AMENDMENT TO CUSTODIAN CONTRACT
This Amendment to the Custodian Contract is made as of March 15, 1999
by and between International Equity Portfolio (the "Fund") and State Street Bank
and Trust Company (the "Custodian"). Capitalized terms used in this Amendment
without definition shall have the respective meanings given to such terms in the
Custodian Contract referred to below.
WHEREAS, the Fund and the Custodian entered into a Custodian Contract
dated as of March 3, 1995 (as amended and in effect from time to time, the
"Contract"); and.
WHEREAS, the Fund and the Custodian desire to amend certain provisions
of the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated
under the Investment Company Act of 1940, as amended (the "1940 Act); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the custody of assets of the Fund
held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinafter contained, the parties hereby agree to
amend the Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 22
of the Contract are hereby renumbered, as of the effective date of this
Amendment, as Articles 5 through 23, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the effective
date of this Amendment, as set forth below.
3. The Custodian as Foreign Custody Manager.
3.1. Definitions.
Capitalized terms in this Article 3 shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
systemic custody and settlement practices; and laws and regulations applicable
to the safekeeping and recovery of Foreign Assets held in custody in that
country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 0000 Xxx) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of the Fund's investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Fund's
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository clearing
agency that, either as a legal or practical matter, must be used if the Fund
determines to place Foreign Assets in a country outside the United States (i)
because required by law or regulation; (ii) because securities cannot be
withdrawn from such foreign securities depository or clearing agency; or (iii)
because maintaining or effecting trades in securities outside the foreign
securities depository or clearing agency is not consistent with systemic
custodial or market practices.
3.2. Delegation to the Custodian as Foreign Custody Manager.
The Fund, by resolution adopted by its Board of Trustees (the "Board"), hereby
delegates to the Custodian, subject to Section (b) of the Rule 17f-5, the
responsibilities set forth in this Article 3 with respect to Foreign Assets held
outside the United States, and the Custodian hereby accepts such delegation, as
Foreign Custody Manager of the Fund.
3.3. Countries Covered.
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to the countries and custody
arrangements for each such country listed on Schedule A to this Contract, which
list of countries may be amended from time to time by the Fund with the
agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list
on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody
Manager to maintain the Fund's assets, which list of Eligible Foreign Custodians
may be amended from time to time in the sole discretion of the Foreign Custody
Manager. Mandatory Securities Depositories are listed on Schedule B to this
Contract, which Schedule B may be amended from time to time by the Foreign
Custody Manager upon reasonable notice to the Fund. The Foreign Custody Manager
will provide amended versions of Schedules A and B in accordance with Section
3.7 of this Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account, or to place or maintain Foreign Assets, in a country listed on
Schedule A, and the fulfillment by the Fund of the applicable account opening
requirements for such country, the Foreign Manager shall be deemed to have been
delegated by the Board responsibility as Foreign Custody Manager with respect to
that country and to have accepted such delegation. Execution of this Amendment
by the Fund shall be deemed to be a Proper Instruction to open an account, or to
place or maintain Foreign Assets, in each country listed on Schedule A in which
the Custodian has previously placed or currently maintains Foreign Assets
pursuant to the terms of the Contract. Following the receipt of Proper
Instructions directing the Foreign Custody Manager to close the account of the
Fund with the Eligible Foreign Custodian selected by the Foreign Custody Manager
in a designated country, the delegation by the Board to the Custodian as Foreign
Custody Manager for that country shall be deemed to have been withdrawn and the
Custodian shall immediately cease to be the Foreign Custody Manager of the Fund
with respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
3.4. Scope of Delegated Responsibilities.
3.4.1. Selection of Eligible Foreign Custodians.
Subject to the provisions of this Article 3, the Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodian selected by the Foreign Custody Manager in each country listed on
Schedule A, as amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c) (1).
3.4.2. Contracts With Eligible Foreign Custodians.
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5 (c) (2).
3.4.3 Monitoring.
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian selected by the Foreign Custody Manager, the
Foreign Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository). In
the event the Foreign Custody Manager determines that the custody arrangements
with an Eligible Foreign Custodian it has selected are no longer appropriate,
the Foreign Custody Manager shall notify the Board in accordance with Section
3.7 hereunder.
3.5. Guidelines for the Exercise of Delegated Authority.
For purposes of this Article 3, the Foreign Custody Manager shall have no
responsibility for Country Risk as is incurred by placing and maintaining the
Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Portfolios. The Fund and the Custodian each expressly
acknowledge that the Foreign Custody Manager shall not be delegated any
responsibilities under this Article 3 with respect to Mandatory Securities
Depositories.
3.6. Standard of Care as Foreign Custody Manager of the Fund.
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.7. Reporting Requirements.
The Foreign Custody Manager shall report the withdrawal of the Foreign Assets
from an Eligible Foreign Custodian and the placements of such Foreign Assets
with another Eligible Foreign Custodian by providing to the Board amended
Schedules A or B at the end of the calendar quarter in which an amendment to
either Schedule has occurred. The Foreign Custody Manager shall make written
reports notifying the Board of any other material change in the foreign custody
arrangements of the Fund described in this Article 3 after the occurrence of the
material change.
3.8. Representations with Respect to Rule 17f-5.
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in Section (a)(7) of Rule 17f-5.
3.9 Effective Date and Termination of the Custodian as Foreign Custody
Manager.
The Board's delegation to the Custodian as Foreign Custody Manager of the Fund
shall be effective as of the date hereof and shall remain in effect until
terminated at any time, without penalty, by written notice from the terminating
party to the non-terminating party. Termination will become effective thirty
(30) days after receipt by the non-terminating party of such notice. The
provisions of Section 3.3 hereof shall govern the delegation to and termination
of the Custodian as Foreign Custody Manager of the Fund with respect to
designated countries.
3.10. Most Favored Client.
If at any time prior to termination of this Amendment, the Custodian, as a
matter of standard business practice, accepts delegation as Foreign Custody
Manager for its U.S. mutual fund clients on terms of materially greater benefit
to the Fund than set forth in this Amendment, the Custodian hereby agrees to
negotiate with the Fund in good faith with respect thereto.
4. Duties of the Custodian with Respect to Property of the Fund Held Outside the
United States.
4.1. Definitions.
Capitalized terms in this Article 4 shall have the following meanings.
"Foreign Securities System" means either a clearing agency or securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. Holding Securities.
The Custodian shall identify on its books as belonging to the Fund the foreign
securities held by each Foreign Sub-Custodian or Foreign Securities System.The
Custodian may hold foreign securities for all of its customers, including the
Fund, with any Foreign Sub-Custodian in an account that is identified as
belonging to the Custodian for the benefit of its customers, provided however,
that (i) the records of the Custodian with respect to foreign securities of the
Fund which are maintained in such account shall identify those securities as
belonging to the Fund and (ii), to the extent permitted and customary in the
market in which the account is maintained, the Custodian shall require that
securities so held by the Foreign Sub-Custodian be held separately from any
assets of such Foreign Sub-Custodian or of other customers of such Foreign
Sub-Custodian.
4.3. Foreign Securities Systems.
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign
Sub-Custodian in such country pursuant to the terms of this Contract.
4.4. Transactions in Foreign Custody Account.
4.4.1 Delivery of Foreign Assets.
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of the Fund held by such Foreign Sub-Custodian, or in a Foreign
Securities System account, only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
(a) upon the sale of such foreign securities for the Fund in accordance with
commercially reasonable market practice in the country where such foreign
securities are held or traded, including, without limitation: (A) delivery
against expectation of receiving later payment; of (B) in the case of a
sale effected through a Foreign Securities System, in accordance with the
rules governing the operation of the Foreign Securities System;
(b) in connection with any repurchase agreement related to foreign securities;
(c) to the depository agent in connection with tender or other similar offers
for foreign securities of the fund;
(d) to the issuer thereof or its agent when such foreign securities are called,
redeemed, retired or otherwise become payable;
(e) to the issuer thereof, or its agent, for transfer into the name of the
Custodian (or the name of the respective Foreign Sub-Custodian or of any
nominee of the Custodian or such Foreign Sub-Custodian) or for exchange for
a different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units;
(f) to brokers, clearing banks or other clearing agents for examination or
trade execution in accordance with market custom; provided that in any such
case the Foreign Sub-Custodian shall have no responsibility or liability
for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the Foreign
Sub-Custodian's own negligence or willful misconduct;
(g) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement.
(h) in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary securities for
definite securities;
(i) for delivery as security in connection with any borrowing by the Fund
requiring a pledge of assets by the Fund;
(j) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(k) in connection with the lending of foreign securities; and
(l) for any other proper purpose, but only upon receipt of Proper Instructions
specifying the foreign securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose to be
a proper trust purpose, and naming the person or persons to whom delivery
of such securities shall be made.
4.4.2. Payment of Fund Monies.
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign Sub-Custodian or the respective Foreign Securities System to
pay out, monies of the Fund in the following cases only:
(a) upon the purchase of foreign securities for the Fund, unless otherwise
directed by Proper Instructions in accordance with reasonable market
settlement practice in the country where such foreign securities are held
or traded, including without limitation (A) delivering money to the seller
thereof or to a dealer therefor (or an agent for such seller or dealer)
against expectation of receiving later delivery of such foreign securities
; or (B) in the case of a purchase effected through a Foreign Securities
System, in accordance with the rules governing the operation of such
Foreign Securities System;
(b) in connection with the conversion, exchange or surrender of foreign
securities of the Fund;
(c) for the payment of any expense or liability of the fund including but not
limited to the following payments: interest, taxes, investment advisory
fees, transfer agency fees, fees under this contract, legal fees,
accounting fees, and other operating expenses;
(d) for the purchase or sale of foreign exchange or foreign exchange contracts
for the Fund, including transactions executed with or through the Custodian
or its Foreign Sub-Custodians;
(e) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(f) for payment of part or all of the dividends received in respect of
securities sold short;
(g) in connection with the borrowing or lending of foreign securities; and
(h) for any other proper purpose, but only upon receipt of Proper instructions
specifying the amount of such payment, setting forth the payment for which
such payment is to be made, declaring such purpose to be a proper trust
purpose, and naming the person or persons to whom such payment is to be
made.
4.4.3. Market Conditions; Market Information.
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of the Fund and delivery of
Foreign Assets maintained for the account of the Fund may be effected in
accordance with the customary established securities trading or processing
practices and procedures in the country or market in which the transaction
occurs generally accepted by Institutional Clients, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
there of ( or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
For purposes of this Agreement, the term "Institutional Clients" means U.S.
registered investment companies, or major U.S. commercial banks, insurance
companies, pensions funds or substantially similar institutions which, as part
of their ordinary business operations, purchase or sell securities and make use
of global custody services.
The Custodian shall provide to the Board the information with respect to custody
and settlement practices in countries in which the Custodian employs a Foreign
Sub-Custodian, including without limitation information relating to Foreign
Securities Systems and other information described in Schedule C hereto at the
time or times set forth on such Schedule. The Custodian may revise Schedule C
from time to time, provided that no such revision shall result in the Board
being provided with substantively less information than had previously been
provided hereunder and provided further that the Custodian shall in any event
provide to the Board at least annually the following information and opinions
with respect to the Board approved countries listed on Schedule A:
(a) legal opinions relating to whether local law restricts with respect to U.S.
registered mutual funds (a) access of a fund's independent public
accountants to books and records of a Foreign Sub-Custodian or Foreign
Securities System, (b) a fund's ability to recover in the event of a loss
by a Foreign Sub-Custodian or Foreign Securities System and the ability of
a foreign investor to convert cash and cash equivalents to U.S. dollars;
(b) summary of information regarding Foreign Securities Systems; and
(c) country profile information containing market prices for (a) delivery
versus payment, (b) settlement method, currency restrictions, (d) buy-in
practices, (e) foreign ownership limits and (f) unique market arrangements.
4.5. Registration of Foreign Securities.
The foreign securities maintained in the custody of a Foreign Sub-Custodian
(other than bearer securities) shall be registered in the name of the Fund or in
the name of the Custodian or in the name of any Foreign Sub-Custodian or in any
name of any nominee of the foregoing, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such foreign
securities. The Custodian or a Foreign Sub-Custodian shall not be obligated to
accept securities on behalf of the Fund under the terms of this Contract unless
the form of such securities and the manner in which they are delivered are in
accordance with reasonable market practice.
4.6. Bank Accounts.
The Custodian shall identify on its books as belonging to the Fund cash
(including cash denominated in foreign currencies) deposited with the Custodian.
Where the Custodian is unable to maintain, or market practice does not
facilitate the maintenance of, cash on the books of the Custodian, a bank
account or bank accounts opened and maintained outside the United States on
behalf of the Fund with a Foreign Sub-Custodian shall be subject only to draft
or order by the Custodian or such Foreign Sub-Custodian, acting pursuant to the
terms of this Contract to hold cash received by or from or for the account of
the Fund.
4.7. Collection of Income.
The Custodian shall use reasonable commercial efforts to collect all income and
other payments with respect to the Foreign Assets held hereunder to which the
Fund shall be entitled and shall credit such income, as collected, to the Fund.
In the event that extraordinary measures are required to collect such income,
the Fund and the Custodian shall consult as to such measures and as to the
compensation and expenses of the Custodian relating to such measures.
4.8. Shareholder Rights.
With respect to the foreign securities held pursuant to this Article 4, the
Custodian will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder rights, subject always to the laws, regulations and
practical constraints that may exist in the country where such securities are
issued. The Fund acknowledges that local conditions including lack of
regulation, onerous procedural obligations, lack of notice and other factors may
have the effect of severely limiting the ability of the Fund to exercise
shareholder rights.
4.9. Communications Relating to Foreign Securities.
The Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendancy of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of the Fund. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund written information so
received by the Custodian from issuers of the foreign securities whose tender or
exchange is sought or from the party (or its agents) making the tender or
exchange offer. The Custodian shall not be liable for any untimely exercise of
any tender, exchange or other right or power in connection with foreign
securities or other property of the Fund at any time held by it unless (i) the
Custodian or the respective Foreign Sub-Custodian is in actual possession of
such foreign securities or property and (ii) the Custodian receives Proper
Instructions with regard to the exercise of any such right or power, and both
(i) and (ii) occur at least three business days prior to the date on which the
Custodian is to take action to exercise such right or power.
4.10. Liability of Foreign Sub-Custodians and Foreign Securities Systems.
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible, require the Foreign Sub-Custodian to exercise
reasonable care in the performance of its duties and, to the extent possible, to
indemnify, and hold harmless, the Custodian from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
Foreign Sub-Custodian's performance of such obligations. At the election of the
Fund, the Fund shall be entitled to be subrogated to the rights of the Custodian
with respect to any claims against a Foreign Sub-Custodian as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
4.11. Tax Law.
The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund or the Custodian as custodian of the Fund by
the tax law of the United States or of any state or political subdivision
thereof. It shall be the responsibility of the Fund to notify the Custodian of
the obligations imposed on the Fund with respect to the Fund or the Custodian as
custodian of the Fund by the tax law of countries other than those mentioned in
the above sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of countries for which the Fund has
provided such information.
4.12. Liability of Custodian.
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a Sub-Custodian, the Custodian shall be
without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by anything which is (A) part of Country Risk or (B)
part of the "prevailing country risk" of the Fund, as such term is used in SEC
Release Nos. IC-22658; IS-1080 (May 12,1997) or as such term or other similar
terms are now or in the future interpreted by the SEC or by the staff of the
Division of Investment Management of the SEC.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian to the same extent as set forth with respect to sub-custodians
generally in the Contract and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities Depository, the
Custodian shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism, or any other loss where the Sub-Custodian has
otherwise acted with reasonable care.
III. Except as specifically superseded or modified herein, the terms and
provisions of the Contract shall continue to apply with full force and
effect. In the event of any conflict between the terms of the Contract
prior to this Amendment and this Amendment, the terms of this Amendment
shall prevail. If the Custodian is delegated the responsibilities of
Foreign Custody Manager pursuant to the terms of Article 3 hereof, in
the event of any conflict between the provisions of Articles 3 and 4
hereof, the provisions of Article 3 shall prevail.
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be executed
in its name and behalf by its duly authorized representative as of the date
first above written.
Witnessed By: STATE STREET BANK AND TRUST
COMPANY:
__________________________
Xxxx X. Xxxxxxx By: _________________________
Associate Counsel Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
Witnessed By: INTERNATIONAL EQUITY PORTFOLIO
__________________________
Name: Xxxxxxxxx X. Xxxxxxx By: __________________________
Title: Assistant Secretary Name: Xxxxx X. Xxxxxx
Title: Secretary
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