CUSTODIAN CONTRACT
between
NEW ENGLAND FUNDS TRUST III
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It . . . . . . . . . 1
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States . . . . . . . . . . . . . . . . . . . . . 2
2.1. Holding Securities . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Delivery of Securities . . . . . . . . . . . . . . . . . . . . 2
2.3. Registration of Securities . . . . . . . . . . . . . . . . . . 4
2.4. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . 5
2.5. Collection of Income . . . . . . . . . . . . . . . . . . . . . 5
2.6. Payment of Fund Monies . . . . . . . . . . . . . . . . . . . . 6
2.7. Liability for Payment in Advance of Receipt of Securities
Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.8. Appointment of Agents . . . . . . . . . . . . . . . . . . . . 7
2.9. Fund Assets-Held in the Custodian's Direct Paper System . . . 9
2.10. Segregated Account . . . . . . . . . . . . . . . . . . 10
2.11. Ownership Certificates for Tax Purposes . . . . . . . . 10
2.12. Proxies . . . . . . . . . . . . . . . . . . . . . . . . 11
2.13. Communications Relating to Portfolio Securities . . . . 11
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.1. Appointment of Foreign Sub-Custodians . . . . . . . . . . . 11
3.2. Assets to be Held . . . . . . . . . . . . . . . . . . . . . 12
3.3. Foreign Securities Systems . . . . . . . . . . . . . . . . . 12
3.4. Holding Securities . . . . . . . . . . . . . . . . . . . . . 12
3.5. Agreements with Foreign Banking Institutions . . . . . . . . 12
3.6. Access of Independent Accountants of the Fund . . . . . . . 13
3.7. Reports by Custodian . . . . . . . . . . . . . . . . . . . . 13
3.8. Transactions in Foreign Custody Account . . . . . . . . . . 13
3.9. Liability of Foreign Sub-Custodians . . . . . . . . . . . . 14
3.10. Liability of Custodian . . . . . . . . . . . . . . . . . . 14
3.11. Reimbursement for Advances . . . . . . . . . . . . . . . . 14
3.12. Monitoring Responsibilities . . . . . . . . . . . . . . . . 15
3.13. Branches of US -Banks . . . . . . . . . . . . . . . . . . . 15
3.14. Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund 15
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 16
6. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . 17
7. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income . . . . . . . . . . . . . . . . . . 17
8. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9. Opinion of Fund's Independent Accountant . . . . . . . . . . . . . . . 18
PAGE i
10. Reports to Fund by Independent Public Accountants . . . . . . . . . . 18
11. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . 18
12. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . 18
13. Effective Period, Termination and Amendment . . . . . . . . . . . . . 20
14. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . 20
15. Interpretive and Additional Provisions . . . . . . . . . . . . . . . . 21
16. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
17. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . 22
18. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
19. Shareholder Communications Election . . . . . . . . . . . . . . . . . 22
20. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
21. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
22. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PAGE ii
CUSTODIAN CONTRACT
This Contract between New England Funds Trust III, a business trust
organized and existing under the laws of The Commonwealth of Massachusetts with
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, hereinafter called the "Fund", and State Street Bank and Trust Company,
a Massachusetts trust company with its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series,
New England Equity Income Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with Article 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf
of the applicable Portfolio, desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the Fund's
declaration of trust (the "Declaration of Trust"). The Fund on behalf of the
Portfolio(s) agrees to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios, ("Shares") as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of a Portfolio
held or received by the Portfolio and not delivered to the Custodian.
The Custodian shall on behalf of the applicable Portfolio(s) from
time to time employ one or more sub-custodians, located in the United States,
but only in accordance with Section 2.16. The Custodian may employ as sub-
custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
Page 1
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian in the United States
2.1. Holding Securities. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash
property, to be held by it in the United States including all
domestic securities owned by such Portfolio, other than (a)
securities which are maintained pursuant to Section 2.9 in a
clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the
Treasury (each, a "U.S. Securities System") and (b) commercial
paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the
Custodian (the "Direct Paper System") pursuant to Section 2.10.
2.2. Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or
in a U.S. Securities System account of the Custodian or in the
Custodian's Direct Paper System account ("Direct Paper System
Account") only upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in
the following cases:
(1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
(2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Portfolio;
(3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.9
hereof;
(4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name
of any agent appointed pursuant to Section 2.8 or into the
name or nominee name of any sub-custodian appointed
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pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence
representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities
are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street
delivery" custom; provided that in any such case, the
Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, split up of shares,
changes of par value, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any
such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(9) In the case of warrants, subscription or purchase rights,
the surrender thereof in the exercise of such warrants,
subscription or purchase rights or the surrender of interim
receipts or temporary securities for definitive securities;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
(10) For delivery in connection with any loans of securities
made by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the
Custodian and the Fund on behalf of the Portfolio, which
may be in the form of cash or obligations issued by the
United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
(11) For delivery as security in connection with any borrowings
by the Fund on behalf of the Portfolio requiring a pledge
of assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed, except that in cases
where additional collateral is required to secure a
Page 3
borrowing already made, subject to proper prior
authorization, further securities may be released for that
purpose;
(12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio of the Fund;
(13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection
with transactions by the Portfolio of the Fund;
(14) Upon receipt of instructions from the transfer agent for
the Fund (the "Transfer Agent") for delivery to such
Transfer Agent or to the holders of Shares in connection
with distributions in kind, as may be described from time
to time in the currently effective prospectus and statement
of additional information of the Fund, related to the
Portfolio (the "Prospectus"), in satisfaction of requests
by holders of Shares for repurchase or redemption; and
(15) For any other purpose that the Fund declares is a proper
corporate purpose, but only upon upon receipt of proper
Instructions from the Fund.
2.3. Registration of Securities. Securities of each Portfolio held by
the Custodian shall be registered in the name of such Portfolio
or of any nominee of such Portfolio or in the name of the
Custodian or of any nominee of the Custodian or in the name of
any Security System approved by the California Insurance
Commissioner.
Any nominee shall either be a 'dba' of the Cusdodian or a
partnership consisting solely of the Custodian's employees,
officers, directors or affiliated entities under the legal and
operational control of the Custodian. Only one nominee will be
used for all securities of each Portfolio held by the Custodian.
Page 4
Any securities issued in bearer form shall be maintained in that
form and not be subject to reregistration in definitive form;
i.e. in the name of a nominee of any depository, except upon
specific instruction as to a given security. The bearer
securities must be retained by the Custodian itself, unless
deposited with a depository authorized by the SEC and approved
by the California Insurance Commissioner.
2.4. Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940, as amended (the " 1940 Act").
Funds held by the Custodian for a Portfolio may be deposited by
it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in
its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act
as a custodian under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank
or trust company shall on behalf of each applicable Portfolio be
approved by vote of a majority of the Board. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity. If
requested by the Fund, the Custodian shall furnish the Fund, not
later than twenty (20) calendar days after the last business day
of each month, a statement reflecting the current status of its
internal reconciliation of the closing balance as of that day in
all acounts described in this Section 2.4 to the balance shown on
the daily cash report for that day rendered to the Fund. Any
bank account maintained under this Section 2.4 shall be subject
to all of the terms and conditions of this Contract.
2.5. Collection of Income. Subject to the provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and
other payments with respect to registered domestic securities
held hereunder to which each Portfolio shall be entitled either
by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments
with respect to bearer domestic securities if, on the date of
payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected,
to such Portfolio's custodian account. Without limiting the
generality of the foregoing, the Custodian shall (1) detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder; (2) present for
Page 5
payment all securities which may mature or be called, redeemed,
retired or otherwise become payable on the date such securities
become payable; and (3) endorse and deposit for collection, in
the name of the applicable Portfolio, checks, drafts or other
negotiable instruments on the same day as received. In any case
in which the Custodian does not receive any such due and unpaid
income within a reasonable time after it has made proper demands
for the same (which shall be presumed to consist of at least
three demand letters and at least one telephonic demand), it
shall so notify the Fund in writing, including copies of all
demand letters, any written responses thereto, and memoranda of
all oral responses thereto and to telephonic demands, and await
proper instructions; the Custodian shall not be obliged to take
legal action for collection unless and until reasonably
indemnified to its satisfaction. It shall also notify the Fund
as soon as reasonably practicable whenever income due on
securities is not collected in due course.
2.6. Payment of Fund Monies. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of a Portfolio in the
following cases only:
(1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account
of the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian
(or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
of 1940 Act to act as a custodian and has been designated
by the Custodian as its agent for this purpose) registered
in the name of the Portfolio or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.9 hereof, (c) in
the case of a purchase involving the Direct Paper System,
in accordance with the conditions set forth in Section
2.10; (d) in the case of repurchase agreements entered into
between the Fund on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities
either in certificate form or through an entry crediting
the Custodian account at the Federal Reserve Bank with such
securities (which account shall comply with Section 2.4) or
(ii) against delivery of the receipt evidencing purchase by
the Portfolio of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to
repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank,
Page 6
whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the
Fund as defined in Article 5; all such securities to be
accompanied by payment of, or a "due xxxx" for, any
dividends, interest or other distributions of the issuer
due to the purchaser;
(2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section
2.2 hereof;
(3) For the redemption or repurchase of Shares as set forth in
Article 4 hereof;
(4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest, taxes,
management, accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not such expenses
are to be in whole or part capitalized or treated as
deferred expenses; provided, however that the Custodian
shall not, in connection with the Custodian's compensation
or expenses, charge the custodied assets of any Portfolio,
attach any lien or withhold delivery of any asset, in full
or in part, it being understood that the Fund will make
timely payment of all compensation due to the Custodian on
account of each Portfolio;
(5) For the payment of any dividends on Shares declared
pursuant to the governing documents of the Fund;
(6) For payment of the amount of dividends received in respect
of securities sold short;
(7) For any other purpose which the Fund declares is a proper
trust purpose, but only, upon receipt of Proper
Instructions from the Fund on behalf of the Portfolio.
2.7. Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase of
domestic securities for the account of a Portfolio is made by the
Custodian in advance of receipt of the securities purchased in
the absence of specific written instructions from the Fund on
behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the
same extent as if the securities had been received by the
Custodian.
Page 7
2.8. Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other
bank or trust company which is itself qualified under the 1940
Act to act as a custodian, as its agent to carry out such of the
provisions of this Contract as the Custodian may from time to
time direct; provided, however, that the appointment of any agent
shall not relieve the Custodian of its responsibilities or
liabilities hereunder. Notwithstanding any provision contained
herein to the contrary, the Fund retains the ultimate
responsibility and authority for direction and control for the
services provided pursuant to this Contract.
2.9. Deposit of Fund Assets in U.S. Securities Systems. The Custodian
may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission (the "SEC") under Section 17A of the Exchange Act,
which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as
"U.S. Securities System" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject
to the following provisions:
(1) The Custodian may keep securities of the Portfolio in a
U.S. Securities System provided that such securities are
represented in an account ("Account") of the Custodian in
the U.S. Securities System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of
the Portfolio which are maintained in a U.S. Securities
System shall identify by book-entry those securities
belonging to the Portfolio;
(3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of
all advices from the U.S. Securities System of transfers of
securities for the account of the Portfolio shall identify
the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
Page 8
request, the Custodian shall furnish the Fund on behalf of
the Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting
each day's transactions in the U.S. Securities System for
the account of the Portfolio;
(4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
U.S. Securities System;
(5) The Custodian shall have received from the Fund on behalf
of the Portfolio the initial or annual certificate, as the
case may be, required by Article 14 hereof;
(6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Fund for the benefit
of the Portfolio for any loss or damage to the Portfolio
resulting from use of the U.S. Securities System by reason
of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees or from failure of the Custodian or any such
agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole
for any such loss or damage. Securities Systems,
subcustodians and correspondents utilized by the Custodian
shall be deemed to be agents of the Custodian.
2.10. Fund Assets-Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to
the following provisions:
(1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions from the Fund on behalf of the Portfolio;
(2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented
in the Direct Paper System Account, which account shall not
include any assets of the Custodian other than assets held
as a fiduciary, custodian or otherwise for customers;
Page 9
(3) The records of the Custodian with respect to securities of
the Portfolio which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Portfolio;
(4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and
transfer of securities to the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
(5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice
or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transaction in the U.S. Securities
System for the account of the Portfolio;
(6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request from
time to time.
2.11. Segregated Account; Safekeeping. The Custodian shall upon
receipt of Proper Instructions from the Fund on behalf of each
applicable Portfolio establish and maintain a segregated account
or accounts for and on behalf of each such Portfolio, into which
account or accounts may be transferred cash and/or securities,
including securities maintained in an account by the Custodian
pursuant to Section 2.9 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the
Portfolio, the Custodian and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating
to compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating
cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity fixtures
contracts or options thereon purchased or sold by the Portfolio,
(iii) for the purposes of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666,
Page 10
or any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only,
in the case of clause (iv), upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the applicable
Portfolio, a Certified Resolution setting forth the purpose or
purposes of such segregated account and declaring such purposes
to be proper corporate purposes.
The Custodian shall maintain records of all receipts, deliveries
and locations of each Portfolio's securities, together with a
current inventory thereof, and shall conduct periodic physical
inspections of certificates representing bonds and other
securities held by it under this Contract in such manner as the
Custodian shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Section 2.8,
or securities held by any sub-custodian appointed pursuant to
Section 2.15, or securities held by any foreign sub-custodian
appointed pursuant to Section 3.1, the Custodian may rely upon
certificates from such agent, sub-custodian or foreign sub-
custodian as to the holdings of such agent, sub-custodian or
foreign sub-custodian, it being understood that such reliance in
no way relieves the Custodian of its responsibilities under this
Contract. The Custodian will promptly report to the Fund the
results of such inspections, indicating any shortages or
discrepancies uncovered thereby, and take appropriate action to
remedy any such shortages or discrepancies.
2.12. Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of
each Portfolio held by it and in connection with transfers of
securities.
2.13. Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14. Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly
to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities
of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written
Page 11
by the Fund on behalf of the Portfolio and the maturity of
fixtures contracts purchased or sold by the Portfolio) received
by the Custodian from issuers of the securities being held for
the Portfolio. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Portfolio all written
information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.15. Subcustodians. The Custodian, may from time to time employ one
or more sub-custodians meeting the terms and conditions set forth
in Section 9.4(a) of the Fund's By-Laws, subject to prior
approval by the Fund. Notwithstanding any provision contained
herein to the contrary, the Fund retains the ultimate
responsibility and authority for direction and control for the
services provided pursuant to this Contract.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1. Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Custodian to employ as sub-
custodians for the Portfolio's securities and other assets
maintained outside the United States the foreign banking
institutions and foreign securities depositories designated on
Schedule A hereto ("foreign sub-custodians"). Upon receipt of
"Proper Instructions", as defined in Article 5 hereof, together
with a Certified Resolution, the Custodian and the Fund may agree
to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodians. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2. Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-
custodians to: (a) "foreign securities", as defined in paragraph
(c)(1) of Rule 17f-5 under the 1940 Act, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may
determine to be reasonably necessary to effect the Portfolio's
foreign securities transactions. The Custodian shall identify on
its books as belonging to the relevant Portfolio, the foreign
securities of such Portfolio held by each foreign sub-custodian.
Each agreement pursuant to which the Custodian employs a foreign
banking institution shall require that such institution establish
a custody account for the Custodian on behalf of the relevant
Page 12
Portfolio and physically segregate in that account securities and
other assets of such Portfolio, and, in the event that such
institution deposits such Portfolio's securities in a foreign
securities depository, that it shall identify on its books as
belonging to the Custodian, as agent for such Portfolio, the
securities so deposited.
3.3. Foreign Securities Systems. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in a clearing agency which acts as
a securities depository or in a book-entry system for the central
handling of securities located outside the United States (each a
"Foreign Securities System") only through arrangements
implemented by the foreign banking institutions serving as sub-
custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are collectively referred to
herein as the "Securities Systems"). Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4. Holding Securities. The Custodian may hold securities and other
non-cash property for all of its customers, including the Fund,
with a Foreign Sub-custodian in a single 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 securities and other non-cash property
of the Fund which are maintained in such account shall identify
by book-entry those securities and other non-cash property
belonging to the Fund and (ii) the Custodian shall require that
securities and other non-cash property so held by the Foreign
Subcustodian be held separately from any assets of the Foreign
Sub-custodian or of others.
3.5. Agreements with Foreign Banking Institutions. Each agreement
with a foreign banking institution shall be substantially in the
form set forth in Exhibit I hereto and shall provide that: (a)
the assets of each Portfolio will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of
the foreign banking institution or its creditors or agent, except
a claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be
freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be
maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants
for the Fund, will be given access to the books and records of
the foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Portfolios
held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
Page 13
3.6. Access of Independent Accountants of the Fund. Upon request of
the Fund, the Custodian will use its best efforts to arrange for
the independent accountants of the Fund to be afforded access to
the books and records of any foreign banking institution employed
as a foreign sub-custodian insofar as such books and records
relate to the performance of such foreign banking institution
under its agreement with the Custodian.
3.7. Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of
the securities and other assets of the Portfolio(s) held by
foreign sub-custodians, including but not limited to an
identification of entities having possession of the Portfolio(s)
securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account
maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities
acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
3.8. Transactions in Foreign Custody Account. (a) Except as otherwise
provided in subsection (b) of this Section 3.8, the provision of
Sections 2.2 and 2.6 of this Contract shall apply, mutatis
mutandis to the foreign securities of the Fund held outside the
United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received
for the account of each applicable Portfolio and delivery
of securities maintained for the account of each applicable
Portfolio may be effected in accordance with the customary
established securities trading or securities processing
practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or
dealer.
(c) Securities maintained in the custody of a foreign sub-
custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee
harmless from any liability as a holder of record of such
securities.
3.9. Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
the standard of care that a professional custodian engaged in
the banking or trust company industry and having professional
Page 14
expertise in financial and securities processing transactions
and custody would observe in the performance of its duties and to
indemnify, and hold harmless, the Custodian and the Fund from
and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's perform-
ance of such obligations. At the election of the Fund, it shall
be entitled to be subrogated to the rights of the Custodian with
respect to any claims against a foreign banking institution 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.
3.10. Liability of Custodian. The Custodian shall be liable for the
acts or omissions of a foreign banking institution to the same
extent as set forth with respect to sub-custodians generally in
this Contract and, regardless of whether assets are maintained in
the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated
by Section 3.13 hereof, 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 loss where the sub-custodian has
otherwise exercised the standard of care that a professional
custodian engaged in the banking or trust company industry and
having professional expertise in financial and securities
processing transactions and custody would observe.
Notwithstanding the foregoing provisions of this Section 3.10, in
delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to the Fund
for any loss due to such delegation, except such loss as may
result from (a) political risk (including, but not limited to,
exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities)
or (b) other losses (excluding a bankruptcy or insolvency of
State Street London Ltd. not caused by political risk) due to
Acts of God, nuclear incident or other losses under circumstances
where the Custodian and State Street London Ltd. have exercised
reasonable care.
3.11. Reimbursement for Advances. If the Fund requires the Custodian
to advance cash or securities for any purpose for the benefit of
a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the
Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in
connection with the performance of Section 3 of this Contract,
except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, each
Portfolio hereby grants to the Custodian a security interest and
pledges to the Custodian in an amount not to exceed the lesser of
the dollar amounts borrowed or two percent of such Portfolio's
total assets (taken at cost), the specific securities to be
Page 15
designated in writing from time to time by the Portfolio or its
investment adviser; provided, however, that (1) if from time to
time neither the Portfolio nor its investment adviser shall have
designated in writing specific securities in an amount at least
equal to the lesser of the dollar amounts borrowed or two percent
of such Portfolio's total assets (taken at cost), or (2) if as a
result of the delivery by the Custodian out of its custody,
pursuant to Proper Instructions, of any securities previously so
designated, the remaining amount of securities so designated
shall be less than the lesser of the dollar amounts borrowed or
two percent of such Portfolio's total assets, then the Custodian
shall have a security interest in such Portfolio's securities in
an amount that, taken together with amounts of securities from
time to time designated in writing by the Portfolio or its
investment adviser that have not been delivered out of the
custody of the Custodian pursuant to Proper Instructions, does
not exceed the lesser of the dollar amounts borrowed or two
percent of such Portfolio's total assets (taken at cost). Should
the Portfolio fail to repay promptly any advances of cash or
securities, the Custodian shall be entitled to use available cash
and to dispose of pledged securities and property as is necessary
to repay any such advances.
3.12. Monitoring Responsibilities. The Custodian shall furnish
annually to the Fund, during the month of June, information
concerning the foreign sub-custodians employed by the Custodian.
Such information shall be similar in kind and scope to that
furnished to the Fund in connection with the initial approval of
this Contract. In addition, the Custodian will promptly inform
the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-
custodian or any material loss of the assets of the Fund or in
the case of any foreign sub-custodian not the subject of an
exemptive order from the SEC is notified by such foreign sub-
custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S.
dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting principles).
3.13. Branches of US Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody
of the Portfolios assets are maintained in a foreign branch of a
banking institution which is a "bank" as defined by Section
2(a)(5) of the 1940 Act meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as
a sub-custodian shall be governed by Article 1 hereof.
(b) Cash held for each Portfolio of the Fund in the United
Kingdom shall be maintained in an interest bearing account
Page 16
established for the Fund with the Custodian's London
branch, which account shall be subject to the direction of
the Custodian, State Street London Ltd. or both.
3.14. 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 of America or 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 or the Custodian
as custodian of the Fund by the tax law of jurisdictions 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 jurisdictions for which the Fund has provided such
information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the
Fund
The Custodian shall make such arrangements with the Transfer Agent of
each Portfolio, which may be the Custodian, as will enable the Custodian to
make certain it receives the cash consideration due to each such Portfolio for
shares of such Portfolio as may be issued or sold from time to time by the
Fund, all in accordance with the Fund's Declaration of Trust. In connection
with such issuance of shares of each Portfolio, the Custodian shall make such
arrangements with the Transfer Agent as shall insure the timely notification to
the Transfer Agent and to the Fund of the receipt of Federal funds by the
Custodian by means of the Federal Reserve Wire System or of the receipt of
funds by other bank wire transfers in payment for the issuance of such shares.
Consideration received in connection with the sale of Shares of any Series
shall be credited to the account of that Portfolio only.
At 9:00 a.m. on the second business day after the deposit of a check
into a Portfolio's account, the Custodian agrees to make Federal funds
available to such Portfolio in the amount of the check.
From such funds as may be available for the purpose but subject to
the limitations of the Declaration of Trust, and applicable resolutions of the
Trustees of the Fund pursuant thereto, the Custodian shall make funds of the
applicable Portfolio available for payment to shareholders who have delivered
to the Transfer Agent a request for redemption of their shares by such
Portfolio pursuant to said Declaration of Trust. Redemption of the shares of
any Portfolio shall be made only from the assets of the relevant Portfolio. In
connection with the redemption of shares of each Portfolio pursuant to the
Declaration of Trust, the Custodian is authorized and directed upon receipt of
instructions from the Transfer Agent for such Portfolio to make funds of such
Portfolio available for transfer through the Federal Reserve Wire System or by
Page 17
other bank wire to a commercial bank account designated by the redeeming
shareholder.
5. Proper Instructions
The Custodian shall be deemed to have received proper instructions
upon receipt of written instructions signed by a majority of the Trustees of
the Fund or by one or more person or persons as the Trustees shall have from
time to time authorized to give the particular class of instructions in
question ("Proper Instructions"). Different persons may be authorized to give
instructions for different purposes. A certified copy of a resolution or
action of the Trustees may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person or persons to act and
may be considered as in full force and effect until receipt of written notice
to the contrary. Such instructions may be general or specific in terms. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Board, Proper Instructions may include communications effected
directly between electromechanical or electronic devices provided that the
Board and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three - party agreement which requires a segregated asset account in
accordance with Section 2.11.
In performing its duties generally, and more particularly in
connection with the purchase, sale and exchange of securities made by or for
each Portfolio, the Custodian may take cognizance of the provisions of the
Declaration of Trust of the Fund as from time to time amended; however, except
as otherwise expressly provided herein, it may assume unless and until notified
in writing to the contrary that instructions purporting to be proper
instructions received by it are not in conflict with or in any way contrary to
any provision of the Declaration of Trust and By-Laws of the Fund as amended,
or resolutions or proceedings of the Trustees of the Fund.
6. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board pursuant to the Declaration of Trust as described in such vote, and such
vote may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
Page 18
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall keep books of account and render statements,
including interim monthly and complete quarterly financial statements, or
copies thereof from time to time as requested by the Treasurer or any Executive
Officer of the Fund.
Unless otherwise directed by receipt of proper instructions, the
Custodian shall compute and determine, as of the close of business of the New
York Stock Exchange, the "net asset value" of a share of each Portfolio, and
shall also compute and determine such net asset value for each Portfolio on
each day during which there is a sufficient degree of trading in such
Portfolio's portfolio securities that the current net asset value of such
Portfolio's shares might be affected by the change in the value of such
portfolio securities, each such computation and determination to be made
pursuant to the provisions of the Declaration of Trust and/or By-Laws of the
Fund, by a vice president, assistant vice president or assistant secretary of
the Custodian; and promptly to notify the Fund of the result of such
computation and determination. In computing the "net asset value" the
Custodian shall rely upon security quotations received by telephone or
otherwise from sources designated by the Fund by proper instructions and may
further rely upon information furnished to it by any officer of the Fund
thereunto duly authorized relative (a) to liabilities of each Portfolio not
appearing on its books of account, (b) to the existence, status and proper
treatment of any reserve or reserves and (c) to the fair value of any security
or other property for which market quotations are not readily available.
Upon receipt of proper instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
calculate daily the "net income" of each Portfolio in a manner consistent with
the Declaration of Trust and in accordance with the then current prospectus of
the Fund applicable to such Portfolio, and shall advise the Fund and the
Transfer Agent daily of the total amount of such "net income".
8. Records
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Section 31 thereof and Rules 3la-1 and 31a-2
thereunder, applicable Federal and State tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All
such records shall be the property of the Fund and in the event of termination
of this Contract will be delivered in accordance with Section 14.
The Custodian will keep books of account and render statements for
each Portfolio separately. The Custodian shall maintain such records as will
enable the Fund to comply with the requirements of all Federal and State laws
Page 19
and regulations applicable to the Fund with respect to the matters covered by
this Contract. The Custodian shall submit, upon not more than 48 hours' notice
and during the course of the Custodian's regular business hours, to all
regulatory and administrative bodies having jurisdiction over the services
provided pursuant to this Contract, present or future, any information, reports
or other materials which any such body by reason of this Contract may request
or require pursuant to applicable laws and regulations. The Custodian shall
not disclose or use any record it has prepared by reason of this Contract in
any manner except as expressly authorized herein or directed by the Fund and
shall keep confidential any information obtained by reason of this Contract.
Subject to security requirements of the Custodian applicable to its
own employees having access to similar records within the Custodian and such
regulations as to the conduct of such monitors as may be reasonably imposed by
the Custodian after prior consultation with an officer of the Fund, the books
and records of the Custodian pertaining to its actions under this Contract
shall be open to inspection and audit at reasonable times by the Trustees of,
attorneys for, and auditors employed by, the Fund.
9. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from
year to year favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the preparation of the
Fund's Form N- IA, and Form N-SAR or other annual reports to the SEC, state
"Blue Sky" authorities and with respect to any other requirements of the SEC
or such state "Blue Sky" authority.
10. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so
state.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund on behalf of each applicable Portfolio and the Custodian.
Page 20
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be properly executed in accordance with
Section 5, including any futures commission merchant acting pursuant to the
terms of a three-party futures or options agreement. The Custodian shall be
entitled to receive and act upon advice of counsel (who may be counsel for the
Fund) and, except as provided in the next paragraph of this Section 12, shall
be without liability for any action reasonably taken or thing reasonably done
pursuant to such advice, provided that such action is not in violation of
applicable Federal or State laws or regulations, and, if the counsel is counsel
for the Fund and not for The Custodian, shall be kept indemnified by the Fund
and be without liability for any action taken or thing done by it in carrying
out the terms and provisions of this Contract in good faith and without
negligence. The Custodian shall not be entitled to indemnification for any
action taken upon advice of its own counsel.
Notwithstanding any other provision of this Contract, the Custodian
shall be strictly liable for all losses to the property of any Portfolio held
by the Custodian due to fire, burglary, robbery, theft and mysterious
disappearance, whether such a loss occurred while the property was in the
possession of the Custodian, its nominee or any agent of the Custodian at the
time of loss. Notwithstanding any other provision of this Contract, the
Custodian shall be liable for losses resulting from any cause or causes other
than those specified in the immediately preceding sentence unless the Custodian
itself can establish that the loss was not due to any dishonesty, negligence or
misconduct by its officers, employees or agents or nominee. In the event of
loss, damage or injury to the securities held on deposit for any Portfolio with
the Custodian, its nominee or its agent, the Custodian shall promptly, upon
demand of the Fund on behalf of such Portfolio, cause such securities to be
replaced by securities of like kind and quality, together with all rights and
privileges pertaining thereto, or, if acceptable to the Fund on behalf of the
Portfolio, remit cash equal to the fair market value of said securities. (Fair
market value shall be determined as of the date such securities suffered the
loss, damage or injury.) Notwithstanding any provision of this Section 12, the
Custodian shall not be liable for any loss, damage or injury resulting from
nuclear contamination (other than industrial use of nuclear energy),
expropriation by government order, war, insurrection or revolution and, with
respect to a sub-custodian or foreign sub-custodian, even if the sub-custodian
or foreign sub-custodian's standards of liability for failure or delay in
effecting any collections or providing any notices may be less than that
described in this Section 12, the Custodian shall not be absolved of
responsibility if the failure or delay in effecting collections or giving
notice is due to the Custodian's negligence or misconduct.
Each party shall be liable for its own misconduct and negligence.
While there may be indemnification between the Custodian and the Fund, neither
Page 21
of these parties can immunize themselves from liability by relying upon advice
from their own individual counsel. In order that the indemnification
provisions contained in this Section 12 shall apply, however, it is understood
that in any case in which the Fund may be asked to indemnify or hold the
Custodian harmless, the Fund shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Custodian will use all reasonable care to identify and
notify the Fund promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Fund. The Fund shall have the option to defend the Custodian against any
claim which may be the subject of this indemnification, and in the event that
the Fund so elects it will so notify the Custodian, and thereupon the Fund
shall take over complete defense of the claim, and the Custodian shall in such
situations initiate no further legal or other expenses for which it shall seek
indemnification under this Section 12. The Custodian shall in no case confess
any claim or make any compromise in any case in which the Fund will be asked to
indemnify the Custodian except with the Fund's prior written consent.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against the Custodian
or its nominee in connection with the performance of this Contract, except such
as may arise from it or its nominee's own negligent action, negligent failure
to act or willful misconduct and except for claims by or liabilities to the
Fund. To secure any advances of cash or securities made by the Custodian to or
for the benefit of the Fund for any purposes which result in a Portfolio
incurring an overdraft at the end of any business day or for extraordinary or
emergency purposes during any business day, each Portfolio hereby grants to the
Custodian a security interest in and pledges to the Custodian securities held
for it by the Custodian, in an amount not to exceed the lesser of the dollar
amounts borrowed or two percent of the Portfolio's total assets (taken at
cost), the specific securities to be designated in writing from time to time by
the Portfolio or its investment adviser; provided, however, that (1) if from
time to time neither the Portfolio nor its investment adviser shall have
designated in writing specific securities in an amount at least equal to the
lesser of the dollar amounts borrowed or two percent of the Portfolio's total
assets (taken at cost), or (2) if as a result of the delivery by the Custodian
out of its custody, pursuant to Proper Instructions, of any securities
previously so designated, the remaining amount of securities so designated
shall be less than the lesser of the dollar amounts borrowed or two percent of
the Portfolio's total assets (taken at cost), then the Custodian shall have a
security interest in the Portfolio's securities in an amount that, taken
together with amounts of securities from time to time designated in writing by
the Portfolio or its investment adviser that have not been delivered out of
custody of the Custodian pursuant to Proper Instructions, does not exceed the
lesser of the dollar amounts borrowed or two percent of the Portfolio's total
assets (taken at cost). Should the Portfolio fail to repay promptly any
advances of cash or securities, the Custodian shall be entitled to use
available cash and to dispose of pledged securities and property as is
necessary to repay any such advances.
Page 22
The Custodian in its performance of its duties will exercise the
standard of care that a professional custodian engaged in the banking or trust
company industry and having professional expertise in financial and securities
processing transactions and custody would observe in these affairs.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect
not sooner than thirty (30) days after the date of such delivery or mailing;
provided, however that the Custodian shall not with respect to a Portfolio
act under Section 2.10 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board has
approved the initial use of a particular Securities System by such Portfolio,
as required by Rule 17f-4 under the 1940 Act and that the Custodian shall not
with respect to a Portfolio act under Section 2.10 hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board has approved the initial use of the Direct Paper System by
such Portfolio; provided further, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust, and further
provided, that the Fund on behalf of one or more of the Portfolios may at any
time by action of the Board (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian for the Fund, of one or more of the
Portfolios shall be appointed by the Board, the Custodian shall, upon
termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities, funds
and other properties and all records of each applicable Portfolio then held by
it hereunder and shall transfer to an account of the successor custodian all of
the securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
Page 23
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by the Custodian
on behalf of each applicable Portfolio and all instruments held by the
Custodian relative thereto and all other property held by it under this
Contract on behalf of each applicable Portfolio and to transfer to an account
of such successor custodian all of the securities of each such Portfolio held
in any Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, ftmds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Declaration of Trust. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
16. Additional Funds
In the event that the Fund establishes one or more series of Shares
in addition to New England Equity Income Fund with respect to which it desires
to have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in
writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
Page 24
17. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
18. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
19. Shareholder Communications Election
SEC Rule 14b-2 requires banks which hold securities for the account
of customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to disclosure
of this information. In order to comply with the rule, the Custodian needs
the Fund to indicate whether it authorizes the Custodian to provide the
Fund's name, address, and share position to requesting companies whose
securities the Fund owns. If the Fund tells the Custodian "no", the
Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below,
the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any
funds or accounts established by the Fund. For the Fund's protection, the
Rule prohibits the requesting company from using the Fund's name and address
for any purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
20. Notices.
Notices and other writings delivered or mailed postage prepaid to the
Fund at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx and to State Street at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000 or to such other address as the
Fund or the Custodian may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address. Notice given
to the Fund with respect to any matter affecting less than all of the Portfolio
shall indicate in such notice the Portfolio to which such matter pertains.
Page 25
21. Binding Effect.
This Agreement shall be binding on and shall inure to the benefit of
the Custodian and its successors. The Custodian shall xxxx the Fund for each
Portfolio separately on account of those custodian fees determined in
accordance with this Contract which are attributable to the administration,
portfolio trades, interest accrual and appraisals or other activities of such
Portfolio. Except as otherwise specifically provided in this Contract, the
rights, obligations and interests of the Fund, any Portfolio and the Custodian
under this Contract shall not be assignable in whole or in part.
22. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
Page 26
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of September [ ], 1995.
STATE STREET BANK AND TRUST COMPANY
By: ________________________________________
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
NEW ENGLAND FUNDS TRUST III
By: ________________________________________
Name:
Title:
Page 27
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Depository
Argentina Citibank, N.A. Caja de Valores S.A.
Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft der Sparkassen
Kontrollbank AG
(Wertpapiersammelbank Division)
Bangladesh Standard Chartered Bank None
Belgium Generale Bank Caisse Interprofessionnelle de
Depots et de Virements de
Titres S.A. (CIK)
Banque Nationale de Belgique
Botswana Barclays Bank of Botswana None
Limited
Brazil Citibank, N.A. Bolsa de Valores de Sdo Paulo
(Bovespa);
Banco Central do Brasil,
Systema Especial de
Liquidacao e Custodia
(SELIC)
Canada Canada Trustco Mortgage The Canadian Depository for
Company Securities Limited (CDS)
Chile Citibank, N.A. None
Page 28
People's The Hongkong and Shanghai Shanghai Securities Central
Republic of Banking Corporation Limited, Clearing and Registration
China Shanghai and Shenzhen Corporation (SSCCRC)
branches
Shenzhen Securities Registrars
Co., Ltd. and its designated
agent banks
Page 29
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Depository
Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
Cyprus Barclays Bank PLC None
Czech Republic CeskoslovenskA Obchodni Stfedisko cennych papir-6
(SCP);
Czech National Bank (CNB)
Denmark Den Danske Bank Vaerdipapircentralen - The
Danish Securities Center (VP)
Egypt National Bank of Egypt None
Finland Xxxxxx Bank Limited The Central Share Register of
Finland
France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobili&res
(SICOVAM);
Banque de France, Saturne
System
Germany BHF - Bank The Deutscher Kassenverein
Aktiengesellschaft AG
Ghana Barclays Bank of Ghana None
Limited
Page 30
Greece National Bank of The Central Securities
Greece S.A. Depository (Apothetirion
Titlon A.E.)
Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
Hungary Citibank Budapest Rt. The Central Depository and
Clearing House (Budapest)
Ltd. (KELER Ltd.)
Page 31
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Xxxxxxxxxx
Xxxxx Xxxxxxxx Xxxx XX Xxxx
Xxxxxxxxx Standard Chartered Bank None
Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office
(GSO)
Israel Bank Hapoalim B.M. The Clearing House of the Tel
Aviv Stock Exchange
Italy Xxxxxx Guaranty Monte Titoli S.p.A;
Trust Company
Japan The Daiwa Bank, Limited Japan Securities Depository
Center (JASDEC);
Bank of Japan Net System
The Sumitomo Trust & Japan Securities Depository
Banking Co., Ltd. Center (JASDEC);
Bank of Japan Net System
Jordan The British Bank of the None
Middle East
Kenya Barclays Bank of Kenya None
Limited
Page 00
Xxxxxxxx xx Xxxxx XXXXXXXXX Xxxxx Securities Depository
(KSD)
Malaysia Standard Chartered Bank Malaysian Central Depository
Malaysia Berhad Sdn. Bhd. (MCD)
Mauritius The Hongkong and None
Shanghai Banking
Corporation Limited
Page 33
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Depository
Mexico Citibank Mexico, S.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de
Valores);
Banco de Mexico
Morocco Banque Commerciale du None
Maroc
Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEFK)
New Zealand ANZ Banking Group (New Austraclear Limited
Zealand) Limited
The Reserve Bank of New
Zealand, Austraclear NZ
Norway Christiania Bank og Verdipapirsentralen - The
Kreditkasse Norwegian Registry of
Securities (VPS)
Xxxxxxxx Xxxxxxxx Xxxx XX Xxxx
Xxxx Xxxxxxxx, N.A. Caja de Valores (CAVAL)
Philippines Standard Chartered Bank None
Poland Citibank Poland S.A. The National Depository of
Securities (Centrum
Krajowego Depozytu
Papierow Warto ciowych)
Page 34
Portugal Banco Comercial Portugues Xxxxxxx xx Xxxxxxx
Xxxxxxxxxxx (Xxxxxxx)
Xxxxxxxxx The Development Bank of The Central Depository (Pte)
Singapore Ltd. Limited (CDP)
Page 35
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Depository
Slovak Republic Ceskoslovenskd Obchodnd Stredisko cenn@ch papierov
Banka A.S. (SCP);
National Bank of Slovakia
South Africa Standard Bank of South None
Africa Limited
Spain Banco Santander, S.A. Servicio de Compensaci6n y
Liquidaci6n de Valores, S.A.
(SCLV);
Banco de Espafia,
Anotaciones en Cuenta
SriLanka The Hongkong and Central Depository System
Shanghai Banking (Pvt) Limited
Corporation Limited
Swaziland Barclays Bank of Swaziland None
Limited
Sweden Skandinaviska Enskilda Vdrdepapperscentralen VPC
Xxxxxx XX, The Swedish Central
Securities Depository
Switzerland Union Bank of Switzerland Schweizerische Effekten -
Giro AG (SEGA)
Taiwan - R.O.C. Central Trust of China The Taiwan Securities Central
Depository Company, Ltd.
(TSCD)
Page 36
Thailand Standard Chartered Bank Thailand Securities
Depository Company Limited
(TSD)
Turkey Citibank, N.A. Istanbul Stock Exchange
Settlement and Custody Co.,
Inc. (I.M.K.B. Takas ve
Saklama A.S.)
Page 37
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
JUNE 1995
Country Subcustodian Central Depository
United Kingdom State Street Bank and Trust None;
Company
The Bank of England,
The Central Gilts Office
(CGO);
The Central Moneymarkets
Office (CMO)
Uruguay Citibank, N.A. None
Venezuela Citibank, N.A. None
Zambia Barclays Bank of Zambia None
Limited
Zimbabwe Barclays Bank of None
Zimbabwe Limited
Euroclear (The Euroclear System)/State Street London Limited
Cedel (Cedel Bank societe anonyme)/State Street London Limited
Page 38
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN CONTRACT
AGREEMENT between New England Funds Trust III (the "Customer") and
State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain
assets of the Customer pursuant to a certain Custodian Contract (the "Custodian
Contract") dated as of September [ * ], 1995;
WHEREAS, State Street has developed and utilizes proprietary
accounting and other systems, including State Street's proprietary
Multicurrency HORIZON R Accounting System, in its role as custodian of the
Customer, and maintains certain Customer-related data ("Customer Data") in
databases under the control and ownership of State Street (the "Data Access
Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration,
the parties agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. System. Subject to the terms and conditions of this Agreement,
State Street hereby agrees to provide the Customer with access to State
Street's Multicurrency HORIZON R Accounting System and the other information
systems (collectively, the "System") as described in Attachment A, on a remote
basis for the purpose of obtaining reports, solely on computer hardware, system
software and telecommunication links of the Customer, or certain third parties
approved by State Street that serve as investment advisors or investment
managers of the Customer (each an "Investment Advisor") as listed in Attachment
C hereto and solely with respect to the Customer (the "Designated
Configuration") or on any designated substitute or back-up equipment
configuration with State Street's written consent, such consent not to be
unreasonably withheld.
b. Data Access Services. State Street agrees to make available to
the Customer the Data Access Services subject to the terms and conditions of
this Agreement and data access operating standards and procedures as may be
issued by State Street from time to time. The ability of the Customer to
originate electronic instructions to State Street on behalf of the Customer in
order to (i) effect the transfer or movement of cash or securities held under
PAGE 39
custody by State Street or (ii) transmit accounting or other information (such
transactions are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and
analysis, shall be deemed to be Data Access Services for purposes of this
Agreement.
c. Additional Services. State Street may from time to time agree
to make available to the Customer additional Systems that are not described in
the attachments to this Agreement. In the absence of any other written
agreement concerning such additional systems, the term "System" shall include,
and this Agreement shall govern, the Customer's access to and use of any
additional System made available by State Street and/or accessed by the
Customer.
2. NO USE OF THIRD PARTY SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Agreement, the Customer will have
access, through the Data Access Services, to Customer Data and to functions
of State Street's proprietary systems; provided, however that in no event
will the Customer have direct access to any third party systems-level
software that retrieves data for, stores data from, or otherwise supports the
System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the
Data Access Services shall be used and accessed solely on and through the
Designated Configuration at the offices of the Customer or each Investment
Advisor located in Boston, Massachusetts ("Designated Location").
b. Designated Configuration; Trained Personnel. State Street shall
be responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable
both parties to perform their respective obligations under this Agreement.
State Street agrees to use commercially reasonable efforts to maintain the
System so that it remains serviceable, provided, however, that State Street
does not guarantee or assure uninterrupted remote access use of the System.
c. Scope of Use. The Customer will use the System and the Data
Access Services only for the processing of securities transactions, the keeping
of books of account for the Customer and accessing data for purposes of
reporting and analysis. The Customer shall not, and shall cause its employees
and agents not to (i) permit any third party to use the System or the Data
Access Services, (ii) sell, rent, license or otherwise use the System or the
Data Access Services for any purpose other than as expressly authorized under
this Agreement, (iii) allow access to the System or the Data Access Services
through terminals or any other computer or telecommunications facilities
located outside the Designated Locations, (iv) allow or cause any information
Page 40
(other than portfolio holdings, valuations of portfolio holdings, and other
information reasonably necessary for the management or distribution of the
assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
(v) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
d. Other Locations. Except in the event of an emergency or of a
planned System shutdown, the Customer's access to services performed by the
System or to Data Access Services at the Designated Location may be transferred
to a different location only upon the prior written consent of State Street.
In the event of an emergency or System shutdown, the Customer may use any back-
up site included in the Designated Configuration or any other back-up site
agreed to by State Street, which agreement will not be unreasonably withheld.
The Customer may secure from State Street the right to access the System or the
Data Access Services through computer and telecommunications facilities or
devices complying with the Designated Configuration at additional locations
only upon the prior written consent of State Street and on terms to be mutually
agreed upon by the parties.
e. Title. Title and all ownership and proprietary rights to the
System, including any enhancements or modifications thereto, whether or not
made by State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State
Street, the Customer shall not modify, enhance or otherwise create derivative
works based upon the System, nor shall the Customer reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
System.
g. Security Procedures. The Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and
to access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by
State Street and, upon notice from State Street, the Customer shall discontinue
remote use of the System and access to Data Access Services for any security
reasons cited by State Street; provided, that, in such event, State Street
shall, for a period not less than 180 days (or such other shorter period
specified by the Customer) after such discontinuance, assume responsibility to
provide accounting services under the terms of the Custodian Contract.
Page 41
4. PROPRIETARY INFORMATION
a. Proprietary Information. The Customer acknowledges and State
Street represents that the System and the databases, computer programs, screen
formats, report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy
its obligations hereunder. The Customer further acknowledges that State Street
shall not be required to provide any Investment Advisor with access to the
System unless it has first received from such Investment Advisor an undertaking
with respect to State Street's Proprietary Information in the form of
Attachment C to this Agreement. The Customer shall use all commercially
reasonable efforts to assist State Street in identifying and preventing any
unauthorized use, copying or disclosure of the Proprietary Information or any
portions thereof or any of the logic, formats or designs contained therein.
b. Cooperation. Without limitation of the foregoing, the Customer
shall advise State Street immediately in the event the Customer learns or has
reason to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
cooperate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. The Customer acknowledges that the
disclosure of any Proprietary Information, or of any information which at law
or equity ought to remain confidential, will immediately give rise to
continuing irreparable injury to State Street inadequately compensable in
damages at law. In addition, State Street shall be entitled to obtain
immediate injunctive relief against the breach or threatened breach of any of
the foregoing undertakings, in addition to any other legal remedies which may
be available.
d. Survival. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. The Customer
agrees that State Street's liability to the Customer arising out of contract,
strict liability in tort, or any other cause of action under this Agreement for
its provision of Data Access Services or the System shall be limited to the
amount paid by the Customer for the preceding 24 months for such component
services. No action, regardless of form, arising out of this Agreement may be
brought by the Customer more than two years after the Customer has knowledge
that the cause of action has arisen.
Page 42
b. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET. IN NO EVENT WILL STATE STREET BE
LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL
DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S ACCESS TO THE SYSTEM OR USE OF
INFORMATION OBTAINED THEREBY.
c. Third-Party Data. Organizations from which State Street may
obtain certain data included in the System or the Data Access Services are
solely responsible for the contents of such data, and State Street shall have
no liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and the
Customer, the Customer shall be solely responsible for the accuracy of any
accounting statements or reports produced using the Data Access Services and
the System and the conformity thereof with any requirements of law.
e. Force Majeure. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Agreement arising out of any
cause or event beyond such party's control, including without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party, or the Customer as a result of work stoppage, power or other mechanical
failure, computer virus, natural disaster, governmental action, or
communication disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from
any loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful
misconduct in the use by the Customer of the Data Access Services or the
System, including any loss incurred by State Street resulting from a security
breach at the Designated Location or committed by the Customer's employees or
agents or the Investment Advisor and (ii) any loss resulting from incorrect
Client Originated Electronic Financial Instructions. State Street shall be
entitled to rely on the validity and authenticity of Client Originated
Electronic Financial Instructions without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security
procedures established by State Street from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access
Services and related payment terms shall be as set forth in the Custody Fee
Schedule in effect from time to time between the parties (the "Fee Schedule").
Any tariffs, duties or taxes imposed or levied by any government or
governmental agency by reason of the transactions contemplated by this
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Agreement, including, without limitation, federal, state and local taxes, use,
value added and personal property taxes (other than income, franchise or
similar taxes which may be imposed or assessed against State Street) shall be
borne by the Customer. Any claimed exemption from such tariffs, duties or
taxes shall be supported by proper documentary evidence delivered to State
Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a
designated State Street training facility or at the Designated Location, to the
Customer's personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time
to enable all operators of the System and the Data Access Services, designated
by the Customer, to receive the training offered by State Street pursuant to
this Agreement.
b. Installation and Conversion. State Street shall be responsible
for the technical installation and conversion ("Installation and Conversion")
of the Designated Configuration. The Customer shall have the following
responsibilities in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely
acquisition and maintenance of the hardware and software
that attach to the Designated Configuration in order to use
the Data Access Services at the Designated Location.
(ii) State Street and the Customer each agree that they will
assign qualified personnel to actively participate during
the Installation and Conversion phase of the System
implementation to enable both parties to perform their
respective obligations under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the
date of its execution by State Street and shall remain in full force and effect
until terminated as herein provided.
b. Termination of Agreement. Either party may terminate this
Agreement (i) for any reason by giving the other party at least one-hundred and
eighty days' prior written notice in the case of notice of termination by State
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Street to the Customer or thirty days' notice in the case of notice from the
Customer to State Street of termination; or (ii) immediately for failure of the
other party to comply with any material term and condition of the Agreement by
giving the other party written notice of termination. In the event the
Customer shall cease doing business, shall become subject to proceedings under
the bankruptcy laws (other than a petition for reorganization or similar
proceeding) or shall be adjudicated bankrupt, this Agreement and the rights
granted hereunder shall, at the option of State Street, immediately terminate
with notice to the Customer. This Agreement shall in any event terminate as to
any Customer within 90 days after the termination of the Custodian Contract
applicable to such Customer.
c. Termination of the Right to Use. Upon termination of this
Agreement for any reason, any right to use the System and access to the Data
Access Services shall terminate and the Customer shall immediately cease use of
the System and the Data Access Services. Immediately upon termination of this
Agreement for any reason, the Customer shall return to State Street all copies
of documentation and other Proprietary Information in its possession; provided,
however, that in the event that either party terminates this Agreement or the
Custodian Contract for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by the parties.
11. MISCELLANEOUS
a. Assignment: Successors. This Agreement and the rights and
obligations of the Customer and State Street hereunder shall not be assigned by
either party without the prior written consent of the other party, except that
State Street may assign this Agreement to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by, or under
common control with State Street.
b. Survival. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
c. Entire Agreement. This Agreement and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all prior
or contemporaneous representations or agreements, whether oral or written,
between the parties as such may relate to the Data Access Services or the
System, and cannot be modified or altered except in a writing duly executed by
the parties. This Agreement is not intended to supersede or modify the duties
and liabilities of the parties hereto under the Custodian Contract or any other
agreement between the parties hereto except to the extent that any such
agreement specifically refers to the Data Access Services or the System. No
single waiver or any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this Agreement
shall be held to be invalid, unlawful, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall not in any way
be affected or impaired.
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e. Governing Law. This Agreement shall be interpreted and
construed in accordance with the internal laws of The Commonwealth of
Massachusetts without regard to the conflict of laws provisions thereof.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement effective as of September [ * ], 1995.
NEW ENGLAND FUNDS TRUST III
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY
By:
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President
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ATTACHMENT A
System Product Description
I. Multicurrency-HORIZONR Accounting System. The Multicurrency HORIZON
Accounting System is designed to provide lot level portfolio and
general ledger accounting for SEC and ERISA type requirements and
includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3)
reconciliation of daily activity with the trial balance, and 4)
appropriate automated feeding mechanisms to (i) domestic and
international settlement systems, (ii) daily, weekly and monthly
evaluation services, (iii) portfolio performance and analytic
services, (iv) customer's internal computing systems and (v) various
State Street provided information services products.
II. Global Quest. Global Quest is designed to provide customer access
to the following information maintained on The Multicurrency HORIZON
Accounting System: 1) cash transactions and balances; 2) purchases
and sales; 3) income receivables; 4) tax refund; 5) daily priced
positions; 6) open trades; 7) settlement status; 8) foreign exchange
transactions; 9) trade history; and 10) daily, weekly and monthly
evaluation services.
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ATTACHMENT B
Designated Configuration
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ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to New England Funds Trust III (the "Customer") it will have
access to State Street Bank and Trust Company's ("State Street") Multicurrency
HORIZON Accounting System and other information systems (collectively, the
"System").
The undersigned acknowledges that the System and the databases,
computer programs screen formats, report formats, interactive design
techniques, documentation and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Undersigned shall
be deemed proprietary and confidential information of State Street
(hereinafter "Proprietary Information"). The Undersigned agrees that it will
hold such Proprietary Information in confidence and secure and protect it in a
manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of
the System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
NEW ENGLAND FUNDS MANAGEMENT, L.P.
By:
Name:
Title:
Date:
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ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as Investment
Advisor to New England Funds Trust III (the "Customer") it will have access to
State StreetBank and Trust Company's ("State Street") Multicurrency HORIZON
Accounting System andother information systems (collectively, the "System").
The undersigned acknowledges that the System and the databases,
computer programs screen formats, report formats, interactive design
techniques, documentation and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Undersigned shall
be deemed proprietary and confidential information of State Street
(hereinafter "Proprietary Information"). The Undersigned agrees that it will
hold such Proprietary Information in confidence and secure and protect it in a
manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of
the System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
XXXXXX, XXXXXX & COMPANY, L.P.
By:
Name:
Title:
Date:
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ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following ongoing support services:
a. Telephone Support. The Customer Designated Persons may contact
State Street's HORIZOPe Help Desk and Customer Assistance Center between the
hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose
of obtaining answers to questions about the use of the System, or to report
apparent problems with the System. From time to time, the Customer shall
provide to State Street a list of persons, not to exceed five in number, who
shall be permitted to contact State Street for assistance (such persons being
referred to as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support
to assist the Customer in using the System and the Data Access Services. The
total amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. Maintenance Support. State Street shall use commercially
reasonable efforts to correct system functions that do not work according to
the System Product Description as set forth on Attachment A in priority order
in the next scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer
any enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such
enhancement, State Street shall notify the Customer and shall offer the
Customer reasonable training on the enhancement. Charges for system
enhancements shall be as provided in the Fee Schedule. State Street retains
the right to charge for related systems or products that may be developed and
separately made available for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in
its sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to
support the Customer's use of the System: (1) for use on any computer
equipment or telecommunication facilities which does not conform to the
Designated Configuration or (ii) in the event the Customer has modified the
System in breach of this Agreement.
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