authorized transactions of a
Portfolio, or other obligations of a Portfolio incurred for proper Portfolio
purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Portfolio,
or specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
5.9 Termination: Upon the termination of this Agreement as hereinafter
set forth pursuant to Section 8 and Section 16 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided herein,
and except for securities to be delivered to any subcustodian appointed pursuant
to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and hold
pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of each Portfolio. All such Portfolio Securities will be held or
disposed of by the Bank for, and subject at all times to, the instructions of
the Fund pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not physically held
by the Bank, the Bank will register all Portfolio Securities (unless otherwise
directed by Proper Instructions or an Officers' Certificate), in the name of a
registered nominee of the Bank as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by such
laws or regulations or under the laws of any state.
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The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of a Portfolio.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to each Portfolio all notices,
proxies and proxy soliciting materials delivered to the Bank with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Portfolio), but
without indicating the manner in which such proxies are to be voted.
6.3 Corporate Action. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the affected Portfolio promptly of the Corporate Action, the Response
required in connection with the Corporate Action and the Bank's deadline for
receipt from the Fund of Proper Instructions regarding the Response (the
"Response Deadline"). The Bank shall forward to the Portfolio via telecopier
and/or overnight courier all notices, information statements or other materials
relating to the Corporate Action promptly after, but in any event within
twenty-four (24) hours of confirmed receipt of such materials by the Bank.
(a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Portfolio no later than 5:00
p.m. on the date specified as the Response Deadline and only if the Bank (or its
agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.
(b) The Bank shall have no duty to act upon a required Response
if Proper Instructions relating to such Response and all necessary Securities,
consents and other materials are not received by and in the possession of the
Bank no later than 5:00 p.m. on the date specified as the Response Deadline.
Notwithstanding, the Bank may, in its sole discretion, use its best efforts to
act upon a Response for which Proper Instructions and/or necessary Securities,
consents or other materials are received by the Bank after 5:00 p.m. on the date
specified as the Response Deadline, it being acknowledged and agreed by the
parties that any undertaking by the Bank to use its best efforts in such
circumstances shall in no way create any duty upon the Bank to complete such
Response prior to its expiration.
(c) In the event that a Portfolio notifies the Bank of a
Corporate Action requiring a Response and the Bank has received no other notice
of such Corporate Action, the Response Deadline shall be 48 hours prior to the
Response expiration time set by the depository processing such Corporate Action.
(d) Section 14.3(e) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Sub-Custodian.
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6.4 Book-Entry System. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits of Fund assets
in the Book-Entry System, and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect
to a Portfolio's participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry the Portfolio Securities which are
included with other securities deposited in the Account and shall at all times
during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Fund. Where
securities are transferred to a Portfolio's account, the Bank shall also, by
book entry or otherwise, identify as belonging to the Portfolio a quantity of
securities in a fungible bulk of securities (i) registered in the name of the
Bank or its nominee, or (ii) shown on the Bank's account on the books of the
Federal Reserve Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Portfolio or shall pay cash collateral against the return
of Portfolio Securities loaned by the Portfolio upon (i) receipt of advice from
the Book-Entry System that such Securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Bank (or its agent) to
reflect such payment and transfer for the account of the Portfolio. The Bank (or
its agent) shall transfer securities sold or loaned for the account of the
Portfolio upon
(i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Portfolio has been transferred to the
Account; and
(ii) the making of an entry on the records of the Bank
(or its agent) to reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Bank and shall be provided to the Portfolio
at its request. The Bank shall send the Portfolio a confirmation, as defined by
Rule 17f-4 under the 1940 Act, of any transfers to or from the account of the
Portfolio;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
6.5 Use of a Depository. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
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(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of a Portfolio all income and other payments thereon and
to take all steps necessary and proper in connection with the collection
thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Portfolio and the Portfolio shall pay cash collateral against the return
of Portfolio Securities loaned by the Portfolio only upon delivery of the
Securities to or for the account of the Portfolio; and upon any sale of
Portfolio Securities, delivery of the Securities will be made only against
payment therefor or, in the event Portfolio Securities are loaned, delivery of
Securities will be made only against receipt of the initial cash collateral to
or for the account of the Portfolio; and
(d) The Bank shall use its best efforts to provide that:
(i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;
(ii) Proxy materials received by a Depository with
respect to Portfolio Securities held by a Portfolio deposited with such
Depository are forwarded immediately to the Bank for prompt transmittal to the
Portfolio;
(iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities on behalf of a
Portfolio and of the appropriate book entry made by such Depository to the
Portfolio's account;
(iv) Such Depository prepares and delivers to the Bank
such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Portfolio to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Portfolio may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has reviewed the arrangement, upon receipt of
Proper Instructions and upon receipt of confirmation from an Issuer (as defined
below) that the Portfolio has purchased such Issuer's Book-Entry Paper, the Bank
shall issue and hold in book-entry form, on behalf of each Portfolio, commercial
paper issued by issuers with whom the Bank has entered into a book-entry
agreement (the "Issuers"). In maintaining procedures for Book-Entry Paper, the
Bank agrees that:
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(a) The Bank will maintain all Book-Entry Paper held by the
Portfolio in an account of the Bank that includes only assets held by it for
customers;
(b) The records of the Bank with respect to each Portfolio's
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to each Portfolio which is included in the Book-Entry
System and shall at all times during the regular business hours of the Bank be
open for inspection by duly authorized officers, employees or agents of that
Portfolio;
(c) The Bank shall pay for Book-Entry Paper purchased for the
account of each Portfolio upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the making
of an entry on the records of the Bank to reflect such payment and transfer for
the account of such Portfolio;
(d) The Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Portfolio, and (ii) the making
of an entry on the records of the Bank to reflect such payment for the account
of such Portfolio; and
(e) The Bank will send to the Fund such reports on its system
of internal accounting control with respect to the Book-Entry Paper as the Fund
may reasonably request from time to time.
6.7 Use of Immobilization Programs. Provided (i) the Bank has received
a certified copy of a resolution of the Board specifically approving the
maintenance of Portfolio Securities in an immobilization program operated by a
bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and (ii)
for each year following such approval the Board has reviewed and reapproved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.8 Eurodollar CDs. Any Portfolio Securities that are Eurodollar CDs
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Portfolio Securities are identified on the books of the Bank as belonging
to a Portfolio and that the books of the Bank identify the European Branch
holding such Portfolio Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.8, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to a Portfolio.
6.9 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
(i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by a Portfolio
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions among the Bank,
any broker-dealer registered with the National Association of Securities
Dealers, Inc. (the "NASD"), and, if necessary, the Portfolio, relating to the
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations.
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(ii) The Bank shall be under a duty and obligation to
see that each Portfolio has deposited or is maintaining adequate margin, as
required, with any broker in connection with any option, and the Bank shall be
under a duty and obligation to present such option to the broker for exercise
upon receiving Proper Instructions from the Portfolio. The Bank shall have
responsibility for the legality of any put or call purchased or sold on behalf
of a Portfolio, the propriety of any such purchase or sale, or the adequacy of
any collateral delivered to a broker in connection with an option or deposited
to or withdrawn from a Segregated Account (as defined in subsection 6.10 below).
The Bank specifically, but not by way of limitation, shall be under a duty and
obligation to: (i) periodically check and notify the Portfolio that the amount
of such collateral held by a broker or held in a Segregated Account is
insufficient to protect such broker or the Portfolio against any loss; (ii)
effect the return of any collateral delivered to a broker; or (iii) advise the
Portfolio that any option it holds, has or is about to expire. Such duties or
obligations shall be the responsibility of the Bank and the Portfolio.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
(i) The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by a Portfolio in accordance
with the provisions of any agreement entered into upon the receipt of Proper
Instructions among the Portfolio, the Bank 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 the Portfolio.
(ii) The responsibilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(ii) of this Section 6.9 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.
6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of each Portfolio.
(a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in the following
circumstances:
(i) in accordance with the provisions of any agreement
among the Portfolio, the Bank 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 organizations regarding escrow or other arrangements in connection
with transactions by the Portfolio;
(ii) for the purpose of segregating cash or securities
in connection with options purchased or written by the Portfolio or commodity
futures purchased or written by the Portfolio;
(iii) for the deposit of liquid assets, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Portfolio's
then outstanding forward commitments or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Portfolio's then outstanding
commitments under reverse repurchase agreements entered into with broker-dealer
firms;
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(iv) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent releases of the Securities and Exchange Commission ("SEC") or SEC
staff positions relating to the maintenance of Segregated Accounts by registered
investment companies;
(v) for other proper corporate purposes, but only, in
the case of this clause (v), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the executive
committee of the Board signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such Segregated Account and declaring such purposes to be proper corporate
purposes.
(b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:
(i) with respect to assets deposited in accordance with
the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;
(ii) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet the Portfolio's
obligations under outstanding forward commitment or when-issued agreements for
the purchase of Portfolio Securities and under reverse repurchase agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward
commitment or when-issued agreements for the purchase of Portfolio Securities or
reverse repurchase agreements are sold to other parties or the Portfolio's
obligations thereunder are met from assets of the Portfolio other than those in
the Segregated Account;
(v) for delivery upon settlement of a forward
commitment or when-issued agreement for the sale of Portfolio Securities; or
(vi) with respect to assets deposited pursuant to
(a)(v) above, in accordance with the purposes of such account as set forth in
Proper Instructions.
6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by a Portfolio of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Portfolio appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Portfolio and the responsibility of the
Bank therefore shall be the same as and no greater than the Bank's
responsibility in respect of other Portfolio Securities of the Portfolio.
6.12 Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section it shall have received Proper
Instructions to that effect. The Proper Instructions shall state that such
transfer, exchange or delivery is
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for a purpose permitted under the terms of this Section 6.12, and shall specify
the applicable subsection, or describe the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection. After receipt of such Proper Instructions, the Bank will transfer,
exchange, deliver or release Portfolio Securities only in the following
circumstances:
(a) Upon sales of Portfolio Securities for the account of the
Portfolio, against contemporaneous receipt by the Bank of payment therefor in
full, or against payment to the Bank in accordance with generally accepted
settlement practices and customs in the jurisdiction or market in which the
transaction occurs, each such payment to be in the amount of the sale price
shown in a broker's confirmation of sale received by the Bank before such
payment is made, as confirmed in the Proper Instructions received by the Bank
before such payment is made;
(b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided, however, that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(c) Upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) For the purpose of redeeming in-kind shares of the
Portfolio upon authorization from the Fund;
(e) In the case of option contracts owned by a Portfolio, for
presentation to the endorsing broker;
(f) When such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to a Portfolio
by any bank, including the Bank; provided, however, that such Portfolio
Securities will be released only upon payment to the Bank for the account of the
Portfolio of the moneys borrowed, provided further, however, that in cases where
additional collateral is required to secure a borrowing already made, and such
fact is made to appear in the Proper Instructions, Portfolio Securities may be
released for that purpose without any such payment. In the event that any
pledged Portfolio Securities are held by the Bank, they will be so held for the
account of the lender, and after notice to the Fund from the lender in
accordance with the normal procedures of the lender and any loan agreement
between the fund and the lender that an event of deficiency or default on the
loan has occurred, the Bank may deliver such pledged Portfolio Securities to or
for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;
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(i) for the purpose of delivering securities lent by a
Portfolio to a bank or broker dealer, but only against receipt in accordance
with street delivery custom except as otherwise provided herein, of adequate
collateral as agreed upon from time to time by the Portfolio and the Bank, and
upon receipt of payment in connection with any repurchase agreement relating to
such securities entered into by the Portfolio;
(j) for other authorized transactions of a Portfolio or for
other proper corporate purposes; provided that before making such transfer, the
Bank will also receive a certified copy of resolutions of the Board, signed by
an authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Fund or such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made; and
(k) upon termination of this Agreement as hereinafter set forth
pursuant to Section 8 and Section 16 of this Agreement.
As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.
7. Redemptions. In the case of payment of assets of a Portfolio held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation or Declaration of Trust
and By-laws of the Fund (the "Articles"), from assets available for said
purpose.
8. Merger, Dissolution, etc. of a Portfolio. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of a Portfolio into or the consolidation of a Portfolio with another
investment company, the sale by a Portfolio of all, or substantially all, of its
assets to another investment company, or the liquidation or dissolution of a
Portfolio and distribution of its assets, the Bank will deliver the Portfolio
Securities held by it under this Agreement and disburse cash only upon the order
of the Fund set forth in an Officers' Certificate, accompanied by a certified
copy of a resolution of the Board authorizing any of the foregoing transactions.
Upon completion of such delivery and disbursement and the payment of the fees
through the end of the then current term of this Agreement, and disbursements
and expenses of the Bank, this Agreement will terminate and the Bank shall be
released from any and all obligations hereunder.
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the name of
the Portfolio all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Portfolio and hold for the account of the Portfolio all income,
dividends, interest and other payments or distributions of cash with respect to
the Portfolio Securities held thereunder;
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9.2 Present for payment all coupons and other income items held by it
for the account of the Portfolio which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Portfolio;
9.3 Receive and hold for the account of the Portfolio all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Portfolio all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any State, now or hereafter in effect, inserting the Portfolio's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of each Portfolio; and
9.6 Exchange interim receipts or temporary securities for definitive
securities.
10. Collections and Defaults. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Portfolio notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which such
income is payable are in default or payment is refused after due demand or
presentation, the Bank will notify the Portfolio in writing of any default or
refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal.
11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Fund and will be preserved by the Bank in the manner and in accordance with
the applicable rules and regulations under the 1940 Act.
The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
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12. Fund Evaluation and Yield Calculation
12.1 Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of each Portfolio of the Fund, such determination to be made in accordance
with the provisions of the Articles and By-laws of the Fund and the Prospectus
and Statement of Additional Information relating to the Portfolio, as they may
from time to time be amended, and any applicable resolutions of the Board at the
time in force and applicable; and promptly to notify the Fund, the proper
exchange and the NASD or such other persons as the Fund may request of the
results of such computation and determination. In computing the net asset value
hereunder, the Bank may rely in good faith upon information furnished to it by
any Authorized Person in respect of (i) the manner of accrual of the liabilities
of each Portfolio and in respect of liabilities of each Portfolio not appearing
on its books of account kept by the Bank, (ii) reserves, if any, authorized by
the Board or that no such reserves have been authorized, (iii) the source of the
quotations to be used in computing the net asset value, (iv) the value to be
assigned to any security for which no price quotations are available, and (v)
the method of computation of the public offering price on the basis of the net
asset value of the shares, and the Bank shall not be responsible for any loss
occasioned by such reliance or for any good faith reliance on any quotations
received from a source pursuant to (iii) or (iv) above.
12.2. Yield Calculation. The Bank will compute the performance results
of each Portfolio (the "Yield Calculation") in accordance with the provisions of
Release No. 33-6753 and Release No. IC-16245 (February 2, 1988) (the "Releases")
promulgated by the SEC, and any subsequent amendments to, published
interpretations of or general conventions accepted by the staff of the SEC with
respect to such releases or the subject matter thereof ("Subsequent Staff
Positions"), subject to the terms set forth below:
(a) The Bank shall compute the Yield Calculation for each
Portfolio for the stated periods of time as shall be mutually agreed upon, and
communicate in a timely manner the result of such computation to the Portfolio.
(b) In performing the Yield Calculation, the Bank will derive
the items of data necessary for the computation from the records it generates
and maintains for each Portfolio pursuant Section 11 hereof. The Bank shall have
no responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by a
Portfolio, any of such Portfolio's designated agents or any of the Fund's
designated third party providers.
(c) At the request of the Bank, the Fund shall provide, and the
Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods set
forth in the Releases or any Subsequent Staff Positions as they specifically
apply to each Portfolio. In the event that the computation methods in the
Releases or the Subsequent Staff Positions or the application to a Portfolio of
a standard or guideline is not free from doubt or in the event there is any
question of interpretation as to the characterization of a particular security
or any aspect of a security or a payment with respect thereto (e.g., original
issue discount, participating debt security, income or return of capital, etc.)
or otherwise or as to any other element of the computation which is pertinent to
such Portfolio, the Fund or its designated agent shall have the full
responsibility for making the determination of how the security or payment is to
be treated for purposes of the computation and how the computation is to be made
and shall inform the Bank thereof on a timely basis. The Bank shall have no
responsibility to make independent determinations with respect to any item which
is covered by this Section, and shall not be responsible for its computations
made in accordance with such determinations so long as such computations are
mathematically correct.
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(d) The Fund shall keep the Bank informed of all publicly
available information and of any non-public advice, or information obtained by
the Fund from its independent auditors or by its personnel or the personnel of
its investment adviser, or Subsequent Staff Positions related to the
computations to be undertaken by the Bank pursuant to this Agreement and the
Bank shall not be deemed to have knowledge of such information (except as
contained in the Releases) unless it has been furnished to the Bank in writing.
13. Additional Services. The Bank shall perform the additional services
for the Fund as are set forth on Appendix B hereto. Appendix B may be amended
from time to time upon agreement of the parties to include further additional
services to be provided by the Bank to the Fund.
14. Duties of the Bank.
14.1 Performance of Duties. In performing its duties hereunder and any
other duties listed on any Schedule hereto, if any, the Bank will be entitled to
receive and act upon the advice of independent counsel of its own selection,
which may be counsel for the Fund, and will be without liability for any action
taken or thing done or omitted to be done in accordance with this Agreement in
good faith in conformity with such advice.
The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for a Portfolio, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities by or
for any Portfolio or the propriety of the amount for which the same are sold;
(c) the legality of an issue or sale of any common shares of a
Portfolio or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of a
Portfolio or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by a
Portfolio or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; and
(f) any property or moneys of a Portfolio unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of a Portfolio are such as may properly be held by the
Portfolio under the provisions of the Fund's Articles, By-laws, any federal or
state statutes or any rule or regulation of any governmental agency.
14.2 Agents and Subcustodians with Respect to Property of the Fund Held
in the United States. The Bank may employ agents of its own selection in the
performance of its duties hereunder and shall be responsible for the acts and
omissions of such agents as if performed by the Bank hereunder. Without limiting
the foregoing, certain duties of the Bank hereunder may be performed by one or
more affiliates of the Bank.
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Upon receipt of Proper Instructions, the Bank may employ subcustodians
selected by or at the direction of the Fund, provided that any such subcustodian
meets at least the minimum qualifications required by Section 17(f)(1) of the
1940 Act to act as a custodian of the Fund's assets with respect to property of
the Fund held in the United States. The Bank shall have no liability to the Fund
or any other person by reason of any act or omission of any such subcustodian
selected by or at the direction of the Fund and the Fund shall indemnify the
Bank and hold it harmless from and against any and all actions, suits and
claims, arising directly or indirectly out of the performance of any such
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity. The Fund shall
pay all fees and expenses of any such subcustodian.
14.3 Duties of the Bank with Respect to Property of the Fund Held
Outside of the United States.
(a) Appointment of Foreign Custody Manager.
(i) If the Fund has appointed the Bank Foreign Custody
Manager (as that term is defined in Rule 17f-5 under the 1940 Act), the Bank's
duties and obligations with respect to the Fund's Portfolio Securities and other
assets maintained outside the United States shall be, to the extent not set
forth herein, as set forth in the Delegation Agreement between the Fund and the
Bank (the "Delegation Agreement").
(ii) If the Fund has appointed any other person or
entity Foreign Custody Manager, the Bank shall act only upon Proper Instructions
from the Fund with regard to any of the Fund's Portfolio Securities or other
assets held or to be held outside of the United States, and the Bank shall be
without liability for any Claim (as that term is defined in Section 15 hereof)
arising out of maintenance of the Fund's Portfolio Securities or other assets
outside of the United States. The Fund also agrees that it shall enter into a
written agreement with such Foreign Custody Manager that shall obligate such
Foreign Custody Manager to provide to the Bank in a timely manner all
information required by the Bank in order to complete its obligations hereunder.
The Bank shall not be liable for any Claim arising out of the failure of such
Foreign Custody Manager to provide such information to the Bank.
(b) Segregation of Securities. The Bank shall identify on its
books as belonging to each Portfolio the Foreign Portfolio Securities held by
each foreign sub-custodian (each an "Eligible Foreign Custodian") selected by
the Foreign Custody Manager, subject to receipt by the Bank of the necessary
information from such Eligible Foreign Custodian if the Foreign Custody Manager
is not the Bank.
(c) Access of Independent Accountants of the Fund. If the Bank
is the Fund's Foreign Custody Manager, upon request of the Fund, the Bank will
use its best efforts to arrange for the independent accountants of the Fund to
be afforded access to the books and records of any foreign banking institution
employed as an Eligible Foreign Custodian insofar as such books and records
relate to the performance of such foreign banking institution with regard to the
Fund's Portfolio Securities and other assets.
(d) Reports by Bank. If the Bank is the Fund's Foreign Custody
Manager, the Bank will supply to the Fund the reports required under the
Delegation Agreement.
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(e) Transactions in Foreign Custody Account. Transactions with
respect to the assets of each Portfolio held by an Eligible Foreign Custodian
shall be effected pursuant to Proper Instructions from each Portfolio to the
Bank and shall be effected in accordance with the applicable agreement between
the Foreign Custody Manager and such Eligible Foreign Custodian. If at any time
any Foreign Portfolio Securities shall be registered in the name of the nominee
of the Eligible Foreign Custodian, each Portfolio agrees to hold any such
nominee harmless from any liability by reason of the registration of such
securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Portfolio Securities received for
the account of a Portfolio and delivery of Foreign Portfolio Securities
maintained for the account of the Portfolio may be effected in accordance with
the customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such securities from
such purchaser or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation, the
exercise of any voting rights, subscription rights, redemption rights, exchange
rights, conversion rights or tender rights, or any other action in connection
with any other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Portfolio
such information in connection therewith as is made available to the Bank by the
Eligible Foreign Custodian, and shall promptly forward to the applicable
Eligible Foreign Custodian any instructions, forms or certifications with
respect to such Rights, and any instructions relating to the actions to be taken
in connection therewith, as the Bank shall receive from the Portfolio pursuant
to Proper Instructions. Notwithstanding the foregoing, the Bank shall have no
further duty or obligation with respect to such Rights, including, without
limitation, the determination of whether the Portfolio is entitled to
participate in such Rights under applicable U.S. and foreign laws, or the
determination of whether any action proposed to be taken with respect to such
Rights by the Portfolio or by the applicable Eligible Foreign Custodian will
comply with all applicable terms and conditions of any such Rights or any
applicable laws or regulations, or market practices within the market in which
such action is to be taken or omitted.
(f) Tax Law. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on a Portfolio or the Bank as
custodian for the Portfolio by the tax laws of any jurisdiction, and it shall be
the responsibility of the Fund to notify the Bank of the obligations imposed on
the Portfolio or the Bank as the custodian of the Fund by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Eligible Foreign Custodian with regard
to such tax law shall be to use reasonable efforts to assist the Portfolio with
respect to any claim for exemption or refund under the tax law of jurisdictions
for which the Portfolio has provided such information.
14.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Portfolio held by it as it
uses in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Portfolio.
14.5 Advances by the Bank. The Bank may, in its sole discretion,
advance funds on behalf of a Portfolio to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by a Portfolio. Should such a payment or payments, with
advanced funds, result in an overdraft (due to insufficiencies of the
Portfolio's account with the Bank, or
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for any other reason) this Agreement deems any such overdraft or related
indebtedness a loan made by the Bank to the Portfolio payable on demand. Such
overdraft shall bear interest at the current rate charged by the Bank for such
loans unless the Portfolio shall provide the Bank with agreed upon compensating
balances. The Portfolio agrees that the Bank shall have a continuing lien and
security interest to the extent of any overdraft or indebtedness and to the
extent required by law, in and to any property at any time held by it for the
Portfolio's benefit or in which the Portfolio has an interest and which is then
in the Bank's possession or control (or in the possession or control of any
third party acting on the Bank's behalf). The Portfolio authorizes the Bank, in
the Bank's sole discretion, at any time to charge any overdraft or indebtedness,
together with interest due thereon, against any balance of account standing to
the credit of the Portfolio on the Bank's books.
14.6. Fees and Expenses of the Bank. For the services rendered by the
Bank hereunder, the Fund will pay to the Bank such fees at such rate as shall be
agreed upon in writing by the parties from time to time. The Portfolio will also
pay or reimburse the Bank from time to time for any transfer taxes payable upon
any transfer of Portfolio Securities made hereunder, and for all necessary
proper disbursements, reasonable expenses and charges made or incurred by the
Bank in the performance of this Agreement (including any duties listed on any
Schedule hereto, if any) including any indemnities for any loss, liabilities or
expense to the Bank as provided herein. The Bank will also be entitled to
reimbursement by the Portfolio for all reasonable expenses incurred in
conjunction with termination of this Agreement.
Fees and expenses will be calculated monthly. Fees and expenses owed to
the Bank for any month may be charged against any cash balance held by the
Portfolio beginning on the fifth (5th) business day after the end of such month
based on information then available. Fees charged to an account may result in an
overdraft that will be subject to normal interest charges. The Fund will have
thirty (30) days after the receipt of an invoice to dispute any charge that
appears on such invoice. After such thirty (30) day period, the invoice will be
deemed to be complete and accurate and may no longer be disputed.
15. Limitation of Liability and Standard of Care.
15.1 The Bank shall be held to the exercise of reasonable care and
diligence in carrying out the provisions of this Agreement, and shall be
responsible for its negligence, willful misfeasance, bad faith and reckless
disregard of its duties hereunder, provided that the Bank shall not thereby be
required to take any action which is in contravention of any applicable law,
rule or regulation or any order or judgment of any court of competent
jurisdiction: The Fund agrees to indemnify and hold the Bank and its officers,
directors, employees or agents (collectively, the "Indemnified Parties")
harmless from and against any and all loss, damage, liability, actions, suits,
claims, costs and expenses, including legal fees, (a "Claim") arising as a
result of any act or omission of the Bank or any Indemnified Party under this
Agreement, except for any Claim resulting from the negligence, willful
misconduct, bad faith or reckless disregard of the Bank or any Indemnified
Party. Without limiting the foregoing, and provided that the above-referenced
standard of care has been met, neither the Bank nor the Indemnified Parties
shall be liable for, and the Bank and the Indemnified Parties shall be
indemnified against, any Claim arising as a result of:
(a) Any act or omission by the Bank or any Indemnified Party in
good faith reliance upon the terms of this Agreement, any Officer's Certificate,
Proper Instructions, resolution of the Board, telegram, telecopier, notice,
request, certificate or other instrument reasonably believed by the Bank to
genuine;
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(b) Any act or omission of any subcustodian selected by or at
the direction of the Fund;
(c) Any act or omission of any Foreign Custody Manager other
than the Bank or any act or omission of any Eligible Foreign Custodian if the
Bank is not the Foreign Custody Manager;
(d) Any Corporate Action, distribution or other event related
to Portfolio Securities which, at the direction of the Fund, have not been
registered in the name of the Bank or its nominee;
(e) Any Corporate Action requiring a Response for which the
Bank has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m. on the date
specified as the Response Deadline;
(f) Any act or omission of any European Branch of a U.S.
banking institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch;
(g) Information relied on in good faith by the Bank and
supplied by any Authorized Person in connection with the calculation of (i) the
net asset value and public offering price of the shares of capital stock of the
Portfolio or (ii) the Yield Calculation; or
(h) Any acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots, nationalization,
expropriation, currency restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss or
malfunction of utilities, transportation or computers (hardware or software) and
computer facilities, the unavailability of energy sources and other similar
happenings or events, except as the result of the Bank's own negligence.
15.2 Notwithstanding anything to the contrary in this Agreement, in
no event shall the Bank, the Indemnified Parties or the Fund be liable to each
other for lost profits or lost revenues or any special, consequential, punitive
or incidental damages of any kind whatsoever in connection with this Agreement
or any activities hereunder.
16. Termination.
16.1 The term of this Agreement shall be three years commencing upon
the date hereof (the "Initial Term"), unless earlier terminated as provided
herein. After the expiration of the Initial Term, the term of this Agreement
shall automatically renew for successive three-year terms (each a "Renewal
Term") unless notice of non-renewal is delivered by the non-renewing party to
the other party no later than ninety days prior to the expiration of the Initial
Term or any Renewal Term, as the case may be.
If a majority of the non-interested members of the Board
reasonably determines that the performance of the Bank under this Agreement has
been unsatisfactory, written notice (the "Notice") of such determination setting
forth the reasons for such determination shall be provided to the Bank. In the
event the Bank shall not, within sixty (60) days thereafter, cure the identified
deficiencies to the satisfaction of the Board, the Fund, with the authorization
of the Board may terminate this Agreement.
Either party hereto may terminate this Agreement prior to the
expiration of the Initial Term or any Renewal Term in the event the other party
violates any material provision of this Agreement, provided that the
non-violating party gives written notice of such violation to the violating
party and the violating party does not cure such violation within 90 days of
receipt of such notice.
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16.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection 16.3, deliver the Portfolio Securities and cash of each
Portfolio held by the Bank to a bank or trust company of the Bank's own
selection meeting the requirements of Section 17(f)(1) of the 1940 Act and has a
reported capital, surplus and undivided profits aggregating not less than
$2,000,000, to be held as the property of the Fund under terms similar to those
on which they were held by the Bank, whereupon such bank or trust company so
selected by the Bank will become the successor custodian of such assets of the
Fund with the same effect as though selected by the Board. Thereafter, the Bank
shall be released from any and all obligations under this Agreement.
16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Portfolio the question of whether the Portfolio will be
liquidated or will function without a custodian for the assets of the Portfolio
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of each Portfolio held by it, subject as aforesaid, in accordance with
one of such alternatives which may be approved by the requisite vote of
shareholders, upon receipt by the Bank of a copy of the minutes of the meeting
of shareholders at which action was taken, certified by the Fund's Secretary and
an opinion of counsel to the Fund in form and content satisfactory to the Bank.
Thereafter, the Bank shall be released from any and all obligations under this
Agreement.
16.4 The Fund shall reimburse the Bank for any reasonable expenses
incurred by the Bank in connection with the termination of this Agreement,
unless such termination is sought by the Fund as a result of a material
violation of this Agreement committed by the Bank, in accordance with paragraph
16.1 above.
16.5 The Bank shall keep records relating to the services to be
performed hereunder. Such records may be inspected by the Fund during regular
business hours upon reasonable notice. To the extent required by Section 31 of
the 1940 Act and the Rules thereunder, the Bank agrees that all such records
prepared or maintained by the Bank relating to the services to be performed by
the Bank hereunder will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered to the Fund on
and in accordance with its request. In addition, at any time after the
termination of this Agreement, the Fund may, upon written request, have
reasonable access to the records of the Bank relating to its performance of its
duties as custodian.
17. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency or
self-regulatory organization. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that
each of them is entitled, in addition to all other remedies at law or in equity
to an injunction or injunctions without bond or other security to prevent
breaches of this provision. In addition, the parties further agree that any
Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation
S-P ("Regulation S-P"), promulgated under
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the Xxxxx-Xxxxx-Xxxxxx Act (the "Act"), disclosed by a party hereunder is for
the specific purpose of permitting the other party to perform the services set
forth in this Agreement. Each party agrees that, with respect to such
information, it will comply with Regulation S-P and the Act and that it will not
disclose any Nonpublic Personal Information received in connection with this
Agreement, to any other party, except as necessary to carry out the services set
forth in this Agreement or as otherwise permitted by Regulation S-P or the Act.
18. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (i) United
States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) hand delivery with signature to such party at its office at
the address set forth below, namely:
(a) In the case of notices sent to the Fund to:
The Glenmede Fund, Inc.
c/o Glenmede Advisers, Inc.
One Liberty Place
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxx Xxx X. Xxxxx
President
With a copy to: Xxxxxxxx X. Xxxxxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxx, Director - Client Management
With a copy to: Xxxxxx X. Xxxxx
or at such other place as such party may from time to time
designate in writing.
19. Amendments. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties.
20. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 16 hereof will not be deemed to
be an assignment within the meaning of this provision.
21. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
22. Counterparts. 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.
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23. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
24. Limitation of Liability. The Bank agrees that the obligations
assumed by the Fund hereunder shall be limited in all cases to the assets of the
Fund and that the Bank shall not seek satisfaction of any such obligation from
the officers, agents, employees, trustees, or shareholders of the Fund.
25. Several Obligations of the Portfolios. This Agreement is an
agreement entered into between the Bank and the Fund with respect to each
Portfolio. With respect to any obligation of the Fund on behalf of any Portfolio
arising out of this Agreement, the Bank shall look for payment or satisfaction
of such obligation solely to the assets of the Portfolio to which such
obligation relates as though the Bank had separately contracted with the Fund by
separate written instrument with respect to each Portfolio.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
THE GLENMEDE FUND, INC.
By: /s/ Xxxx Xxx X. Xxxxx
--------------------------
Name: Xxxx Xxx X. Xxxxx
Title: President
Investors Bank & Trust Company
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Director
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Appendices
Appendix A...................................... Portfolios
Appendix B...................................... Additional Services
APPENDIX A
Portfolios of The Glenmede Fund, Inc.:
Core Fixed Income Portfolio
Core Value Portfolio
Government Cash Portfolio
Institutional International Portfolio
International Portfolio
Large Cap Value Portfolio
Small Capitalization Growth Portfolio
Small Capitalization Value Portfolio
Strategic Equity Portfolio
Tax-Exempt Cash Portfolio
A-1
