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EXHIBIT (g)(xviii)
CUSTODIAN AGREEMENT
THIS AGREEMENT, dated as of October 28, 1999 , between SCHWAB ANNUITY
PORTFOLIOS, an open-end management investment company organized under the laws
of the Commonwealth of Massachusetts and registered with the Commission under
the 1940 Act on behalf of the Portfolios listed on Schedule A (each a FUND) and
XXXXX BROTHERS XXXXXXXX & CO., a limited partnership formed under the laws of
the State of New York (BBH&CO. or the CUSTODIAN).
W I T N E S S E T H:
WHEREAS, the Fund wishes to employ BBH&Co. to act as custodian for the
Fund and to provide related services, all as provided herein, and BBH&Co. is
willing to accept such employment, subject to the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. APPOINTMENT OF CUSTODIAN. The Fund hereby appoints BBH&Co. as the
Fund's custodian, and BBH&Co. hereby accepts such appointment. All
Investments of the Fund delivered to the Custodian or its agents or
Subcustodians (as defined in Section 13.20) shall be dealt with as
provided in this Agreement. The duties of the Custodian with respect to
the Fund's Investments shall be only as set forth expressly in this
Agreement which duties are generally comprised of safekeeping and
various administrative duties that will be performed in accordance with
Instructions and as reasonably required to effect Instructions.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE FUND. The Fund hereby
represents, warrants
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and covenants each of the following:
2.1 This Agreement has been, and at the time of delivery of
each Instruction such Instruction will have been, duly authorized,
executed and delivered by the Fund. This Agreement does not violate any
Applicable Law or conflict with or constitute a default under the
Fund's prospectus or other organic document, agreement, judgment, order
or decree to which the Fund is a party or by which it or its
Investments is bound.
2.2 By providing an Instruction with respect to the first
acquisition of an Investment in a jurisdiction other than the United
States of America, the Fund shall be deemed to have confirmed to the
Custodian that the Fund, or its delegate or agent, has assessed and
accepted all material Country or Sovereign Risks and accepted
responsibility for their occurrence and will, where appropriate, ensure
that such risks are disclosed to the Fund's shareholders.
2.3 The Fund shall safeguard and shall solely be responsible
for the safekeeping of any testkeys, identification codes, passwords,
other security devices or statements of account with which the
Custodian provides it, except that the Fund shall not be responsible
where the Custodian has been negligent in the safekeeping of such
devices or statements of account. In furtherance and not limitation of
the foregoing, in the event the Fund utilizes any on-line service
offered by the Custodian, the Fund and the Custodian shall be fully
responsible for the security of each party's connecting terminal,
access thereto and the proper and authorized use thereof, and the
initiation and application of continuing effective safeguards in
respect thereof.
3. REPRESENTATION AND WARRANTY OF BBH&CO. BBH&Co. hereby represents and
warrants that this Agreement has been duly authorized, executed and delivered by
BBH&Co. and does not and will not violate any Applicable Law or conflict with,
or constitute a default under, BBH&Co.'s limited partnership agreement or any
agreement, instrument, judgment, order or decree to which BBH&Co. is a party or
by which it is bound. BBH&Co. hereby represents and warrants that it is a bank
having the qualification prescribed in paragraph (a) of Section 26(a) of the
1940 Act and that it will continue to have such qualification during the term of
this Agreement.
4. INSTRUCTIONS. Unless otherwise explicitly indicated herein, the
Custodian shall perform its duties pursuant to Instructions. As used herein, the
term INSTRUCTION shall mean a directive initiated by the Fund,
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acting directly or through its board of directors, officers or other Authorized
Persons, which directive shall conform to the requirements of this Section 4.
4.1 AUTHORIZED PERSONS. For purposes hereof, an AUTHORIZED PERSON shall
be a person or entity authorized to give Instructions for or on behalf of the
Fund by written notices to the Custodian or otherwise in accordance with
procedures delivered to and acknowledged by the Custodian, including without
limitation the Fund's Investment Adviser or Foreign Custody Manager. The
Custodian may treat any Authorized Person as having full authority of the Fund
to issue Instructions hereunder unless the notice of authorization contains
explicit limitations as to said authority (including any limitations arising
from the Custodian's appointment of depositories pursuant to Section 5.6 of this
Agreement. The Custodian shall be entitled to rely upon the authority of
Authorized Persons until it receives appropriate written notice from the Fund to
the contrary.
4.2 FORM OF INSTRUCTION. Each Instruction shall be transmitted by such
secured or authenticated electro-mechanical means as the Custodian shall make
available to the Fund from time to time unless the Fund shall elect to transmit
such Instruction in accordance with Subsections 4.2.1 through 4.2.3 of this
Section.
4.2.1 FUND DESIGNATED SECURED-TRANSMISSION METHOD.
Instructions may be transmitted through a secured or tested
electro-mechanical means identified by the Fund or by an Authorized
Person entitled to give Instruction and acknowledged and accepted by
the Custodian; it being understood that such acknowledgment shall
authorize the Custodian to receive and process such means of delivery
but shall not represent a judgment by the Custodian as to the
reasonableness or security of the method determined by the Authorized
Person.
4.2.2 WRITTEN INSTRUCTIONS. Instructions may be transmitted in
a writing that bears the manual signature of Authorized Persons.
4.2.3 OTHER FORMS OF INSTRUCTION. Instructions may also be
transmitted by another means determined by the Fund or Authorized
Persons and acknowledged and accepted by the Custodian (subject to the
same limits as to acknowledgements as is contained in Subsection 4.2.1,
above) including Instructions given orally or by SWIFT, telex or
telefax (whether tested or
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untested).
When an Instruction is given by means established under Subsections 4.2.1
through 4.2.3, it shall be the responsibility of the Custodian to use reasonable
care to adhere to any security or other procedures established in writing
between the Custodian and the Authorized Person with respect to such means of
Instruction, but such Authorized Person shall be solely responsible for
determining that the particular means chosen is reasonable under the
circumstances. With respect to telefax Instructions, the parties agree and
acknowledge that receipt of legible Instructions cannot be assured, that the
Custodian cannot verify that authorized signatures on telefax Instructions are
original or properly affixed, and that the Custodian shall not be liable for
losses or expenses incurred through actions taken in reliance on inaccurately
stated, illegible or unauthorized telefax Instructions. It shall be the
responsibility of the Custodian to promptly notify the Fund if Instructions are
illegible. The provisions of Section 4A of the Uniform Commercial Code shall
apply to Funds Transfers performed in accordance with Instructions. In the event
that a Funds Transfer Services Agreement is executed between the Fund and
Authorized Person and the Custodian, such an agreement shall comprise a
designation of form of a means of delivering Instructions for purposes of this
Section 4.2.
4.3 COMPLETENESS AND CONTENTS OF INSTRUCTIONS. The Authorized Person
shall be responsible for assuring the adequacy and accuracy of Instructions.
Particularly, upon any acquisition, disposition or other dealing in the Fund's
Investments, and upon any delivery and transfer of any Investment or moneys, the
person initiating such Instruction shall give the Custodian an Instruction with
the following information:
4.3.1 The transaction date and the date and location of
settlement;
4.3.2 The specification of the type of transaction;
4.3.4 A description of the Investments or moneys in question,
including, as appropriate,
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quantity, price per unit, amount of money to be received or delivered,
currency information and where applicable, interest rates, maturity
dates and such other information as may be established in operating
procedures between the Fund and the Custodian. Where an Instruction is
communicated by electronic means, or otherwise where an Instruction
contains an identifying number such as a CUSIP, SEDOL or ISIN number,
the Custodian shall be entitled to rely on such number as controlling
notwithstanding any inconsistency contained in such Instruction,
particularly with respect to Investment description;
4.3.5 The name of the broker or similar entity concerned with
execution of the transaction.
If the Custodian shall determine that an Instruction is either unclear or
incomplete (including those transmitted by telefax), the Custodian shall give
prompt notice of such determination to the Fund, and the Fund shall thereupon
amend or otherwise reform such Instruction. In such event, the Custodian shall
have no obligation to take any action in response to the Instruction initially
delivered until the redelivery of an amended or reformed Instruction.
4.4 TIMELINESS OF INSTRUCTIONS. In giving an Instruction, the Fund
shall take into consideration delays which may occur due to the involvement of a
Subcustodian or agent, differences in time zones, and other factors particular
to a given market, exchange or issuer. The Custodian shall attempt in good faith
to execute any Instruction (including any modification or revocation of a
previous Instruction) received by the Custodian after either (i) specific timing
requirements or deadlines established by the Custodian with respect to
particular classes of Instruction, or (ii) such a time that the Custodian could
not reasonably be expected to have acted on such Instruction due to time zone
differences or other factors beyond its reasonable control, but shall not be
held responsible for losses resulting from its inability to do so.
5. SAFEKEEPING OF FUND ASSETS. The Custodian shall hold Investments
delivered to it or Subcustodians for the Fund in accordance with the provisions
of this Section. The Custodian shall not be
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responsible for (a) the safekeeping of Investments not delivered or that are not
caused to be issued to it or its Subcustodians; (b) pre-existing faults or
defects in Investments that are delivered to the Custodian, or its
Subcustodians; or (c) for assets to hold pursuant to Section 5.6 hereof. The
Custodian is hereby authorized to hold with itself or a Subcustodian, and to
record in one or more accounts, all Investments delivered to and accepted by the
Custodian, any Subcustodian or their respective agents pursuant to an
Instruction or in consequence of any corporate action. The Custodian shall hold
Investments for the account of the Fund and shall segregate Investments from
assets belonging to the Custodian and shall cause its Subcustodians to segregate
Investments from assets belonging to the Subcustodian in an account held for the
Fund or in an account maintained by the Subcustodian generally for
non-proprietary assets of the Custodian.
5.1 USE OF SECURITIES DEPOSITORIES. Except for Investments held
pursuant to Section 5.6 hereunder, the Custodian may deposit and maintain
Investments in any Securities Depository, either directly or through one or more
Subcustodians appointed by the Custodian. Investments held in a Securities
Depository shall be held (a) subject to the agreement, rules, statement of terms
and conditions or other document or conditions effective between the Securities
Depository and the Custodian or the Subcustodian, as the case may be, and (b) in
an account for the Fund or in bulk segregation in an account maintained for the
non-proprietary assets of the entity holding such Investments in the Depository.
If market practice or the rules and regulations of the Securities Depository
prevent the Custodian, the Subcustodian (or any agent of either) from holding
its client assets in such a separate account, the Custodian, the Subcustodian or
other agent shall, as appropriate, segregate such Investments for benefit of the
Fund or for benefit of clients of the Custodian generally on its own books.
For purposes of this Section, a "Securities Depository" is (i) a system
for the handling of securities
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where all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
book keeping entry without physical delivery of the securities, or (ii) any
system that qualifies under Rule 17f-4(a) or Rule 17f-5(a)(I)(ii) or (iii) under
the 1940 Act.
The Custodian may deposit Investments in a clearing agency registered
with the Securities and Exchange Commission under section 17A of the Securities
Exchange Act of 1934, as amended ("Clearing Agency"), which acts as a securities
depository or the book-entry system, or both, as provided in Subpart O of
Treasury Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31 CFR Part 350, and the
book-entry regulations of federal agencies substantially in the form of Subpart
O, provided that:
(i) the Custodian ensures that, upon ceasing to act for the Fund, and
subject to its own rules and contributions to a participant's fund, the
clearing agency shall deliver all Investments held for the Fund to a
successor clearing agency or custodian to be named by the Fund. Where
the Fund has not named a successor, the Custodian shall ensure that the
clearing agency shall deliver the Fund's Investments to a bank having
the qualifications prescribed in Section 26(a)(1) of the 1940 Act for
trustees of unit investment trusts, to be held by the bank as custodian
for the Fund under terms customary to a custodian agreement between
banks and investment companies;
(ii) the Custodian or its agent will deposit the Fund's Investments in an
account that includes only assets held by it for customers;
(iii) the Custodian will send the Fund a confirmation of any transfers to or
from the Fund's account. Where Investments are transferred to the
Fund's account, the Custodian shall, by book-entry or otherwise,
identify Investments as belonging to the Fund by registering the
Investments in the
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name of the Custodian (or its nominee) or by reflecting the Investments
on the Custodian's account on the books of the clearing agency, the
book-entry system or the Custodian's agent. For this purpose, the term
"confirmation" means advice of notice of a transaction; and
(iv) the Custodian or its agent will promptly send to the Fund reports it
receives from the appropriate Federal Reserve Bank or clearing agency
or its respective system of internal accounting controls. The Custodian
and its agents shall send the Fund such reports on their own systems of
internal accounting controls as the Fund may reasonably request from
time to time.
5.2 CERTIFICATED ASSETS. Investments which are certificated may be held
in registered or bearer form: (a) in the Custodian's vault; (b) in the vault of
a Subcustodian or agent of the Custodian or a Subcustodian; or (c) in an account
maintained by the Custodian, Subcustodian or agent at a Securities Depository;
all in accordance with customary market practice in the jurisdiction in which
any Investments are held.
5.3 REGISTERED ASSETS. Investments which are registered may be
registered in the name of the Custodian, a Subcustodian, or in the name of the
Fund or a nominee for any of the foregoing, and may be held in any manner set
forth in paragraph 5.2 above with or without any identification of fiduciary
capacity in such registration.
5.4 BOOK ENTRY ASSETS. Investments which are represented by book-entry
may be so held in an account maintained by the Book-Entry Agent on behalf of the
Custodian, a Subcustodian or another agent of the Custodian, or a Securities
Depository; including depositories so appointed pursuant to Section 5.6 hereof.
5.5 REPLACEMENT OF LOST INVESTMENTS. In the event of a loss of
Investments for which the
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Custodian is responsible under the terms of this Agreement, the Custodian shall
replace such Investment, or in the event that such replacement cannot be
effected, the Custodian shall pay to the Fund the fair market value of such
Investment based on the last available price as of the close of business in the
relevant market on the date that the claim is paid to the Fund with respect to
such loss, or, if less, such other amount as shall be agreed by the parties as
the date for settlement.
5.6 This Section 5.6 sets forth provisions addressing those Funds
(listed on Schedule C hereof) that invest primarily in other mutual funds (each
hereinafter referred to as a "Fund of Funds"). The Fund and the Custodian hereby
agree to authorize the Custodian to take certain additional actions on behalf of
the Fund with respect to each Fund of Funds, as set forth in this Section 5.6.
A. Definitions. Terms defined in this Section 5.6 are as follows:
Schwab is Xxxxxxx Xxxxxx & Co., Inc.
Schwab Mutual Fund Shares are shares of mutual funds issued by fund
companies that have executed an Operating and/or Service Agreement(s)
with Schwab to participate in Xxxxxx'x Mutual Fund One Source or
Marketplace programs.
Mutual Fund Shares are shares of mutual funds issued by fund companies
that have not executed an Operating and/or Service Agreement(s) with
Schwab to participate in Xxxxxx'x Mutual Fund One Source or Marketplace
programs.
Fund Agent refers to the transfer agent for any investment company that
issues Mutual Fund Shares.
B. Safekeeping of Mutual Fund Shares. For purposes of this Section 5.6,
Mutual Fund Shares shall be deposited and/or maintained with a Fund
Agent acting as transfer agent for such fund. Each such Fund Agent
shall be deemed to be a "depository" for purposes of Rule 17f-4 under
the 1940 Act. The Fund hereby directs the Custodian to deposit and/or
maintain such securities with a Fund Agent, subject to the following
provisions:
(i) The Custodian shall keep Mutual Fund Shares with a Fund Agent,
provided that such securities are represented in an account
with the Fund Agent, in the name of the Custodian as custodian
of the Fund, in which the Custodian shall not deposit any
assets of the Custodian other than assets held on behalf of
the Fund;
(ii) The records of the Custodian with respect to Mutual Fund
Shares that are maintained with a Fund Agent shall identify by
book-entry those securities which the Fund or its investment
advisor identifies to the Custodian as belonging to the Fund;
(iii) The Custodian shall pay for Mutual Fund Shares purchased for
the account of the Fund upon (x) receipt of Authorized
Instructions that such securities have been purchased and
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will be transferred to the Custodian's account with the Fund
Agent, and (y) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of the Fund. The Custodian shall transfer Mutual Fund Shares
sold for the account of the Fund upon (a) receipt of
Authorized Instructions that such securities have been sold
and that payment for such securities will be transferred to
the Custodian, and (b) the making of an entry on the records
of the Custodian to reflect such transfer and payment for the
account of the Fund. The Custodian will receive confirmation
of the sale of such securities and payment therefore only
after such securities are transferred. Upon request, the
Custodian shall furnish the Fund copies of daily transaction
sheets reflecting each day's transactions with each Fund Agent
for the account of the Fund; and
(iv) The Custodian shall not be liable to the Fund for any loss or
damage to the Fund resulting from the maintenance of Mutual
Fund Shares with a Fund Agent except for losses resulting
directly from the negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees.
C. Safekeeping of Schwab Mutual Fund Shares. Schwab Mutual Fund Shares
shall be deposited and/or maintained in an account maintained with
Schwab as sub-agent for the funds. Schwab shall be deemed to be a
'depository' for purposes of Rule 17f-4 under the 1940 Act. The Fund
hereby directs the Custodian to deposit and/or maintain such securities
with Schwab, subject to the following provisions:
(i) The Custodian shall keep Schwab Mutual Fund Shares with
Schwab, provided that such securities are represented in an
account with Schwab, in the name of the Custodian as custodian
for the Fund, in which the Custodian will not deposit any
assets of the Custodian other than assets held on behalf of
the Fund and which Schwab represents to the Custodian will not
include any assets of Schwab other than assets held as a
fiduciary, custodian or otherwise for customers;
(ii) The records of the Custodian with respect to Schwab Mutual
Fund Shares that are maintained with Schwab shall identify by
book-entry those securities which the Fund or its investment
advisor has identified to the Custodian as belonging to the
Fund;
(iii) The Custodian shall pay for Schwab Mutual Fund Shares
purchased for the account of the Fund upon (i) receipt of
Authorized Instructions that such securities have been
purchased and will be transferred to the Custodian's account
with Schwab, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer Schwab
Mutual Fund Shares sold for the account of the Fund upon (i)
receipt of Authorized Instructions that such securities have
been sold and that payment for such securities will be
transferred to the Custodian, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. The Custodian will
receive confirmation of the sale of such securities and
payment therefor only after such securities are transferred.
Upon request, the Custodian shall furnish the Fund copies of
daily transaction sheets reflecting each day's transactions
with Schwab for the account of the Fund; and
(iv) The Custodian shall not be liable to the Fund for any loss or
damage to the Fund resulting from maintenance of Schwab Mutual
Fund Shares with Schwab except for losses resulting directly
from the negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees. The Fund acknowledges that the maintenance of
Schwab Mutual Fund Shares with Schwab as contemplated by this
Section 5.6 may be deemed to be "self custody" for purposes of
the Investment Company Act of 1940 and the regulations
thereunder.
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6. ADMINISTRATIVE DUTIES OF THE CUSTODIAN. The Custodian shall perform the
following administrative duties with respect to Investments of the Fund.
6.1 PURCHASE OF INVESTMENTS. Pursuant to Instruction, Investments
purchased for the account of the Fund shall be paid for (a) against delivery
thereof to the Custodian or a Subcustodian, as the case may be, either directly
or through a Clearing Corporation or a Securities Depository (in accordance with
the rules of such Securities Depository or such Clearing Corporation), or (b)
otherwise in accordance with an Instruction, Applicable Law, generally accepted
trade practices, or the terms of the instrument representing such Investment.
6.2 SALE OF INVESTMENTS. Pursuant to Instruction, Investments sold for
the account of the Fund shall be delivered (a) against payment therefor in cash,
by check or by bank wire transfer, (b) by credit to the account of the Custodian
or the applicable Subcustodian, as the case may be, with a Clearing Corporation
or a Securities Depository (in accordance with the rules of such Securities
Depository or such Clearing Corporation), or (c) otherwise in accordance with an
Instruction, Applicable Law, generally accepted trade practices, or the terms of
the instrument representing such Investment.
6.3 DELIVERY IN CONNECTION WITH BORROWINGS OF THE FUND OR OTHER
COLLATERAL AND MARGIN REQUIREMENTS. Pursuant to Instruction, the Custodian may
deliver Investments or cash of the Fund in connection with borrowings and other
collateral and margin requirements.
6.4 FUTURES AND OPTIONS. If, pursuant to an Instruction, the Custodian
shall become a party to an agreement with the Fund and a futures commission
merchant regarding margin (TRI-PARTY AGREEMENT), the Custodian shall (a) receive
and retain, to the extent the same are provided to the Custodian, confirmations
or other documents evidencing the purchase or sale by the Fund of
exchange-traded futures contracts and commodity options, (b) when required by
such Tri-Party Agreement, deposit and maintain in an account opened pursuant to
such Agreement (MARGIN ACCOUNT), segregated either physically or by book-entry
in a Securities Depository for the benefit of any futures commission merchant,
such Investments as the Fund shall have designated as initial, maintenance or
variation "margin" deposits or other collateral intended to secure the Fund's
performance of its obligations under the terms of any exchange-traded futures
contracts and commodity options; and (c) thereafter pay, release or transfer
Investments into or out of the
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margin account in accordance with the provisions of the such Agreement.
Alternatively, the Custodian may deliver Investments, in accordance with an
Instruction, to a futures commission merchant for purposes of margin
requirements in accordance with Rule 17f-6. The Custodian shall in no event be
responsible for the acts and omissions of any futures commission merchant to
whom Investments are delivered pursuant to this Section; for the sufficiency of
Investments held in any Margin Account; or, for the performance of any terms of
any exchange-traded futures contracts and commodity options.
6.5 CONTRACTUAL OBLIGATIONS AND SIMILAR INVESTMENTS. From time to time,
the Fund's Investments may include Investments that are not ownership interests
as may be represented by certificate (whether registered or bearer), by entry in
a Securities Depository or by book entry agent, registrar or similar agent for
recording ownership interests in the relevant Investment. If the Fund shall at
any time acquire such Investments, including without limitation deposit
obligations, loan participations, repurchase agreements and derivative
arrangements, the Custodian shall (a) receive and retain, to the extent the same
are provided to the Custodian, confirmations or other documents evidencing the
arrangement; and (b) perform on the Fund's account in accordance with the terms
of the applicable arrangement, but only to the extent directed to do so by
Instruction. The Custodian shall have no responsibility for agreements running
to the Fund as to which it is not a party other than to retain, to the extent
the same are provided to the Custodian, documents or copies of documents
evidencing the arrangement and, in accordance with Instruction, to include such
arrangements in reports made to the Fund.
6.6 EXCHANGE OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian shall: (a) exchange securities held for the account of the Fund
for other securities in connection with any reorganization, recapitalization,
conversion, split-up, change of par value of shares or similar event, and (b)
deposit any such securities in accordance with the terms of any reorganization
or protective plan.
6.7 SURRENDER OF SECURITIES. Unless otherwise directed by Instruction,
the Custodian may surrender securities: (a) in temporary form for definitive
securities; (b) for transfer into the name of an entity allowable under Section
5.3; and (c) for a different number of certificates or instruments representing
the same number of shares or the same principal amount of indebtedness.
6.8 RIGHTS, WARRANTS, ETC. Pursuant to Instruction, the Custodian shall
(a) deliver warrants, puts, calls, rights or similar securities to the issuer or
trustee thereof, or to any agent of such issuer or trustee, for
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purposes of exercising such rights or selling such securities, and (b) deposit
securities in response to any invitation for the tender thereof.
6.9 MANDATORY CORPORATE ACTIONS. Unless otherwise directed by
Instruction, the Custodian shall: (a) comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions or similar rights of
securities ownership affecting securities held on the Fund's account and
promptly notify the Fund of such action, and (b) collect all stock dividends,
rights and other items of like nature with respect to such securities.
6.10 INCOME COLLECTION. Unless otherwise directed by Instruction, the
Custodian shall collect any amount due and payable to the Fund with respect to
Investments and promptly credit the amount collected to a Principal or Agency
Account; provided, however, that the Custodian shall not be responsible for: (a)
the collection of amounts due and payable with respect to Investments that are
in default, or (b) the collection of cash or share entitlements with respect to
Investments that are not registered in the name of the Custodian or its
Subcustodians. The Custodian is hereby authorized to endorse and deliver any
instrument required to be so endorsed and delivered to effect collection of any
amount due and payable to the Fund with respect to Investments.
6.11 OWNERSHIP CERTIFICATES AND DISCLOSURE OF THE FUND'S INTEREST. The
Custodian is hereby authorized to execute on behalf of the Fund ownership
certificates, affidavits or other disclosure required under Applicable Law or
established market practice in connection with the receipt of income, capital
gains or other payments by the Fund with respect to Investments, or in
connection with the sale, purchase or ownership of Investments.
6.12 PROXY MATERIALS. The Custodian shall deliver, or cause to be
delivered, to the Fund proxy forms, notices of meeting, and any other notices or
announcements materially affecting or relating to Investments received by the
Custodian or any nominee.
6.13. TAXES. The Custodian shall, where applicable, assist the Fund in
the reclamation of taxes withheld on dividends and interest payments received by
the Fund. In the performance of its duties with respect to tax withholding and
reclamation, the Custodian shall be entitled to rely on the reasonable advice of
counsel and upon information and advice regarding the Fund's tax status that is
received from or on behalf of the Fund without duty of separate inquiry.
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6.14 OTHER DEALINGS. The Custodian shall otherwise act as directed by
Instruction, including without limitation effecting the free payments of moneys
or the free delivery of securities, provided that such Instruction shall
indicate the purpose of such payment or delivery and that the Custodian shall
record the party to whom such payment or delivery is made.
The Custodian shall attend to all nondiscretionary details in
connection with the sale or purchase or other administration of Investments,
except as otherwise directed by an Instruction, and may make payments to itself
or others for minor expenses of administering Investments under this Agreement;
provided that the Fund shall have the right to request an accounting with
respect to such expenses.
In fulfilling the duties set forth in Sections 6.6 through 6.10 above,
the Custodian shall provide to the Fund all material information pertaining to a
corporate action which the Custodian actually receives; provided that the
Custodian shall not be responsible for the completeness or accuracy of such
information. Any advance credit of cash or shares expected to be received as a
result of any corporate action shall be subject to actual collection and may,
when the Custodian deems collection unlikely, be reversed by the Custodian.
The Custodian may at any time or times in its discretion appoint (and
may at any time remove) agents (other than Subcustodians) to carry out some or
all of the administrative provisions of this Agreement (AGENTS), provided,
however, that the appointment of such agent (other than agents appointed under
Section 5.6 of this Agreement) shall not relieve the Custodian of its
administrative obligations under this Agreement.
7. CASH ACCOUNTS, DEPOSITS AND MONEY MOVEMENTS. Subject to the terms and
conditions set forth
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in this Section 7, the Fund hereby authorizes the Custodian to open and
maintain, with itself or with Subcustodians, cash accounts in United States
Dollars, in such other currencies as are the currencies of the countries in
which the Fund maintains Investments or in such other currencies as the Fund
shall from time to time request by Instruction.
7.1 TYPES OF CASH ACCOUNTS. Cash accounts opened on the books of the
Custodian (PRINCIPAL ACCOUNTS) shall be opened in the name of the Fund. Such
accounts collectively shall be a deposit obligation of the Custodian and shall
be subject to the terms of this Section 7 and the general liability provisions
contained in Section 9. Cash accounts opened on the books of a Subcustodian may
be opened in the name of the Fund or the Custodian or in the name of the
Custodian for its customers generally (AGENCY ACCOUNTS). Such deposits shall be
obligations of the Subcustodian and shall be treated as an Investment of the
Fund. The appointment or use of such accounts shall not relieve the Custodian of
its obligations under this Agreement, and specifically the Custodian shall be
responsible for using reasonable care in the administration of such accounts,
including without limitation in the selection and monitoring of such
Subcustodians. Provided that the Custodian has complied with these obligations,
the Custodian shall not be liable for the repayment of balances in Agency
Accounts in the event such Subcustodian fails to make repayment by reason of
bankruptcy, insolvency or similar cause.
7.2 PAYMENTS AND CREDITS WITH RESPECT TO THE CASH ACCOUNTS. The
Custodian shall make payments from or deposits to any of said accounts in the
course of carrying out its administrative duties, including but not limited to
income collection with respect to the Fund's Investments, and otherwise in
accordance with Instructions. The Custodian and its Subcustodians shall be
required to credit amounts to the cash accounts only when moneys are actually
received in cleared funds in accordance with banking
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practice in the country and currency of deposit. Any credit made to any
Principal or Agency Account before actual receipt of cleared funds shall be
provisional and may be reversed by the Custodian in the event such payment is
not actually collected. Unless otherwise specifically agreed in writing by the
Custodian or any Subcustodian, all deposits shall be payable only at the branch
of the Custodian or Subcustodian where the deposit is made or carried.
7.3 CURRENCY AND RELATED RISKS. The Fund bears risks of holding or
transacting in any currency. The Custodian shall not be liable for any loss or
damage arising from the applicability of any law or regulation now or hereafter
in effect, or from the occurrence of any event, which may delay or affect the
transferability, convertibility or availability of any currency in the country
(a) in which such Principal or Agency Accounts are maintained or (b) in which
such currency is issued, and in no event shall the Custodian be obligated to
make payment of a deposit denominated in a currency during the period during
which its transferability, convertibility or availability has been affected by
any such law, regulation or event. Without limiting the generality of the
foregoing, neither the Custodian nor any Subcustodian shall be required to repay
any deposit made at a foreign branch of either the Custodian or Subcustodian if
such branch cannot repay the deposit due to a cause for which the Custodian
would not be responsible in accordance with the terms of Section 9 of this
Agreement unless the Custodian or such Subcustodian expressly agrees in writing
to repay the deposit under such circumstances. All currency transactions in any
account opened pursuant to this Agreement are subject to exchange control
regulations of the United States and of the country where such currency is the
lawful currency or where the account is maintained. Any taxes, costs, charges or
fees imposed on the convertibility of a currency held by the Fund shall be for
the account of the Fund.
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7.4 FOREIGN EXCHANGE TRANSACTIONS. The Custodian shall, subject to the
terms of this Section, settle foreign exchange transactions (including
contracts, futures, options and options on futures) on behalf and for the
account of the Fund with such currency brokers or banking institutions,
including Subcustodians, as the Fund may direct pursuant to Instructions. The
Custodian may act as principal in any foreign exchange transaction with the Fund
in accordance with Section 7.4.2 of this Agreement. The obligations of the
Custodian in respect of all foreign exchange transactions (whether or not the
Custodian shall act as principal in such transaction) shall be contingent on the
free, unencumbered transferability of the currency transacted on the actual
settlement date of the transaction.
7.4.1 THIRD PARTY FOREIGN EXCHANGE TRANSACTIONS. The
Custodian shall process foreign exchange transactions
(including without limitation contracts, futures, options, and
options on futures), where any third party acts as principal
counterparty to the Fund on the same basis it performs duties
as agent for the Fund with respect to any other of the Fund's
Investments. Accordingly the Custodian shall only be
responsible for delivering or receiving currency on behalf of
the Fund in respect of such contracts pursuant to
Instructions. The Custodian shall not be responsible for the
failure of any counterparty (including any Subcustodian) in
such agency transaction to perform its obligations thereunder.
The Custodian (a) shall transmit cash and Instructions to and
from the currency broker or banking institution with which a
foreign exchange contract or option has been executed pursuant
hereto, (b) may make free outgoing payments of cash in the
form of Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or
confirmation that the countervalue currency completing the
foreign exchange contract has been delivered or received or
that the option has been delivered or received, and (c) shall
hold all confirmations, certificates and other documents and
agreements received by the Custodian and evidencing or
relating to such foreign exchange transactions in safekeeping.
The Fund accepts full responsibility for its use of
third-party foreign exchange dealers and for execution of said
foreign exchange contracts and options and understands that
the Fund shall be responsible for any and all costs and
interest charges which may be incurred by the Fund or the
Custodian as a result of the failure or delay of third parties
to deliver foreign exchange.
7.4.2 FOREIGN EXCHANGE WITH THE CUSTODIAN AS
PRINCIPAL. The Custodian may undertake foreign exchange
transactions with the Fund as principal as the Custodian and
the Fund may agree from time to time. In such event, the
foreign exchange transaction will be performed in accordance
with the particular agreement of the parties, or in the event
a principal foreign exchange transaction is initiated by
Instruction in the absence of specific agreement, such
transaction will be performed in accordance with the usual
commercial terms of the Custodian.
7.5 DELAYS. If no event of Force Majeure shall have occurred and be
continuing and in the event
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that a delay shall have been caused by the negligence or willful misconduct of
the Custodian in carrying out an Instruction to credit or transfer cash, the
Custodian shall be liable to the Fund: (a) with respect to Principal Accounts,
for interest to be calculated at the rate customarily paid on such deposit and
currency by the Custodian on overnight deposits at the time the delay occurs for
the period from the day when the transfer should have been effected until the
day it is in fact effected; and, (b) with respect to Agency Accounts, for
interest to be calculated at the rate customarily paid on such deposit and
currency by the Subcustodian on overnight deposits at the time the delay occurs
for the period from the day when the transfer should have been effected until
the day it is in fact effected. The Custodian shall not be liable for delays in
carrying out such Instructions to transfer cash which are not due to the
Custodian's own negligence or willful misconduct.
7.6 ADVANCES. If, for any reason in the conduct of its safekeeping
duties pursuant to Section 5 hereof or its administration of the Fund's assets
pursuant to Section 6 hereof, the Custodian or any Subcustodian advances monies
to facilitate settlement or otherwise for benefit of the Fund (whether or not
any Principal or Agency Account shall be overdrawn either during, or at the end
of, any Business Day), the Fund hereby does:
7.6.1 acknowledge that the Fund shall have no right or title to any
Investments purchased with such Advance save a right to receive such
Investments upon: (a) the debit of the Principal or Agency Account; or,
(b) if such debit would produce an overdraft in such account, other
reimbursement of the associated Advance;
7.6.2 grant to the Custodian a security interest in all Investments;
and,
7.6.3 agree that the Custodian may secure the resulting Advance by
perfecting a security interest in all Investments under Applicable Law.
Neither the Custodian nor any Subcustodian shall be obligated to advance monies
to the Fund, and in the
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event that such Advance occurs, any transaction giving rise to an Advance shall
be for the account and risk of the Fund and shall not be deemed to be a
transaction undertaken by the Custodian for its own account and risk. If such
Advance shall have been made by a Subcustodian or any other person, the
Custodian may assign the security interest and any other rights granted to the
Custodian hereunder to such Subcustodian or other person. If the Fund shall fail
to repay when due the principal balance of an Advance and accrued and unpaid
interest thereon, the Custodian or its assignee, as the case may be, shall be
entitled to utilize the available cash balance in any Agency or Principal
Account and to dispose of any Investments to the extent necessary to recover
payment of all principal of, and interest on, such Advance in full. The
Custodian may assign any rights it has hereunder to a Subcustodian or third
party. Any security interest in Investments taken hereunder shall be treated as
financial assets credited to securities accounts under Articles 8 and 9 of the
Uniform Commercial Code (1997). Accordingly, the Custodian shall have the rights
and benefits of a secured creditor that is a securities intermediary under such
Articles 8 and 9.
7.7 INTEGRATED ACCOUNT. For purposes hereof, deposits maintained in all
Principal Accounts (whether or not denominated in Dollars) shall collectively
constitute a single and indivisible current account with respect to the Fund's
obligations to the Custodian, or its assignee, and balances in such Principal
Accounts shall be available for satisfaction of the Fund's obligations under
this Section 7. The Custodian shall further have a right of offset against the
balances in any Agency Account maintained hereunder to the extent that the
aggregate of all Principal Accounts is overdrawn.
8. SUBCUSTODIANS AND SECURITIES DEPOSITORIES. Subject to the provisions
hereinafter set forth in this Section 8, the Fund hereby authorizes the
Custodian to utilize Securities Depositories to act on behalf
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of the Fund and to appoint from time to time and to utilize Subcustodians. With
respect to securities and funds held by a Subcustodian, either directly or
indirectly (including by a Securities Depository or Clearing Corporation),
notwithstanding any provisions of this Agreement to the contrary, payment for
securities purchased and delivery of securities sold may be made prior to
receipt of securities or payment, respectively, and securities or payment may be
received in a form, in accordance with (a) governmental regulations, (b) rules
of Securities Depositories and clearing agencies, (c) generally accepted trade
practice in the applicable local market, (d) the terms and characteristics of
the particular Investment, or (e) the terms of Instructions.
8.1 DOMESTIC SUBCUSTODIANS AND SECURITIES DEPOSITORIES. The Custodian
may deposit and/or maintain, either directly or through one or more agents
appointed by the Custodian, Investments of the Fund in any Securities Depository
in the United States, including The Depository Trust Company, provided such
Depository meets applicable requirements of the Federal Reserve Bank or of the
Securities and Exchange Commission. The Custodian may, at any time and from time
to time, appoint any bank as defined in Section 2(a)(5) of the 1940 Act meeting
the requirements of a custodian under Section 17(f) of the 1940 Act and the
rules and regulations thereunder, to act on behalf of the Fund as a Subcustodian
for purposes of holding Investments of the Fund in the United States.
Notwithstanding the foregoing, nothing in this Section shall relieve the
Custodian of its administrative obligations under this Agreement in connection
with the appointment of Subcustodians and Securities Depositories. In addition,
the Custodian may appoint as a depository an entity described in Section 5.6 of
this Agreement.
8.2 FOREIGN SUBCUSTODIANS AND SECURITIES DEPOSITORIES. The Custodian
may deposit and/or maintain non-U.S. Investments of the Fund in any Securities
Depository located outside the United States
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provided such Securities Depository meets the requirements of an "eligible
foreign custodian" under Rule 17f-5 promulgated under the 1940 Act, or any
successor rule or regulation ("Rule 17f-5") or which by order of the Securities
and Exchange Commission is exempted therefrom. Additionally, the Custodian may,
at any time and from time to time, appoint (a) any bank, trust company or other
entity meeting the requirements of an ELIGIBLE FOREIGN CUSTODIAN under Rule
17f-5 or which by order of the Securities and Exchange Commission is exempted
therefrom, or (b) any bank as defined in Section 2(a)(5) of the 1940 Act meeting
the requirements of a custodian under Section 17(f) of the 1940 Act and the
rules and regulations thereunder, to act on behalf of the Fund as a Subcustodian
for purposes of holding Investments of the Fund outside the United States. Such
appointment of foreign Subcustodians shall be subject to approval of the Fund in
accordance with Subsections 8.2.1 and 8.2.2.
8.2.1 BOARD APPROVAL OF FOREIGN SUBCUSTODIANS. Unless and
except to the extent that review of certain matters concerning the
appointment of Subcustodians shall have been delegated to the Custodian
pursuant to Subsection 8.2.2, the Custodian shall, prior to the
appointment of any Subcustodian for purposes of holding Investments of
the Fund outside the United States, obtain written confirmation of the
approval of the Board of Trustees or Directors of the Fund with respect
to (a) the identity of a Subcustodian, (b) the country or countries in
which, and the Securities Depositories, if any, through which, any
proposed Subcustodian is authorized to hold Investments of the Fund,
and (c) the Subcustodian agreement which shall govern such appointment.
Each such duly approved country, Subcustodian and Securities Depository
shall be listed on Appendix A attached hereto as the same may from time
to time be amended.
8.2.2 DELEGATION OF BOARD REVIEW OF SUBCUSTODIANS. From time
to time, the Custodian may offer to perform, and the Fund may accept to
perform, that the Custodian perform certain reviews of Subcustodians
and of Subcustodian Contracts as delegate of the Fund's Board. In such
event, the Custodian's duties and obligations with respect to this
delegated review will be performed in accordance with the terms of the
separate delegation agreement between the Fund and the Custodian.
8.3 RESPONSIBILITY FOR FOREIGN SUBCUSTODIANS. With respect to
securities and funds held by a Foreign Subcustodian, either directly or
indirectly (including by a Securities System or foreign clearing agency),
including demand deposit and interest bearing deposits, currencies or other
deposits and foreign
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exchange contracts as referred to herein, the Custodian shall be liable to
the Fund for any loss or damage to the Fund caused by or resulting from the acts
or omissions of any Foreign Subcustodian to the extent that (i) under the terms
set forth in the Subcustodian Agreement between the Custodian and the Foreign
Subcustodian, the Foreign Subcustodian failed to perform in accordance with the
terms of such contract or the standard of conduct imposed under such
Subcustodian Agreement or (ii) such acts or omissions would be deemed to be
negligence, gross negligence or willful misconduct under the laws, circumstances
and practices prevailing in the jurisdiction where the act or omission occurred.
8.4 NEW COUNTRIES. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Foreign Subcustodian is authorized to act in order that
the Custodian shall, if it deems appropriate to do so, have sufficient time to
establish a subcustodial arrangement in accordance herewith. In the event,
however, the Custodian is unable to establish such arrangements prior to the
time such investment is to be acquired, the Custodian is authorized to designate
at its discretion a local safekeeping agent, and the use of such local
safekeeping agent shall be at the sole risk of the Fund, and accordingly the
Custodian shall be responsible to the Fund for the actions of such agent if and
only to the extent the Custodian shall have recovered from such agent for any
damages caused the Fund by such agent. The foregoing sentence does not apply
where the Custodian is acting as the Fund's Foreign Custody Manager pursuant to
a separate Foreign Custody Manager Delegation Agreement between the Custodian
and the Fund.
9. RESPONSIBILITY OF THE CUSTODIAN. In performing its duties and
obligations hereunder, the Custodian shall use reasonable care under the facts
and circumstances prevailing in the market where
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performance is effected. Subject to the specific provisions of this Section, the
Custodian shall be liable for any damage incurred by the Fund in consequence of
the Custodian's negligence, bad faith or willful misconduct, including that
caused by a Subcustodian as set forth is Section 8 hereof. In no event shall the
Custodian be liable hereunder for any special, indirect, punitive or
consequential damages arising out of, pursuant to or in connection with this
Agreement even if the Custodian has been advised of the possibility of such
damages. It is agreed that the Custodian shall have no duty to assess the risks
inherent in the Fund's Investments or to provide investment advice with respect
to such Investments and that the Fund as principal shall bear any risks
attendant to particular Investments such as failure of counterparty or issuer.
9.1 LIMITATIONS OF PERFORMANCE. The Custodian shall not be responsible
under this Agreement for any failure to perform its duties, and shall not liable
hereunder for any loss or damage in association with such failure to perform,
for or in consequence of the following causes:
9.1.1 FORCE MAJEURE. FORCE MAJEURE shall mean any circumstance
or event which is beyond the reasonable control of the Custodian, a
Subcustodian or any agent of the Custodian or a Subcustodian and which
adversely affects the performance by the Custodian of its obligations
hereunder, by the Subcustodian of its obligations under its Subcustody
Agreement or by any other agent of the Custodian or the Subcustodian,
including any event caused by, arising out of or involving (a) an act
of God, (b) accident, fire, water damage or explosion, (c) any
computer, system or other equipment failure or malfunction caused by
any computer virus or the malfunction or failure of any communications
medium (provided that the Custodian has performed in accordance with
Section 12.10), (d) any interruption of the power supply or other
utility service, (e) any strike or other work stoppage, whether partial
or total other than a strike or work stoppage involving the Custodian,
any Subcustodian or any affiliate of the Custodian, (f) any delay or
disruption resulting from or reflecting the occurrence of any Sovereign
Risk, (g) any disruption of, or suspension of trading in, the
securities, commodities or foreign exchange markets, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, (h)
any encumbrance on the transferability of a currency or a currency
position on the actual settlement date of a foreign exchange
transaction, whether or not resulting from or reflecting the occurrence
of any Sovereign Risk, or (i) any other cause similarly beyond the
reasonable control of the Custodian. The Custodian shall use reasonable
care within its control to minimize the loss or damage to the Fund
resulting from a Force Majeure event including without limitation, the
maintenance of a suitable disaster recovery plan to ensure that the
effects of any Force Majeure event or circumstance are mitigated
insofar as possible and to ensure continuity of service to the Fund.
9.1.2 COUNTRY RISK. COUNTRY RISK shall mean, with respect to
the acquisition, ownership, settlement or custody of Investments in a
jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for or
ownership
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of Investments including (a) the prevalence of crime and corruption,
(b) the inaccuracy or unreliability of business and financial
information, (c) the instability or volatility of banking and financial
systems, or the absence or inadequacy of an infrastructure to support
such systems, (d) custody and settlement infrastructure of the market
in which such Investments are transacted and held, (e) the acts,
omissions and operation of any Securities Depository, (f) the risk of
the bankruptcy or insolvency of banking agents, counterparties to cash
and securities transactions, registrars or transfer agents, and (g) the
existence of market conditions which prevent the orderly execution or
settlement of transactions or which affect the value of assets.
9.1.3 SOVEREIGN RISK. SOVEREIGN RISK shall mean, in respect of
any jurisdiction, including the United States of America, where
Investments is acquired or held hereunder or under a Subcustody
Agreement, (a) any act of war, terrorism, riot, insurrection or civil
commotion, (b) the imposition of any investment, repatriation or
exchange control restrictions by any Governmental Authority, (c) the
confiscation, expropriation or nationalization of any Investments by
any Governmental Authority, whether de facto or de jure, (iv) any
devaluation or revaluation of the currency, (d) the imposition of
taxes, levies or other charges affecting Investments, (vi) any change
in the Applicable Law, or (e) any other economic or political risk
incurred or experienced.
9.2. LIMITATIONS ON LIABILITY. Except as otherwise specifically
provided in this Agreement or in any separate Delegation Agreement between the
parties, the Custodian shall not be liable for any loss, claim, damage or other
liability arising from the following causes:
9.2.1 FAILURE OF THIRD PARTIES. The failure of any third party
(excluding Subcustodians) including: (a) any issuer of Investments or
book-entry or other agent of and issuer; (b) any counterparty with
respect to any Investment, including any issuer of exchange-traded or
other futures, option, derivative or commodities contract; (c) failure
of an Investment Advisor, Foreign Custody Manager or other agent of the
Fund; or (d) failure of other third parties similarly beyond the
control or choice of the Custodian.
9.2.2 INFORMATION SOURCES. The Custodian may rely upon
information received from issuers of Investments or agents of such
issuers, information received from Subcustodians and from other
commercially reasonable sources such as commercial data bases and the
like, but shall not be responsible for specific inaccuracies in such
information, provided that the Custodian has relied upon such
information in good faith, or for the failure of any commercially
reasonable information provider.
9.2.3 RELIANCE ON INSTRUCTION. Action by the Custodian or the
Subcustodian in accordance with an Instruction, even when such action
conflicts with, or is contrary to any provision of, the Fund's
declaration of trust, certificate of incorporation or by-laws,
Applicable Law, or actions by the trustees, directors or shareholders
of the Fund.
9.2.4 RESTRICTED SECURITIES. The limitations inherent in the
rights, transferability or similar investment characteristics of a
given Investment of the Fund.
10. INDEMNIFICATION. The Fund hereby agrees to indemnify the Custodian and
its respective agents,
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nominees, partners, employees, officers and directors, and agrees to hold each
of them harmless from and against all claims and liabilities, including
reasonable counsel fees and taxes, incurred or assessed against any of them in
connection with the performance of this Agreement and any Instruction, except to
the extent that any such claims, liabilities and losses, including counsel fees
and taxes incurred or assessed, result from the negligence, bad faith or willful
misconduct of the Custodian or of a Subcustodian as set forth in Section 8
hereof. If any person indemnified under the preceding sentence gives written
notice of claim to the Custodian, the Custodian shall promptly give written
notice to the Fund. Not more than thirty days following the date of such notice,
unless the Custodian shall be liable under Section 8 hereof in respect of such
claim, the Fund will pay the amount of such claim or reimburse the Custodian for
any payment made by the Custodian in respect thereof.
The Custodian agrees to indemnify the Fund and its agents, nominees,
partners, employees, officers and trustees, and agrees to hold each of them
harmless from and against all claims and liabilities, including counsel fees and
taxes incurred or assessed against any of them in connection with the
performance of this Agreement or any Instruction to the extent that any such
claims, liabilities and losses, including counsel fees and taxes incurred or
assessed, result from the negligence, bad faith or willful misconduct of the
Custodian or a Subcustodian as set forth in Section 8 hereof. If any person
indemnified under the preceding sentence gives written notice of claim to the
Fund, the Fund shall promptly give written notice to the Custodian. Not more
than thirty days following the date of such notice, unless the Custodian shall
not be liable in respect of such claim, the Custodian will pay the amount of
such claim or reimburse the Fund for any payment made by the Fund in respect
thereof.
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11. REPORTS AND RECORDS. The Custodian shall:
11.1 create and maintain records relating to the performance
of its obligations under this Agreement;
11.2 make available to the Fund, its auditors, agents and
employees, during regular business hours of the Custodian, upon
reasonable request and during normal business hours of the Custodian,
all records maintained by the Custodian pursuant to paragraph (a)
above, subject, however, to all reasonable security requirements of the
Custodian then applicable to the records of its custody customers
generally; and
11.3 make available to the Fund all Electronic Reports; it
being understood that the Custodian shall not be liable hereunder for
the inaccuracy or incompleteness thereof or for errors in any
information included therein.
The Fund shall examine all records, howsoever produced or transmitted,
promptly upon receipt thereof and notify the Custodian promptly of any
discrepancy or error therein. Unless the Fund delivers written notice of any
such discrepancy or error within a reasonable time after its receipt thereof,
such records shall be deemed to be true and accurate. It is understood that the
Custodian now obtains and will in the future obtain information on the value of
assets from outside sources which may be utilized in certain reports made
available to the Fund. The Custodian deems such sources to be reliable but it is
acknowledged and agreed that the Custodian does not verify nor represent nor
warrant as to the accuracy or completeness of such information and accordingly
shall be without liability in selecting and using such sources and furnishing
such information.
12. MISCELLANEOUS.
12.1 PROXIES, ETC. The Fund will promptly execute and deliver, upon
request, such proxies, powers of attorney or other instruments as may be
necessary or desirable for the Custodian to provide, or to cause any
Subcustodian to provide, custody services.
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12.2 ENTIRE AGREEMENT. Except as specifically provided herein, this
Agreement constitutes the entire agreement between the Fund and the Custodian
with respect to the subject matter hereof. Accordingly, this Agreement
supersedes any custody agreement or other oral or written agreements heretofore
in effect between the Fund and the Custodian with respect to the custody of the
Fund's Investments.
12.3 WAIVER AND AMENDMENT. No provision of this Agreement may be
waived, amended or modified, and no addendum to this Agreement shall be or
become effective, or be waived, amended or modified, except by an instrument in
writing executed by the party against which enforcement of such waiver,
amendment or modification is sought; provided, however, that an Instruction
shall, whether or not such Instruction shall constitute a waiver, amendment or
modification for purposes hereof, shall be deemed to have been accepted by the
Custodian when it commences actions pursuant thereto or in accordance therewith.
12.4 GOVERNING LAW AND JURISDICTION. (a) THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY THE LAWS OF, THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW OF SUCH STATE. THE PARTIES
HERETO IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK, THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE BOROUGH OF
MANHATTAN, OR OF THE COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL COURTS
LOCATED IN THE CITY OR COUNTY OF SAN FRANCISCO.
(b) The names "Schwab Capital Trust" and "Trustees of Schwab Capital
Trust" refer respectively to
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the Trust created by the Trustees, as trustees but not individually or
personally, acting from time to time under the Declaration of Trust, to which
reference is hereby made and a copy of which is on file at the Office of the
Secretary of the Commonwealth of Massachusetts and elsewhere as required by law,
and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Schwab Capital Trust" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, interest holders or representatives personally, but bind only the
assets of the Trust, and all persons dealing with any series of units of
interest of the Trust must look solely to the assets of the trust belonging to
such series for the enforcement of any claims against the Trust.
12.5 NOTICES. Notices and other writings contemplated by this
Agreement, other than Instructions, shall be delivered (a) by hand, (b) by first
class registered or certified mail, postage prepaid, return receipt requested,
(c) by a nationally recognized overnight courier or (d) by facsimile
transmission, provided that any notice or other writing sent by facsimile
transmission shall also be mailed, postage prepaid, to the party to whom such
notice is addressed. All such notices shall be addressed, as follows:
IF TO THE FUND:
Xxxxxxx Xxxxxx Investment Management, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Treasurer
Telephone: 000-000-0000
Facsimile: 000-000-0000
(to receive notice pursuant to Section 5.6
Xxxxxxx Xxxxxx & Co., Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Mutual Fund Operations
Telephone: 000-000-0000
Facsimile: 000-000-0000
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IF TO THE CUSTODIAN:
Xxxxx Brothers Xxxxxxxx & Co.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Manager, Securities Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address as the Fund or the Custodian may have designated
in writing to the other.
12.6 HEADINGS. Paragraph headings included herein are for convenience
of reference only and shall not modify, define, expand or limit any of the terms
or provisions hereof.
12.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
the Fund and the Custodian.
12.8 CONFIDENTIALITY. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering or obtaining services pursuant
to this Agreement and, except as may be required in carrying out this Agreement,
shall not be disclosed to any third party without the prior consent of such
providing party. The foregoing shall not be applicable to any information that
is publicly available when provided or thereafter becomes publicly available
other than through a breach of this Agreement, or that is required to be
disclosed by or to any bank examiner of the Custodian or any Subcustodian, any
Regulatory Authority, any auditor of the parties hereto, or by judicial or
administrative process or otherwise by Applicable Law.
12.9 COUNSEL. In fulfilling its duties hereunder, the Custodian shall
be entitled to
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receive and act upon the reasonable advice of (i) counsel for the Fund or (ii)
such counsel as the Fund and the Custodian may agree upon, with respect to all
matters, and the Custodian shall be without liability for any action reasonably
taken or omitted pursuant to such reasonable advice.
12.10 YEAR 2000. Without limiting any other express or implied
warranties made in this Agreement, the Custodian hereby represents and warrants
that its internal core processing systems for the provision of services under
this agreement operate with the ability to store and process date and
date-related data without error or malfunction due to any inability to process
dates in the twentieth or twenty-first century. The Custodian further represents
that it is proceeding with further testing in accordance with industry
conventions and standards with respect to Year 2000 processing. The Custodian
will report and certify to the Fund the results of the same in accordance with
the prevailing schedule established by the relevant financial service industry
sectors and any regulatory schedule or guidelines. The Custodian shall correct
any deficiencies revealed by further testing at no cost to the Fund. In addition
to the foregoing, the Custodian hereby represents and warrants that: (a) it will
use reasonable care and diligence in accordance with the terms of this Agreement
to assure that these services are not compromised by loss of systems or software
functionality related to the succession of the year 2000; (b) it will use
reasonable care and diligence to cause that its agents and Subcustodians perform
likewise; and, (c) it will use reasonable care and diligence to provide for
alternate means of providing services in the event that a computer system or
software might be negatively affected by the succession of the year 2000.
13. DEFINITIONS. The following defined terms will have the respective
meanings set forth below.
13.1 ADVANCE shall mean any extension of credit by or through the
Custodian or by or through any Subcustodian and shall include amounts paid to
third parties for account of the Fund or in discharge of
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any expense, tax or other item payable by the Fund.
13.2 AGENCY ACCOUNT shall mean any deposit account opened on the books
of a Subcustodian or other banking institution in accordance with Section 7.1.
13.3 AGENT shall have the meaning set forth in the last sentence of
Section 6.
13.4 APPLICABLE LAW shall mean with respect to each jurisdiction, all
(a) laws, statutes, treaties, regulations, guidelines (or their equivalents);
(b) orders, interpretations licenses and permits; and (c) judgments, decrees,
injunctions writs, orders and similar actions by a court of competent
jurisdiction; compliance with which is required or customarily observed in such
jurisdiction.
13.5 AUTHORIZED PERSON shall mean any person or entity authorized to
give Instructions on behalf of the Fund in accordance with Section 4.1.
13.6 BOOK-ENTRY AGENT shall mean an entity acting as agent for the
issuer of Investments for purposes of recording ownership or similar entitlement
to Investments, including without limitation a transfer agent or registrar.
13.7 CLEARING CORPORATION shall mean any entity or system established
for purposes of providing securities settlement and movement and associated
functions for a given market.
13.8 COMPULSORY SECURITIES DEPOSITORY shall mean a Securities
Depository the use of which is mandatory (i) under applicable law or regulation;
(ii) because securities cannot be withdrawn from the depository; or (iii)
because maintaining securities outside the Securities Depository is not
consistent with prevailing custodial practices.
13.9 DELEGATION AGREEMENT shall mean any separate agreement entered
into between the Custodian and the Fund or its authorized representative with
respect to certain responsibilities concerning the appointment and
administration of Subcustodians delegated to the Custodian pursuant to Rule
17f-5.
13.10 FOREIGN CUSTODY MANAGER shall mean the Fund's foreign custody
manager appointed pursuant to Rule 17f-5 under the 1940 Act.
13.11 FOREIGN SUBCUSTODIAN shall mean each foreign bank appointed
pursuant to Rule 17f-5 under the 1940 Act, but shall not include Compulsory
Securities Depositories.
13.12 FUNDS TRANSFER SERVICES AGREEMENT shall mean any separate
agreement entered into between the Custodian and the Fund or its authorized
representative with respect to certain matters concerning the processing of
payment orders from Principal Accounts of the Fund.
13.13 INSTRUCTION(S) shall have the meaning assigned in Section 4.
13.14 INVESTMENT ADVISOR shall mean any person or entity who is an
Authorized Person to give Instructions with respect to the investment and
reinvestment of the Fund's Investments.
13.15 INVESTMENTS shall mean any investment asset of the Fund,
including without limitation securities, bonds, notes, and debentures as well as
receivables, derivatives, contractual rights or entitlements and other
intangible assets.
13.16 MARGIN ACCOUNT shall have the meaning set forth in Section 6.4
hereof.
13.17 PRINCIPAL ACCOUNT shall mean deposit accounts of the Fund carried
on the books of
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BBH&Co. as principal in accordance with Section 7.
13.18 SAFEKEEPING ACCOUNT shall mean an account established on the
books of the Custodian or any Subcustodian for purposes of segregating the
interests of the Fund (or clients of the Custodian or Subcustodian) from the
assets of the Custodian or any Subcustodian.
13.19 SECURITIES DEPOSITORY shall mean a central or book entry system
or agency established under Applicable Law for purposes of recording the
ownership and/or entitlement to investment securities for a given market.
13.20 SUBCUSTODIAN shall mean each bank appointed by the Custodian
pursuant to Section 8, but shall not include Compulsory Securities Depositories.
13.21 TRI-PARTY AGREEMENT shall have the meaning set forth in Section
6.4 hereof.
13.22 1940 ACT shall mean the Investment Company Act of 1940, as
amended.
14. COMPENSATION. The Fund agrees to pay to the Custodian (a) a fee in an
amount set forth in the fee letter between the Fund and the Custodian in effect
on the date hereof or as amended from time to time, and (b) all reasonable
out-of-pocket expenses incurred by the Custodian, including the reasonable fees
and expenses of all Subcustodians (not including Subcustodian fees that are
covered in Section 14(a)), all as to which the Custodian and Fund may from time
to time agree, and payable from time to time. Amounts payable by the Fund under
and pursuant to this Section 14 shall be payable by wire transfer to the
Custodian at BBH&Co. in New York, New York.
15. TERMINATION. This Agreement may be terminated by either party in
accordance with the provisions of this Section. The provisions of this Agreement
and any other rights or obligations incurred or accrued by any party hereto
prior to termination of this Agreement shall survive any termination of this
Agreement.
15.1 NOTICE AND EFFECT. This Agreement may be terminated by
either party by written notice effective no sooner than seventy-five
days following the date that notice to such effect shall be delivered
to other party at its address set forth in paragraph 12.5 hereof.
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15.2 SUCCESSOR CUSTODIAN. In the event of the appointment of a
successor custodian, it is agreed that the Investments of the Fund held
by the Custodian or any Subcustodian shall be delivered to the
successor custodian in accordance with reasonable Instructions. The
Custodian agrees to cooperate with the Fund in the execution of
documents and performance of other actions necessary or desirable in
order to facilitate the succession of the new custodian. If no
successor custodian shall be appointed, the Custodian shall in like
manner transfer the Fund's Investments in accordance with Instructions.
15.3 DELAYED SUCCESSION. If no Instruction has been given as
of the effective date of termination, Custodian may at any time on or
after such termination date and upon ten days written notice to the
Fund either (a) deliver the Investments of the Fund held hereunder to
the Fund at the address designated for receipt of notices hereunder; or
(b) deliver any investments held hereunder to a bank or trust company
having a capitalization of $2M USD equivalent and operating under the
Applicable law of the jurisdiction where such Investments are located,
such delivery to be at the risk of the Fund. In the event that
Investments or moneys of the Fund remain in the custody of the
Custodian or its Subcustodians after the date of termination owing to
the failure of the Fund to issue Instructions with respect to their
disposition or owing to the fact that such disposition could not be
accomplished in accordance with such Instructions despite diligent
efforts of the Custodian, the Custodian shall be entitled to
compensation for its services with respect to such Investments and
moneys during such period as the Custodian or its Subcustodians retain
possession of such items and the provisions of this Agreement shall
remain in full force and effect until disposition in accordance with
this Section is accomplished.
15.4 ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party. For this
purpose, assignment includes the change of control of a party or
assignment to any entity controlling, controlled by or under common
control with, the party, including successors.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
SCHWAB ANNUITY PORTFOLIOS
By: /s/ Tai-Xxxx Xxxx
-------------------------------
By: XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Partner
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EXHIBIT (g)(xviii)
SCHEDULE "A"
TO
CUSTODIAN AGREEMENT
BETWEEN
SCHWAB ANNUITY PORTFOLIOS
and
XXXXX BROTHERS XXXXXXXX & CO.
Dated as of October 29, 1999
The following is a list of Portfolio(s) for which the Custodian shall serve
under a Custodian Agreement dated as of October 28, 1999 (the "Agreement"):
SCHWAB MARKETTRACK GROWTH PORTFOLIO II
IN WITNESS WHEREOF, each of the parties hereto has caused this Schedule to be
executed in its name and on behalf of each such Portfolio.
SCHWAB ANNUITY PORTFOLIOS XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Tai-Xxxx Xxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------- ----------------------------
Name: Tai-Xxxx Xxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: Controller Title: Partner
35
EXHIBIT (g)(xviii)
SCHEDULE "C
TO
SECTION 5.6. OF THE CUSTODIAN AGREEMENT
BETWEEN
SCHWAB ANNUITY PORTFOLIOS
and
XXXXX BROTHERS XXXXXXXX & CO.
Dated as of October 28, 1999
The following is a list of Portfolio(s) for which the Custodian shall serve
under a Custodian Agreement dated as of October 28, 1999 (the "Agreement"):
SCHWAB MARKETTRACK GROWTH PORTFOLIO II
IN WITNESS WHEREOF, each of the parties hereto has caused this Schedule to be
executed in its name and on behalf of each such Portfolio.
SCHWAB ANNUITY PORTFOLIOS XXXXX BROTHERS XXXXXXXX & CO.
By: /s/ Tai-Xxxx Xxxx By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------- -----------------------------------
Name: Tai-Xxxx Xxxx Name: Xxxxxxx X. Xxxxxxxxx
Title: Controller Title: Partner
