EXHIBIT 99.G2
MUTUAL FUND CUSTODY AGREEMENT
THIS AGREEMENT is made as of September 1, 2004 by and between THE
ADVISORS' INNER CIRCLE FUND II (the "Fund"), and WACHOVIA BANK, NATIONAL
ASSOCIATION, a National Bank ("Wachovia").
1. DEFINITIONS.
"Authorized Person" means the Fund's President, Vice-President,
Treasurer and any other person, whether or not that person is an officer or
employee of the Fund, duly authorized by the Directors or Trustees of the Fund
to give Proper Instructions on behalf of the Fund and listed on Attachment B
hereto, which may be amended from time to time in writing.
"Board" means the board of trustees or board of directors, as
applicable, of the Fund.
"Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
"Business Day" shall mean any day on which Wachovia, the Book-Entry
System, and relevant Depositories are open for business.
"Country Risks" means the systemic risks arising from holding Foreign
Assets in a particular country, including those arising from a country's
financial infrastructure, prevailing custody and settlement practices;
expropriation, nationalization or other governmental actions; and laws
applicable to the safekeeping and recovery of assets held in custody in such
country.
"Depository" shall include the Book-Entry System, the Depository Trust
Company, any other domestic securities depository, book-entry system or clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees, and any other entity permitted to hold Securities under 1940 Act Rule
17f-4.
"Eligible Foreign Custodian" means an Eligible Foreign Custodian as
defined in Rule 17f-5(a)(1) under the 1940 Act or any other entity that the SEC
qualifies as such by exemptive order, no-action relief, rule or other
appropriate SEC action. "Eligible Securities Depository" means an Eligible
Securities Depository as defined in section (b)(1) of Rule 17f-7 under the 1940
Act or that has otherwise been made exempt pursuant to an SEC exemptive order.
"Foreign Assets" means the Fund's investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Fund's
transactions in such investments.
"Foreign Custody Manager" means a Foreign Custody Manager as defined in
Rule 17f-5(a)(3) under the 1940 Act.
"Foreign Market" means each market so identified in Exhibit C hereto.
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"Portfolio" means each separate series of shares offered by the Fund
representing interests in a separate portfolio of securities and other assets
which is listed on Attachment C hereto or which is added pursuant to Paragraph
35 hereto.
"Proper Instructions" which may include standing instructions, shall
mean any notices, instructions or other instruments in writing Wachovia receives
from an Authorized Person or from a person Wachovia reasonably believes to be an
Authorized Person by letter, telex, facsimile transmission, Wachovia's on-line
communication system, or any other method whereby Wachovia is able to verify
with a reasonable degree of certainty the identity of the sender of the
communications or the sender is required to provide a password or other
identification code. Oral instructions will be considered Proper Instructions if
Wachovia reasonably believes that an Authorized Person has given the oral
instructions.
"Property" shall mean any and all Securities, cash, and other property
of the Fund which the Fund may from time to time deposit, or cause to be
deposited, with Wachovia or which Wachovia may from time to time hold for the
Fund; all income of any Securities or other property; all proceeds of the sales
of any Securities or other property; and all proceeds of the sale of securities
issued by the Fund, which Wachovia receives from time to time from or on behalf
of the Fund.
"Rule 17f-5" means ss.270.17(f)-5 under the 1940 Act, as amended from
time to time.
"Rule 17f-7" means ss.270.17(f)-7 under the 1940 Act, as amended from
time to time.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities" shall include, without limitation, any common stock and other
equity securities; bonds, debentures and other debt securities; forwards, swaps,
futures, derivatives, mortgages or other obligations; and any instruments
representing rights to receive, purchase, or subscribe for the same, or
representing any other rights or interests therein (whether represented by a
certificate or held in a Depository, Eligible Foreign Custodian, or Eligible
Securities Depository).
"U.S. Bank" means a U.S. bank as defined in Rule 17f-5(a)(7) under the
1940 Act.
"Wachovia " shall include any office, branch or subsidiary of Wachovia
Bank, National Association, and shall include any banking or trust institution
that acquires substantially all of the assets of Wachovia Bank, National
Association or into which Wachovia Bank, National Association is merged or
consolidated, in each case having an aggregate capital, surplus, and undivided
profits of not less than U.S. $ [50] million, provided that "Wachovia" shall not
include any entity that is (i) not qualified to act as the Fund's custodian
pursuant to Section 17(f)(1) of the 1940 Act or (ii) not a U.S. Bank.
"1940 Act" means the Investment Company Act of 1940, as amended.
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2. APPOINTMENT.
a. Appointment as Custodian. The Fund is registered as an
open-end management investment company under the 1940 Act, and the Fund desires
to retain Wachovia to serve as the Fund's custodian and Wachovia is willing to
furnish these services. The Fund hereby appoints Wachovia to act as custodian of
its Securities, cash and other Property on the terms set forth in this
Agreement. Wachovia accepts this appointment and agrees to furnish the services
set forth below for the compensation as provided in Paragraph 27 of this
Agreement.
b. Appointment as Foreign Custody Manager. The Fund hereby
appoints Wachovia as a Foreign Custody Manager to perform the responsibilities
set forth in Paragraph 8 with respect to Foreign Assets, and Wachovia hereby
accepts such appointment as a Foreign Custody Manager of the Fund.
3. DELIVERY OF DOCUMENTS. The Fund will promptly furnish to Wachovia
copies, properly certified or authenticated, of contracts, documents and other
related information that Wachovia may request or requires to properly discharge
its duties. These documents may include but are not limited to the following:
a. Resolutions of the Fund's Trustees authorizing the appointment
of Wachovia as custodian of the Property of the Fund and approving this
Agreement;
b. Incumbency and signature certificates identifying and
containing the signatures of the Fund's Authorized Persons;
c. The Fund's most recent prospectus including all amendments and
supplements thereto (the "Prospectus").
The Fund will furnish Wachovia from time to time with copies of all
amendments of or supplements to the foregoing, if any. The Fund also will
furnish Wachovia with a copy of the opinion of counsel for the Fund on the
validity of the shares of common stock or units of beneficial interest (the
"Shares") of the Fund and the status of the Shares under the 1933 Act, and under
any other applicable federal law or regulation.
d. To help the government fight the funding of terrorism and
money laundering activities, Federal law requires all financial institutions to
obtain, verify and record information that identifies each client who opens an
account.
4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Fund will deliver or
cause to be delivered to Wachovia, to be held by Wachovia on the Fund's behalf
under the terms of this Agreement, all Property it owns, including cash received
for the issuance of its Shares, at any time during the period of this Agreement,
except for Securities and monies to be delivered to any subcustodian or
depository appointed pursuant to this Agreement Wachovia will not be responsible
for Securities and monies until Wachovia or any such subcustodian or depository
actually receives them. Wachovia shall identify on its books and records the
Securities and cash belonging to the Fund, whether held directly or indirectly
through depositories or subcustodians. All Securities delivered to Wachovia or
to any subcustodian, or depository on behalf of the Fund as provided herein
(other than in bearer form) shall be registered in the name of the Fund or in
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the name of a nominee of the Fund, in the name of Wachovia or any nominee of
Wachovia (with or without indication of fiduciary status), in the name of any
subcustodian or depository or any nominee of such a subcustodian or depository
appointed pursuant to the terms of this Agreement, or shall be properly endorsed
and in form for transfer satisfactory to Wachovia.
5. VOTING AND OTHER RIGHTS.
a. The Fund shall have the right to exercise voting and other
rights and powers for all Securities, however registered. Wachovia's only duty
shall be to mail for delivery on the next Business Day to the Fund any documents
received, including proxy statements and offering circulars, with any proxies
executed by the nominee for Securities registered in a nominee name. Wachovia
reserves the right to provide any documents received, or parts thereof, in the
language received. The Fund acknowledges that in certain countries Wachovia may
be unable to vote individual proxies but be able only to vote proxies on a net
basis. Wachovia will use reasonable care in facilitating the exercise of voting
and other shareholder rights by the Fund, subject always to the laws,
regulations and practical constraints that may exist in the country where such
securities are issued. The Fund acknowledges that local conditions, including
lack of regulation, onerous procedural obligations, lack of notice and other
factors may have the effect of severely limiting the ability of the Fund to
exercise shareholder rights. Wachovia shall vote or cause proxies to be voted
only as expressly directed in writing pursuant to Proper Instructions of the
Fund's Authorized Person. In the absence of Proper Instructions, neither
Wachovia nor any subcustodian shall vote or cause proxies to be voted, and they
shall expire without liability to Wachovia. Wachovia will not advise the Fund or
act for the Fund in any legal proceedings, including bankruptcies, involving
Securities the Fund holds or previously held or the issuers of these Securities,
except as the Fund and Wachovia expressly agree upon in writing.
b. Wachovia shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and maturities of
Securities and expirations of rights in connection therewith and notices of
exercise of call and put options the Fund writes and the maturity of futures
contracts the Fund purchases or sells) Wachovia receives from issuers of the
Securities the Fund holds, or from an Eligible Foreign Custodian or Eligible
Securities Depository holding Foreign Assets of the Fund. For tender or exchange
offers, Wachovia shall transmit promptly by facsimile to the Fund all written
information Wachovia receives from issuers of the Securities whose tender or
exchange is sought and from the party (or his agents) making the tender or
exchange offer, or from an Eligible Foreign Custodian or Eligible Securities
Depository holding Foreign Assets of the Fund. If the Fund desires to take
action on any tender offer, exchange offer or any other similar transaction, the
Fund shall notify Wachovia at least two business days before the date on which
Wachovia is to take action or five business days if the tender offer, exchange
offer, or other similar transaction involves a Foreign Asset, or upon the date
the Fund first receives the notification, if later. Absent Wachovia's failure to
promptly transmit such written information that it has received to the Fund, or
absent Wachovia's timely receipt of Proper Instructions, Wachovia shall not be
liable for failure to take any action relating to or to exercise any rights the
Securities confer.
c. Wachovia shall promptly notify the Fund of any rights or
discretionary actions or of the date or dates by when the rights must be
exercised or action must be taken provided that Wachovia has received, from the
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issuer, from persons making a tender or exchange offer, or from an Eligible
Foreign Custodian or Eligible Securities Depository, or otherwise, timely notice
of rights, discretionary corporate action, or dates. Absent actual receipt of
this notice, Wachovia shall have no liability for failing to so notify the Fund.
d. Unless otherwise requested by the Fund, Wachovia shall not be
required to notify the Fund of any tender offer with respect to Securities if
the offer is for less than 5% of the outstanding shares of such issue and if the
price offered is less than 99% of the then current market value.
6. RECEIPT AND DISBURSEMENT OF MONEY.
a. Wachovia shall open and maintain a custody account for the
Fund (the "Account") subject only to draft or order by Wachovia acting pursuant
to the terms of this Agreement, and shall hold in the Account, subject to the
provisions in this Paragraph 6, all cash it receives by or for the Fund, other
than cash the Fund maintains in a bank account established and used in
accordance with Rule 17f-3 under the 1940 Act. Wachovia shall make payments of
cash to, or for the account of, the Fund only upon receipt of Proper
Instructions (i) for the purchase of Securities against delivery of such
Securities except as provided in Paragraph 10; (ii) in the case of a purchase of
Securities effected through a Depository, in accordance with the conditions set
forth in Paragraph 16; (iii) in the case of repurchase agreements entered into
between the Fund and Wachovia (acting as principal), or another bank, or a
broker-dealer which is a member of The National Association of Securities
Dealers, Inc. ("NASD"), either (a) against delivery of the Securities for the
account of the Fund either in certificate form or through an entry crediting
Wachovia's account at the Federal Reserve Bank (which account shall be for the
sole benefit of Wachovia's customers) with the Securities or (b) with respect to
a repurchase agreement entered into with Wachovia, as principal, against
delivery of the receipt evidencing the Fund's purchase of Securities from
Wachovia along with written evidence of Wachovia's agreement to repurchase the
Securities from the Fund, provided that such Securities are held by Wachovia so
as to provide the Fund with a perfected security interest in such Securities;
(iv) for transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; the transfer may be effected before receipt of a
confirmation from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund; (v) for the payment of dividends or other
distributions on shares declared pursuant to the governing documents of the
Fund, for payment to the transfer agent to fund share redemptions, or for the
payment of interest, taxes, administration, distribution or advisory fees or
expenses which the Fund is to bear under the terms of this Agreement, any
Advisory Agreement, or any distribution or administration agreement; (vi) for
payments in connection with the conversion, exchange or surrender of Securities
the Fund owns or subscribes to and Wachovia holds on behalf of the Fund or is to
deliver ; (vii) to a subcustodian or a depository pursuant to the terms hereof;
(viii) for expenses the Fund incurs in the ordinary course of its business,
including but not limited to printing and mailing expenses, legal fees,
accountants' fees, exchange fees; or (ix) for any other proper purpose, but only
upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant Secretary,
specifying the amount of the payment, setting forth the purpose for which the
payment is to be made, declaring the purpose to be a proper purpose, and naming
the person or persons to whom the payment is to be made.
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7. RECEIPT AND DELIVERY OF SECURITIES. a. Except for Property held by a
subcustodian or depository pursuant to the terms of this Agreement, Wachovia
shall hold on behalf of the Fund and segregate (physically, where Securities are
held in certificate form) all Securities and non-cash Property it receives for
the Fund. Wachovia will hold or dispose of all Securities and non-cash Property
for the Fund pursuant to the terms of this Agreement. In the absence of Proper
Instructions accompanied by a certified resolution of the Fund's Board
authorizing the specific transaction, Wachovia shall have no power or authority
to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any
Securities and other Property, except in accordance with this Agreement. In no
case may any director, trustee, officer, employee or agent of the Fund withdraw
any Securities. Wachovia may, upon receipt of Proper Instructions, but only in
accordance with an applicable vote of the Board of the Fund, at its own expense,
employ subcustodians for the receipt of certain non-Foreign Assets Wachovia is
to hold for the account of the Fund pursuant to this Agreement; provided that
each subcustodian is a U.S. Bank and has an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000) and that such subcustodian agrees with
Wachovia to comply with all relevant provisions of the 1940 Act and applicable
rules and regulations thereunder. Wachovia will be liable for acts or omissions
of any subcustodian to the same extent that Wachovia is liable to the Fund under
this Agreement.
b. Wachovia shall furnish the Fund daily with confirmations and a
summary of all transfers to or from the account of the Fund during said day.
Where Securities are transferred to the account of the Fund established at a
Depository, Wachovia shall also by book-entry or otherwise identify as belonging
to the Fund (and a Portfolio) the quantity of Securities in a fungible bulk of
Securities registered in the name of Wachovia (or its nominee) or shown in
Wachovia's account on the books of such Depository. At least monthly and from
time to time as requested by the Fund, Wachovia shall furnish the Fund with a
detailed statement of the Property held for the Fund under this Agreement.
8. SCOPE OF RESPONSIBILITIES AS FOREIGN CUSTODY MANAGER.
a. AUTHORIZATION. Subject to the terms and conditions herein,
Wachovia is hereby authorized to: (i) place and maintain Foreign Assets on
behalf of the Fund with Eligible Foreign Custodians pursuant to a written
contract determined appropriate by Wachovia in accordance with the terms and
conditions herein and (ii) withdraw Foreign Assets from Eligible Foreign
Custodians in accordance with the terms and conditions herein.
b. SELECTION. Wachovia shall place and maintain Foreign Assets in
the care of one or more Eligible Foreign Custodians. In performing its
responsibilities to place and maintain Foreign Assets with an Eligible Foreign
Custodian, Wachovia shall determine that the Eligible Foreign Custodian will
hold Foreign Assets in the exercise of reasonable care, based on the standards
applicable to custodians in the jurisdiction or market in which the Foreign
Assets will be held by that Eligible Foreign Custodian, after considering all
factors relevant to the safekeeping of such assets, including, without
limitation:
(i) the Eligible Foreign Custodian's practices,
procedures, and internal controls, including, but not
limited to, the physical protections available for
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certificated securities (if applicable), its methods
of keeping custodial records, its security and data
protection practices, and its settlement practices;
(ii) whether the Eligible Foreign Custodian has the
financial strength to provide reasonable care for
Foreign Assets and to protect Foreign Assets against
the Eligible Foreign Custodian's insolvency;
(iii) the Eligible Foreign Custodian's general reputation
and standing; and
(iv) whether the Fund will have jurisdiction over, and be
able to enforce judgments against, the Eligible
Foreign Custodian in the United States.
c. CONTRACTS. Wachovia shall ensure that the Fund's foreign
custody arrangements with each Eligible Foreign Custodian are governed by a
written contract with such Eligible Foreign Custodian. Wachovia shall determine
that the written contract governing the foreign custody arrangements with each
Eligible Foreign Custodian that Wachovia selects will provide reasonable care
for Foreign Assets held by that Eligible Foreign Custodian. Each written
contract will include terms that provide:
(i) for indemnification and/or insurance arrangements
that will adequately protect the Fund against the
risk of loss of the Foreign Assets held in accordance
with such contract;
(ii) that the Foreign Assets will not be subject to any
right, charge, security interest, lien or claim of
any kind in favor of the Eligible Foreign Custodian
or its creditors, except a claim for the Eligible
Foreign Custodian's services under the contract or,
in the case of cash deposits, liens or rights in
favor of creditors of such Eligible Foreign Custodian
arising under bankruptcy, insolvency or similar laws;
(iii) that beneficial ownership of the Foreign Assets will
be freely transferable without the payment of money
or value, other than payments for the Eligible
Foreign Custodian's services under the contract;
(iv) that the Eligible Foreign Custodian will maintain
adequate records identifying the Foreign Assets held
under the contract as belonging to the Fund or as
being held by a third party for the benefit of the
Fund;
(v) that the Fund's independent public accountants will
be given access to those records or confirmation of
the contents of those records;
(vi) that the Fund will receive periodic reports with
respect to the safekeeping of the Foreign Assets,
including, but not limited to, notification of any
transfer of the Foreign Assets to or from the account
of the Fund or a third party account containing the
Foreign Assets held for the benefit of the Fund; and
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(vii) that the Eligible Foreign Custodian will indemnify
and hold harmless Wachovia (or its agent) or the Fund
from and against any loss, expense, liability or
claim incurred by Wachovia (or its agent) or the Fund
to the extent such loss, expense, liability or claim
arises from the Eligible Foreign Custodian's
negligence or willful misconduct.
or, in lieu of any or all of the terms set forth in (i) through (vi) above, such
other terms that Wachovia determines will provide, in their entirety, the same
or greater level of care and protection for the Foreign Assets as the provisions
set forth in (i) through (vi) above in their entirety.
d. MONITORING. Wachovia will establish and maintain a system to
monitor: (i) the appropriateness of maintaining Foreign Assets with each
Eligible Foreign Custodian; (ii) Material Changes to the Fund's foreign custody
arrangements, as defined in paragraph (f) below; and (iii) the performance of
the contracts described in subparagraph c. above (the "Monitoring System").
e. WITHDRAWING FUND ASSETS. In the event that a foreign custody
arrangement no longer meets the terms and conditions set forth in Rule 00x-0,
Xxxxxxxx will promptly notify the Fund and will then act in accordance with the
Fund's Proper Instructions with respect to the disposition of the affected
Foreign Assets. Under exigent circumstances, however, Wachovia is authorized to
withdraw Foreign Assets if, after first notifying the Fund, forty-eight (48)
hours has passed without receiving a response to the notification from an
Authorized Person.
f. REPORTING REQUIREMENTS. Wachovia shall notify the Board of the
placement of Foreign Assets with an Eligible Foreign Custodian and any Material
Changes in the Fund's foreign custody arrangements by providing a written report
to the Board at the end of each calendar quarter or at such times as the Fund's
trustees deem reasonable and appropriate. With respect to Material Changes,
Wachovia shall provide the Board with a written report promptly after the
occurrence of the Material Change. Material Changes" include, but are not
limited to: a decision to remove all Foreign Assets from a particular
subcustodian; any event that may adversely and materially affect an Eligible
Foreign Custodian's financial or operational strength; Wachovia's inability to
perform its duties in accordance with the standard of care under this Paragraph
8; a change in control of an Eligible Foreign Custodian; the failure of an
Eligible Foreign Custodian to comply with the terms of Rule 17f-5, or its
contract governing the Fund's foreign custody arrangements; any material change
in any contract governing the Fund's foreign custody arrangements; the failure
of Wachovia or a foreign custody arrangement to meet the standards in Rule
17f-5; any event that may adversely affect Wachovia's ability to comply with
Rule 17f-5; and a material change in any information provided to the Board
regarding Wachovia's expertise in foreign custody issues and risks, Wachovia's
use of third party experts to perform its foreign custody responsibilities, the
Board's ability to monitor Wachovia's performance, Wachovia's financial strength
or its ability to indemnify the Fund.
g. PROVISION OF INFORMATION. Wachovia shall provide to the Fund
(or its investment adviser(s)) such information as is specified in Exhibit A
hereto, as may be amended from time to time by the parties. The Fund hereby
acknowledges that such information is solely designed to inform the Fund of
market conditions and procedures, but is not intended to influence the Fund's
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investment decisions (or those of its investment adviser(s)). Wachovia will use
reasonable care in gathering such information. Wachovia agrees to promptly
notify the Fund (or its investment adviser(s)) at the time that Wachovia becomes
aware of a material change to the information provided or if Wachovia learns
that any information previously provided is incomplete or inaccurate. Wachovia
will provide to the Fund (or its investment adviser(s)) upon reasonable request
a written statement as may reasonably be required to document its compliance
with the terms of this Agreement, as well as information regarding the following
factors: (i) Wachovia's expertise in foreign custody issues and risks; (ii)
Wachovia's use of third party experts to perform its foreign custody
responsibilities; (iii) the Board's ability to monitor Wachovia's performance;
and (iv) Wachovia's financial strength and its ability to indemnify the Fund if
necessary. With respect to each Eligible Foreign Custodian employed by the Fund
under Paragraph 8.i below, Wachovia agrees to provide to the Fund (or its
investment adviser(s)) any information it possesses regarding Country Risk or
the risks associated with placing or maintaining Foreign Assets with the
Eligible Foreign Custodian.
h. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER. In performing its
delegated responsibilities as the Fund's Foreign Custody Manager, Wachovia
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of the Fund's Foreign Assets under the
1940 Act would exercise. In particular, regardless of whether assets are
maintained in the custody of an Eligible Foreign Custodian or an Eligible
Securities Depository, Wachovia shall be liable to the Fund for the acts or
omissions of an Eligible Foreign Custodian or Eligible Securities Depository
where that Eligible Foreign Custodian or Eligible Securities Depository has not
acted with reasonable care.
i. DIRECTION OF ELIGIBLE FOREIGN CUSTODIANS. The Fund may direct
Wachovia to place and maintain Foreign Assets with a particular Eligible Foreign
Custodian that is not otherwise part of Wachovia's foreign custody network. In
such event, Wachovia will have no duties under this Paragraph 8 with respect to
such arrangement, except those included under Paragraph 8.g and those that it
may undertake specifically in writing.
j. BEST CUSTOMER. If at any time Wachovia is or becomes a party
to an agreement to serve as Foreign Custody Manager to an investment company
that provides for either: (i) a standard of care with respect to the selection
of Eligible Foreign Custodians in any jurisdiction higher than that set forth in
Paragraph 8.b., or (ii) a standard of care with respect to exercise of
Wachovia's duties other than that set forth in Paragraph 8.h., Wachovia agrees
to notify the Fund of this fact and to raise the applicable standard of care
hereunder to the standard specified in such other agreement.
k. CONDITION PRECEDENT. As a condition precedent to Wachovia's
performance under this Paragraph 8, the Fund shall deliver to Wachovia a
certificate from the Fund's secretary containing the resolution of the Board
regarding the Board's determination that it is reasonable to rely on Wachovia to
perform the responsibilities delegated pursuant to this Agreement to Wachovia as
Foreign Custody Manager of the Fund.
l. LIMITATIONS. Wachovia shall have only such duties as are
expressly set forth herein. In no event shall Wachovia be liable for any Country
Risks associated with investments in a particular country.
m. REPRESENTATIONS WITH RESPECT TO RULE 17F-5. Wachovia
represents to the Fund that it is a U.S. Bank.
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9. ELIGIBLE SECURITIES DEPOSITORIES; COMPLIANCE WITH RULE 17F-7. Wachovia
shall provide an analysis of the custody risks associated with maintaining the
Fund's Foreign Assets with each Eligible Securities Depository prior to the
initial placement of the Fund's Foreign Assets at such Depository and at which
any Foreign Assets of the Fund are held or are expected to be held. Wachovia
shall monitor the custody risks associated with maintaining the Fund's Foreign
Assets at each such Eligible Securities Depository on a continuing basis and
shall promptly notify the Fund and its advisers of any material changes in such
risks. Wachovia shall exercise reasonable care, prudence and diligence in
performing the requirements set forth in this Paragraph. Based on the
information available to it in the exercise of the foregoing standard of care,
Wachovia shall determine the eligibility under Rule 17f-7 of each Depository
before including it on Exhibit B hereto and shall promptly advise the Fund (and
its investment adviser(s)) if any Eligible Securities Depository ceases to be
eligible and will withdraw the Fund's foreign assets from the depository as soon
as reasonably practical. For purposes of this Paragraph 9, the Fund (and its
investment adviser(s)) shall be deemed to have considered the Country Risk as is
incurred by placing and maintaining Foreign Assets in each country in which each
such Eligible Securities Depository operates. Wachovia's responsibilities under
this Paragraph 9 shall not include, or be deemed to include, any evaluation of
Country Risks associated with investment in a particular country.
10. FOREIGN MARKET TRANSACTIONS. The Fund agrees that all settlements of
Foreign Assets transactions shall be against delivery of the Securities for
cash, unless such settlement is inconsistent with customary practices in the
local market and reasonably impracticable to otherwise achieve. Wachovia shall
provide a report of settlement practices in Foreign Markets as described in
Exhibit A.
11. PLEDGE OR ENCUMBRANCE OF SECURITIES OR CASH. Except as provided in this
Agreement, Wachovia may not pledge, assign, hypothecate or otherwise encumber
Securities or cash in any Account without the Fund's prior written consent.
12. SEGREGATED ACCOUNT. Wachovia shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf of the
Fund, into which account or accounts may be transferred cash and/or Securities
(i) in accordance with the provisions of any agreement among the Fund, Wachovia
and a broker-dealer registered under the Securities Exchange Act of 1934 (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 Fund transactions,
(ii) for purposes of segregating cash or government securities in connection
with options the Fund purchases, sells or writes or commodity futures contracts
or options thereon that the Fund purchases or sells, (iii) for the purposes of
the Fund's compliance with the procedures set out in 1940 Act Release No. 10666,
or any subsequent release, interpretation or policy of the SEC relating to
registered investment companies' maintenance of segregated accounts; and (iv)
for other proper corporate purposes, but only, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board or of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting forth the purpose
or purposes of the segregated account and declaring the purposes to be proper
corporate purposes.
10
13. FOREIGN EXCHANGE.
a. For the purpose of settling Securities and foreign exchange
transactions, the Fund shall provide Wachovia with sufficient immediately
available funds for all transactions by such time and date as conditions in the
relevant market dictate. As used herein, "sufficient immediately available
funds" shall mean either (i) sufficient cash denominated in the currency of the
Fund's home jurisdiction to purchase the necessary foreign currency, or (ii)
sufficient applicable foreign currency to settle the transaction. Wachovia shall
provide the Fund with immediately available funds, which result from the actual
settlement of all sale transactions each day, based upon advices Wachovia
receives from the Fund's Eligible Foreign Custodians and Eligible Securities
Depositories. Such funds shall be in the currency of the Fund's home
jurisdiction or such other currency as the Fund may specify to Wachovia.
b. Any foreign exchange transaction Wachovia effects in
connection with this Agreement pursuant to Proper Instructions may be entered
with Wachovia acting as principal or otherwise through customary banking
channels. The Fund may issue standing Proper Instructions with respect to
foreign exchange transactions but Wachovia may establish rules or limitations
concerning any foreign exchange facility made available to the Fund by Wachovia.
The Fund shall bear all currency risks resulting from investing in Securities
denominated in a foreign currency or holding cash denominated in a foreign
currency. In particular (and except to the extent that this paragraph is
inconsistent with paragraphs 8 or 9), the Fund shall bear the risks that (i) a
transfer to, by or for the account of the Fund of Securities or cash held
outside the Fund's jurisdiction or denominated in a currency other than its home
jurisdiction, or (ii) the conversion of cash from one currency into another, may
be prohibited, limited, or be subject to burdens or costs, because of (w)
Eligible Securities Depository rules or procedures, (x) exchange controls, (y)
asset freezes, or (z) other laws, rules, regulations or orders. Wachovia shall
not be obligated to substitute another currency for a currency (including a
currency that is a component of a composite currency unit such as the Euro)
whose transferability, convertibility or availability has been affected by such
law, regulation, rule or procedure. Except as set forth in Paragraphs 8 and 9,
Wachovia shall not be liable to the Fund of any loss resulting from any of the
foregoing events.
14. LENDING OF SECURITIES.
a. Promptly after the Fund or its agent lends Securities in the
Fund's account, the Fund shall deliver or cause to be delivered to Wachovia, as
custodian, a certificate specifying (a) the name of the issuer and the title of
the Securities; (b) the number of shares or principal amount loaned; (c) the
date of the loan and delivery; (d) a description of and total amount of
collateral to be delivered to Wachovia for the account of the Fund against the
loan of the Securities, including the amount of the cash collateral and the
premium, if any, separately identified; and (e) the name of the broker-dealer or
financial institution to which the loan was made. Wachovia shall not lend
Securities except as the Fund or its agent instructs. Wachovia shall deliver
Securities so designated to the broker-dealer or financial institution to which
the loan was made upon the receipt of the collateral for the account of the Fund
designated as to be delivered against the loan of Securities. Wachovia may
accept payment for the account of the Fund in connection with a delivery
11
otherwise than through a Depository only as directed by the Fund and may deliver
Securities in accordance with the customs prevailing among dealers in
Securities.
b. Promptly after each termination of a loan of Securities, the
Fund shall deliver to Wachovia, as custodian, a certificate specifying (a) the
name of the issuer and the title of the Securities to be returned to the Fund;
(b) the number of shares or principal amount to be returned; (c) the date of
termination; (d) the total amount of collateral held for the account of the Fund
that Wachovia is to deliver, including the amount of the cash collateral less
any offsetting credits as described in the certificate; (e) the name of the
broker-dealer or financial institution from which the Securities will be
returned; and (f) whether the return is to be effected through a Depository.
Wachovia shall receive for the account of the Fund all Securities returned from
a broker-dealer or other financial institution to which the Securities were
loaned, and upon receipt thereof shall pay from the account of the Fund the
total amount payable upon the return of the Securities as set forth in the
certificate. Securities returned to Wachovia for the account of the Fund shall
be held as they were before the loan.
15. OVERDRAFTS OR INDEBTEDNESS. If Wachovia in its sole discretion advances
funds in any currency hereunder or if there shall arise for whatever reason an
overdraft in a Fund's Account (including, without limitation, overdrafts
incurred in connection with the settlement of securities transactions, funds
transfers or foreign exchange transactions) or if the Fund is for any other
reason indebted to Wachovia in connection with Wachovia's obligations under this
Agreement ("Indebtedness"), the Fund agrees to repay Wachovia on demand the
amount of the Indebtedness plus accrued interest at a rate Wachovia ordinarily
charges to its institutional custody customers in the relevant currency. To
secure repayment of the Fund's obligations to Wachovia hereunder, the Fund
hereby pledges and grants to Wachovia a continuing lien and security interest
in, and right of set off against, all of the Fund's right, title and interest in
and to (a) all accounts in the Fund's name and the securities, money and other
property now or hereafter held in such accounts (including the proceeds
thereof), (b) each account in respect of which, or for whose benefit the
advance, overdraft or indebtedness relates and the securities, money and other
property now or hereafter held in such account (including the proceeds thereof),
and (c) any other property at any time Wachovia holds for the account of the
Fund, but in each case only to the extent of such Indebtedness. In this regard,
Wachovia shall be entitled to all the rights and remedies of a pledgee and
secured creditor under applicable laws, rules or regulations then in effect.
12
16. USE OF DOMESTIC DEPOSITORY.
a. Wachovia shall, until Wachovia actually receives Proper
Instructions to the contrary, (i) deposit in a Depository all Securities of the
Fund eligible for deposit therein and (ii) use a Depository to the extent
possible in connection with the performance of its duties hereunder, including
without limitation, settlements of the Fund's purchases and sales of Securities,
and deliveries and returns of securities collateral in connection with
borrowings. Without limiting the generality of this use, it is agreed that the
following provisions shall apply thereto:
b. Securities and any cash of the Fund deposited in a Depository
will at all times (1) be represented in an account of Wachovia in the Depository
and (2) be segregated from any assets and cash Wachovia controls in other than a
fiduciary or custodian capacity but may be commingled with other assets held in
these capacities. Securities and cash Wachovia deposits in a Depository will be
held subject to the rules, terms and conditions of the Depository. Wachovia will
effect payment for Securities and receive and deliver Securities in accordance
with accepted industry practices as set forth in (c) below, unless the Fund has
given Wachovia Proper Instructions to the contrary.
c. Wachovia shall transfer cash from the account of the Fund in
payment for Securities purchased for the account of the Fund upon (i) receipt of
advice from the Depository that the Securities have been transferred to the
Fund, and (ii) the making of an entry on the records of Wachovia to reflect the
payment and transfer for the account of the Fund. Upon receipt of Proper
Instructions, Wachovia shall transfer Securities sold for the account of the
Fund upon (i) receipt of advice from the Depository that payment for the
Securities has been transferred to the Account, and (ii) the making of an entry
on the records of Wachovia to reflect the transfer and payment for the account
of the Fund. Copies of all advices from the Depository of transfers of
Securities for the account of the Fund shall identify the Fund, and Wachovia
shall maintain these copies for the Fund and provide them to the Fund at its
request.
d. [Reserved.]
e. All books and records Wachovia maintains that relate to the
Fund's participation in a Depository will at all times during Wachovia's regular
business hours be open to the inspection of the Fund's duly authorized employees
or agents, and the Fund will be furnished with all information in respect of the
services rendered to it as it may require.
f. Wachovia shall exercise due care in accordance with reasonable
commercial standards in discharging its duties as a securities intermediary with
respect to the Fund's assets, to obtain and thereafter maintain such assets. If
Wachovia holds any of the Fund's assets in a Depository through a subcustodian,
Wachovia shall require that such subcustodian, at a minimum, shall exercise due
care in accordance with reasonable commercial standards in discharging its duty
as a securities intermediary to obtain and thereafter maintain financial assets
corresponding to the security entitlements of its entitlement holders, such
terms "securities intermediary," "security entitlements" and "entitlement
holders" to have the meaning set forth in the Uniform Commercial Code as in
effect in the Commonwealth of Pennsylvania. At the election of the Fund on a
case by case basis , it shall be entitled to be subrogated to the rights of
13
Wachovia for any claim against the Depository or any other person that Wachovia
may have as a consequence of any loss or damage if and to the extent that the
Fund has not been made whole for any loss or damage.
17. INSTRUCTIONS CONSISTENT WITH THE DECLARATION, ETC.
a. Unless otherwise provided in this Agreement, Wachovia shall
act only upon Proper Instructions. Wachovia may assume that any Proper
Instructions received hereunder are not in any way inconsistent with any
provision of the Declaration or By-Laws of the Fund or any vote or resolution of
the Fund's Trustees, or any committee thereof. Wachovia shall be entitled to
rely upon any Proper Instructions it actually receives pursuant to this
Agreement and which it reasonably believes an Authorized Person has given. The
Fund agrees that Wachovia shall incur no liability in acting in good faith upon
Proper Instructions that Wachovia reasonably believes an Authorized Person has
given to Wachovia, provided such Proper Instructions are otherwise in accordance
with this Agreement. The Fund agrees to forward to Wachovia Proper Instructions
confirming oral instructions by the close of business of the same day that the
oral instructions are given to Wachovia. However, the Fund agrees that where
Wachovia does not receive confirming Proper Instructions or receives contrary
Proper Instructions, the validity or enforceability of transactions the oral
instructions authorize and which Wachovia carries out prior to receipt of
contrary instructions shall not be affected, and the only obligation that
Wachovia shall have with respect to receipt of conflicting Proper Instructions
is to promptly notify the Fund of such receipt.
b. [Reserved.]
c. The Fund agrees that test arrangements, authentication methods
or other security devices to be used for Proper Instructions which the Fund may
give by telephone, telex, TWX, facsimile transmission, bank wire or through an
electronic instruction system, shall be processed in accordance with terms and
conditions for the use of the arrangements, methods or devices as Wachovia may
put into effect and modify from time to time. The Fund shall safeguard any test
keys, identification codes or other security devices which Wachovia makes
available to the Fund and agrees that the Fund shall be responsible for any
loss, liability or damage Wachovia or the Fund incurs as a result of Wachovia's
acting in accordance with instructions from any unauthorized person using the
proper security device because of the failure of the Fund to properly safeguard
such security device. Wachovia may, but is not obligated to, electronically
record any instructions given by telephone and any other telephone discussions
about the Account.
18. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. Wachovia is authorized to take
the following action without Instructions:
a. COLLECTION OF INCOME AND OTHER PAYMENTS. Wachovia shall:
i. collect and receive on a timely basis for the account of
the Fund, all income and other payments and distributions, including (without
limitation) stock dividends, rights, warrants and similar items, included or to
be included in the Property of the Fund, and promptly advise the Fund of the
receipt and shall credit the income, as collected, to the Fund. Without limiting
14
the generality of the foregoing, Wachovia shall 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.
Income due the Fund on Securities loaned pursuant to the provisions of Paragraph
14 shall be the responsibility of the Fund. Wachovia will have no duty or
responsibility in connection therewith, other than to provide the Fund with
information or data as may be necessary to assist the Fund in arranging for the
timely delivery to Wachovia of the income to which the Fund is properly
entitled. From time to time, Wachovia may elect, but shall not be so obligated,
to credit the Account with interest, dividends or principal payments on payable
or contractual settlement date, in anticipation of receiving the same from a
payor, central depository, broker or other agent the Fund or Wachovia employs.
Any such crediting and posting shall be at the Fund's sole risk, and Wachovia
shall be authorized to reverse any advance posting in the event Wachovia does
not receive good funds from any payor, central depository, broker or agent of
the Fund;
ii. endorse and deposit for collection in the name of the
Fund, checks, drafts, or other orders for the payment of money on the same day
as received;
iii. receive and hold for the account of the Fund all
Securities the Fund receives as a result of a stock dividend, share split-up or
reorganization, recapitalization, readjustment or other rearrangement or
distribution of rights or similar securities issued with respect to any
Securities of the Fund Wachovia holds hereunder;
iv. present for payment and collect the amount payable upon
all Securities which may mature or be called, redeemed or retired, or otherwise
become payable on the date the Securities become payable;
v. take any action which may be necessary and proper in
connection with the collection and receipt of the income and other payments and
the endorsement for collection of checks, drafts and other negotiable
instruments;
vi. effect an exchange of the shares where the par value of
stock is changed, and to surrender Securities at maturity or when advised of an
earlier call for redemption or when Securities otherwise become available,
against payment therefore in accordance with accepted industry practice. The
Fund understands that Wachovia subscribes to one or more nationally recognized
services that provide information on calls for redemption of bonds or other
corporate actions.
Wachovia shall have no duty to notify the Fund of any rights,
duties, limitations, conditions or other information set forth in any Security
(including mandatory or optional put, call and similar provisions), but Wachovia
shall forward to the Fund any notices or other documents subsequently received
in regard to any security. When fractional shares of stock of a declaring
corporation are received as a stock distribution, unless specifically instructed
to the contrary in writing, Wachovia is authorized to sell the fraction received
and credit the Fund's account. Unless specifically instructed to the contrary in
writing, Wachovia is authorized to exchange Securities in bearer form for
Securities in registered form. If the Fund owns Property that is registered in
the name of a nominee of Wachovia and the issuer of any such Property calls the
Property for partial redemption, Wachovia is authorized to allot the called
portion to the beneficial holders of the Property in a manner it deems fair and
equitable in its sole discretion;
15
vii. forward promptly to the Fund copies of all information or
documents that it may receive from an issuer of Securities which, in the opinion
of Wachovia , are intended for the Fund as the beneficial owner of Securities;
and
viii. execute, as Wachovia , any certificates of ownership,
affidavits, declarations or other certificates for all foreign governments,
federal and state tax purposes in connection with the collection or receipt of
income, bond and note coupons, or other payments from Securities or in
connection with transfers of Securities.
b. MISCELLANEOUS TRANSACTIONS. Wachovia is authorized to deliver
or cause to be delivered Property against payment or other consideration or
written receipt therefore in the following cases:
i. for examination by a broker selling for the Account of the
Fund in accordance with street delivery custom;
ii. for the exchange of interim receipts or temporary
Securities for definitive securities; and
iii. for transfer of Securities into the name of the Fund or
Wachovia or a nominee of either, or to the issuer thereof for exchange of
Securities for a different number of bonds, certificates, or other evidence,
representing the same aggregate face amount or number of units bearing the same
interest rate, maturity date and call provisions, if any; provided that, in any
case, the new Securities are to be delivered to Wachovia .
19. TRANSACTIONS REQUIRING INSTRUCTIONS. In addition to the actions
requiring Proper Instructions set forth in this Agreement, upon receipt of
Proper Instructions and not otherwise, Wachovia, directly or through the use of
a Depository, shall:
a. [Reserved.]
b. Deliver any Securities held for the Fund against receipt of
other Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
c. Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, against receipt of certificates of deposit, interim
receipts or other instruments or documents as may be issued to it to evidence
delivery;
d. Make transfers or exchanges of the assets of the Fund and take
such other steps as shall be stated in the instructions to effectuate any duly
authorized plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
e. Release Securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan the Fund
16
incurs; provided, however, that securities shall be released only upon payment
to Wachovia for the account of the Fund of the monies borrowed, except that in
cases where additional collateral is required to secure a borrowing already
made, subject to proper prior authorization, further securities may be released
for that purpose; and pay the loan upon redelivery to it of the securities
pledged or hypothecated therefore and upon surrender of the note or notes
evidencing the loan;
f. Deliver Securities or cash in accordance with the provisions
of any agreement among the Fund, Wachovia and a broker-dealer registered under
the Exchange Act and a member of the 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 Fund transactions;
g. Deliver Securities or cash in accordance with the provisions
of any agreement among the Fund, Wachovia 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 Fund transactions;
h. Surrender, in connection with their exercise, warrants, rights
or similar Securities, provided that in each case, the new Securities and cash,
if any, are to be delivered to Wachovia;
i. Deliver Securities upon receipt of payment for any repurchase
agreement the Fund enters into; and
j. Deliver Securities pursuant to any other proper corporate
purpose, but only upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the Securities to be delivered, setting forth
the purpose for which the delivery is to be made, declaring the purpose to be a
proper corporate purpose, and naming the person or persons to whom delivery of
the Securities shall be made.
20. PURCHASE AND SALE OF SECURITIES.
a. Promptly after any purchase of Securities for the account of
the Fund, the Fund shall deliver to Wachovia (as custodian) Proper Instructions
specifying for each purchase: (a) the name of the issuer and the title of the
Securities, (b) the number of shares or the principal amount purchased and
accrued interest, if any, (c) the dates of purchase and settlement, (d) the
purchase price per unit, (e) the total amount payable upon the purchase, (f) the
name of the person from whom or the broker through whom the purchase was made
and (g) the Portfolio of the Fund for which the purchase was made. Wachovia
shall upon receipt of Securities purchased by or for the Fund pay out of the
monies held for the account of the Fund the total amount payable to the person
from whom or the broker through whom the purchase was made, provided that the
same conforms to the total amount payable as set forth in Proper Instructions.
b. Promptly after the sale of Securities held by the Fund, the
Fund shall deliver to Wachovia (as Custodian) Proper Instructions, specifying
for each sale: (a) the name of the issuer and the title of the security, (b) the
17
number of shares or principal amount sold, and accrued interest, if any, (c) the
dates of sale and settlement, (d) the sale price per unit, (e) the total amount
payable to the Fund upon sale, (f) the name of the broker through whom or the
person to whom the sale was made and (g) the Portfolio of the Fund for which the
sale was made. Wachovia shall deliver the Securities upon receipt for the
account of the Fund of the total amount payable to the Fund upon sale, provided
that the same conforms to the total amount payable as set forth in Proper
Instructions. Subject to the foregoing, Wachovia may accept payment for the
account of the Fund in any form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
c. [Reserved.]
d. Wachovia shall not be liable for the acts or omissions of any
broker or agent (except an affiliate of Wachovia). Upon the Fund's Proper
Instructions (which may include standing instructions), Wachovia shall also
invest cash balances in certificates of deposit, savings accounts or other
similar instruments Wachovia issues or in money market or other mutual funds for
which Wachovia or an affiliate may serve as investment adviser, administrator,
custodian, shareholder servicing agent, or other capacity notwithstanding that
Wachovia or its affiliate collects fees from these mutual funds for providing
the services.
e. Except as otherwise provided by law, and as limited by
Paragraph 12 hereof, any account holding cash for the benefit of the Fund
(including subdivisions of accounts maintained in different currencies) shall
constitute one single and indivisible Account. Consequently, Wachovia has the
right, among others, to transfer the balance of any subaccount held for the
benefit of the Fund to any other subaccount held for the benefit of the Fund at
any time and without prior notice.
f. (i) Unless another agreement requires it to do so, Wachovia shall
be under no obligation or duty to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall Wachovia be under any obligation or duty to present the option
to the broker for exercise unless it receives Proper Instructions from the Fund.
Wachovia shall have no responsibility for the legality of any put or call option
sold on the Fund's behalf, the propriety of any purchase or sale, or the
adequacy of any collateral delivered to a broker in connection with an option or
deposited to or withdrawn from any account. Wachovia specifically, but not by
way of limitation, unless another agreement requires that it do so, shall not be
under any obligation or duty to: (x) periodically check with or notify the Fund
that the amount of collateral a broker holds is sufficient to protect the broker
or the Fund against any loss; (y) effect the return of any collateral delivered
to a broker; or (z) advise the Fund that any option it holds has expired or is
about to expire, subject to the requirement of Paragraph 5 to promptly transmit
notices. These obligations and duties shall be the Fund's sole responsibility.
(ii) Wachovia's responsibility as to futures, puts, and calls traded on
commodities exchanges, any futures commission merchant account, and any account
of the Fund shall be limited as set forth in subparagraph (f)(i) of this
Paragraph 20 as if the subparagraph referred to futures commission merchants
rather than brokers, and futures and puts and calls thereon instead of options.
18
21. RECORDS. The books and records pertaining to the Fund that are in the
possession of Wachovia shall be the property of the Fund. Wachovia shall prepare
and maintain these books and records as the 1940 Act and other applicable
federal securities laws and rules and regulations require. The Fund or the
Fund's authorized representatives shall have access to Wachovia's books and
records pertaining to the Fund at all times during Wachovia's normal business
hours, and Wachovia shall surrender these books and records to the Fund promptly
upon request. Upon reasonable request of the Fund, Wachovia shall provide copies
of any books and records to the Fund or the Fund's authorized representative at
the Fund's expense.
22. COOPERATION WITH ACCOUNTANTS. Wachovia shall cooperate with the Fund's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available to the accountants for the expression of their
unqualified opinion, including but not limited to the opinion included in the
Fund's Form N-1A, Form N-SAR, and other reports to the SEC and for any other
requirement of the SEC.
23. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. Wachovia shall
provide the Fund, at such times as the Fund may reasonably require, with reports
from Wachovia's independent public accountants on the accounting system,
internal accounting controls and procedures for safeguarding Securities, futures
contracts and options on futures contracts, including Securities deposited
and/or maintained in a Depository, relating to the services Wachovia provides
under this Agreement. These reports shall be of sufficient scope and in
sufficient detail as the Fund may reasonably require to provide reasonable
assurance that the examination would disclose any material inadequacies and, if
there are no material inadequacies, the reports shall so state.
24. CONFIDENTIALITY. Wachovia agrees on behalf of itself and its employees
to treat confidentially and as the proprietary information of the Fund all
records and other information related to the Fund and its prior, present or
potential Shareholders, and to the investment adviser and its prior, present or
potential customers, and not to use these records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to the Fund and the Fund's written approval. The
Fund shall not unreasonably withhold this approval, and may not withhold its
approval where Wachovia may be exposed to civil or criminal contempt proceedings
for failure to comply, when duly constituted authorities request Wachovia to
divulge this information, or when the Fund so requests. Nothing contained
herein, however, shall prohibit Wachovia from advertising or soliciting the
public generally for other products or services, regardless of whether the
advertisement or solicitation may include prior, present or potential
shareholders of the Fund.
19
25. EQUIPMENT.
a. Wachovia shall notify the Fund of any errors, omissions or
interruptions in, or delay or unavailability of Wachovia's ability to safeguard
and hold Securities and cash in accordance with this Agreement as promptly as
practicable, and proceed to correct the same as soon as is reasonably possible
at no additional expense to the Fund.
b. In the event of equipment failures beyond Wachovia's control,
Wachovia shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. Wachovia shall make reasonable provision for
back-up emergency use of electronic data processing equipment. Wachovia, its
agents and subcustodians shall maintain and update from time to time business
continuity procedures and disaster recovery facilities with respect to its or
their custody business, both domestic and foreign, as would be maintained by a
professional custodian.
26. RIGHT TO RECEIVE ADVICE.
a. If Wachovia shall be in doubt as to any action it may take or
omit to take, it may request, and shall receive, from the Fund clarification or
advice. If Wachovia shall be in doubt as to any question of law involved in any
action it may take or omit to take, it may request advice at its own cost from
counsel of its own choosing (who may be counsel for the Fund or Wachovia, at the
option of Wachovia). If Wachovia receives conflicting advice from the Fund and
from counsel of its choosing, provided that Wachovia has so notified the Fund,
Wachovia shall be entitled to rely on and follow the advice of its counsel, and
shall be fully protected for anything it does or omits to do in good faith in
conformity with this advice.
b. Wachovia shall be protected in any action or inaction which it
takes or omits to take consistent with the terms of this Agreement in reliance
on any directions or advice received pursuant to subparagraph (a) of this
Paragraph 26 which Wachovia, after receipt of any directions or advice, in good
faith believes to be consistent with these directions or advice. However,
nothing in this Paragraph shall be construed as imposing upon Wachovia any
obligation (i) to seek directions or advice, or (ii) to act in accordance with
directions or advice when received, unless, under the terms or another provision
of this Agreement, the same is a condition to Wachovia's properly taking or
omitting to take action. Nothing in this subparagraph shall excuse Wachovia when
an action or omission on the part of Wachovia constitutes willful misfeasance,
bad faith, negligence or reckless disregard of its duties under this Agreement.
27. COMPENSATION.
As compensation for the services described in this Agreement that
Wachovia shall provide during the term of this Agreement, the Fund will pay to
Wachovia (a) monthly fees as outlined in Attachment A, and (b) out-of-pocket
expenses as may be agreed upon by Wachovia and the Fund from time to time,
including but not limited to, reimbursement of any taxes or other charges which
may be imposed upon the Fund or its income and fees, or on Wachovia in
connection with any acquisition, holding, sale, transfer, delivery, or receipt
of Securities or cash under this Custody Agreement (other than income or other
taxes imposed upon Wachovia in connection with its provision of the custodial
20
services contemplated hereunder). These fees and charges will be payable
quarterly in arrears.
If the Fund invests in shares of registered investment companies to
which Wachovia or Wachovia's affiliates provide investment advisory or other
services for compensation (as described in a prospectus you will receive before
any investment), Wachovia or Wachovia's affiliates will retain this compensation
in addition to all fees you pay under this Agreement.
28. REPRESENTATIONS.
a. The Fund hereby represents to Wachovia that (i) this Agreement
has been duly authorized, executed and delivered by the Fund, constitutes a
valid and legally binding obligation of the Fund enforceable in accordance with
its terms, and no statute, regulation, rule, order, judgment or contract binding
on the Fund prohibits the Fund's execution or performance under this Agreement.
Wachovia hereby represents to the Fund that (i) it is a U.S. bank with the full
power to carry on its businesses as now conducted, and to enter into this
Agreement and to perform its obligations hereunder; and (ii) this Agreement has
been duly authorized, executed and delivered by Wachovia, constitutes a valid
and legally binding obligation of Wachovia enforceable in accordance with its
terms, and no statute, regulation, rule, order, judgment or contract binding on
Wachovia prohibits Wachovia's execution or performance of this Agreement.
b. Wachovia hereby represents and warrants that each and every
commercial and noncommercial hardware, software, firmware, mechanical, or
electrical product ("Products") used, created, assembled, manufactured,
developed, or modified in connection with any goods or services offered or
provided under this Agreement shall, at no additional costs to the Fund, be able
to store and process accurately any data reflected in the currency unit of the
European Monetary Union, the Euro, and related to the Euro (including, but not
limited to, calculating, comparing, storing, processing, recording, valuing,
recognizing, validating, presenting and sequencing) and be able to store and
process accurately any and all date and date-related data (including, but not
limited to processing leap year calculations and processing any other dates with
unique digit arrangements such as, by way of example, 9/9/99). The Fund may, at
no additional cost, require Wachovia to demonstrate compliance and/or compliance
techniques and test procedures it intends to follow or evidence of compliance by
Wachovia and relevant third party vendors, consistent with the Euro related
representations, warranties and obligations contained herein. These
representations and warranties shall be in effect so long as the service(s) or
Product(s) provided under this Agreement are used by Wachovia or provided by
Wachovia for the benefit of the Fund.
29. PERFORMANCE OF DUTIES AND STANDARD OF CARE.
a. Except as stated in Paragraphs 8 and 9 of this Agreement, in
the performance of its duties hereunder, Wachovia shall be obligated to exercise
due care and diligence in accordance with reasonable commercial standards and to
act in good faith to ensure the accuracy and completeness of all services
performed under this Agreement.
b. Wachovia shall be under no duty to take any action on behalf
of the Fund except as specifically set forth herein or as Wachovia may
specifically agree to in writing.
21
c. Wachovia may enter into subcontracts, agreements and
understandings with affiliates, whenever and on any terms and conditions, as it
deems necessary or appropriate to perform its services under this Agreement,
consistent with the 1940 Act and other applicable law. No subcontract, agreement
or understanding shall discharge Wachovia from its obligations under this
Agreement.
d. Wachovia shall not be obligated to execute any of the Fund's
Proper Instructions if Wachovia believes that to do so will or may contravene
any law or regulation, any relevant market practice, or the terms of this
Agreement. The Fund hereby agrees to hold Wachovia harmless from loss, claims,
liability or expense asserted against Wachovia as a result of any contravention
undertaken pursuant to Proper Instructions in accordance with the terms of this
Agreement.
e. Except as stated in Paragraphs 8 and 9 of this Agreement,
Wachovia shall be responsible for its own negligent failure or that of any
subcustodian it shall appoint to perform its duties under this Agreement but to
the extent that duties, obligations and responsibilities are not expressly set
forth in this Agreement, Wachovia shall not be liable for any act or commission
that does not constitute willful misfeasance, bad faith, or negligence on the
part of Wachovia or any subcustodian it appoints or reckless disregard of such
duties, obligations and responsibilities. Without limiting the generality of the
foregoing or of any other provision of this Agreement, Wachovia in connection
with its duties under this Agreement, so long as and to the extent it is in the
exercise of reasonable care, shall not be under any duty or obligation to
inquire into and shall not be liable for or in respect of (i) the validity or
invalidity or authority or lack thereof of any advice, direction, notice or
other instrument which conforms to the applicable requirements of this
Agreement, if any, and which Wachovia reasonably believes to be genuine, (ii)
the validity of the issue of any Securities the Fund purchases or sells, the
legality of the purchase or sale thereof or the propriety of the amount paid or
received therefore, (iii) the legality of the issue or sale of any Shares, or
the sufficiency of the amount to be received therefore, (iv) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefore,
(v) the legality of the declaration or payment of any dividend or distribution
on Shares, or (vi) delays or errors or loss of data occurring by reason of
circumstances beyond Wachovia's control, including acts of civil or military
authority, acts of terrorism, national emergencies, labor difficulties, fire,
mechanical breakdown (except as provided in Paragraph 25), flood or catastrophe,
acts of God, insurrection, war, riots, or failure of the mail, transportation
systems, communication systems or power supply.
f. The Fund assumes full responsibility for insuring that the
contents of each Registration Statement of the Fund complies with all applicable
requirements of the 1933 Act, the 1940 Act, and any laws, rules and regulations
of governmental authorities having jurisdiction.
30. INDEMNIFICATION. The Fund, as sole owner of the Property, agrees to
indemnify and hold harmless Wachovia and its nominees from all taxes, charges,
assessments, claims, and liabilities (including, without limitation, liabilities
arising under the 1933 Act, the 1934 Act, the 1940 Act, and any state and
foreign securities and blue sky laws, all as or to be amended from time to time)
and expenses, including (without limitation) attorney's fees and disbursements,
22
arising directly or indirectly from any action or thing which Wachovia takes or
does or omits to take or do (i) at the request or on the direction of or in
reliance on the advice of the Fund given in accordance with the terms of this
Agreement, or (ii) upon Proper Instructions provided any such action or omission
is in accordance with the terms of this Agreement; provided, however, that
neither Wachovia nor any of its nominees or subcustodian shall be indemnified
against any liability to the Fund or to its Shareholders (or any expenses
incident to this liability) arising out of (x) Wachovia's or its nominee's or
subcustodian's own willful misfeasance, bad faith, negligence or reckless
disregard of its duties under this Agreement or any agreement between Wachovia
and any nominee or subcustodian or (y) Wachovia's own negligent failure to
perform its duties under this Agreement. Wachovia similarly agrees to indemnify
and hold harmless the Fund from all liabilities and expenses arising directly or
indirectly from Wachovia's or its nominee's or sub-custodian's willful
misfeasance, bad faith, negligence or reckless disregard in performing its
duties under this agreement.
31. EFFECTIVE PERIOD; TERMINATION AND AMENDMENT. This Agreement shall
become effective as of its execution and shall continue in full force and effect
until terminated as hereinafter provided. The parties may mutually agree to
amend this Agreement at any time. Either party may terminate this Agreement by
an instrument in writing delivered or mailed, postage prepaid to the other
party, the termination to take effect not sooner than sixty (60) days after the
date of delivery or mailing, nor shall Wachovia act under Paragraph 8 in the
absence of receipt of a certificate from the Fund's secretary containing the
resolution of the Board regarding the Board's determination that it is
reasonable to rely on Wachovia to perform the responsibilities delegated
pursuant to this Agreement to Wachovia as Foreign Custody Manager of the Fund,
provided further, however, that the Fund shall not amend or terminate this
Agreement in contravention of any applicable federal or state regulations, or
any provision of the Declaration of Trust, and further provided, that the Fund
may at any time by action of its Board (i) substitute another bank or trust
company for Wachovia by giving notice as described above to Wachovia or (ii)
immediately terminate this Agreement in the event the Comptroller of the
Currency appoints a conservator or receiver for Wachovia 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 Agreement, the Fund shall pay to
Wachovia all compensation as may be due as of the date of termination and shall
likewise reimburse Wachovia for its costs, expenses and disbursements.
32. SUCCESSOR CUSTODIAN. If the Board shall appoint a successor custodian,
Wachovia shall, upon termination, deliver to the successor custodian at the
office of the custodian, duly endorsed and in the form for transfer, all
Securities it then holds under this Agreement and shall transfer to an account
of the successor custodian all of the Fund's Securities held in a Securities
Depository, Book-Entry System, Eligible Securities Depository, or Eligible
Foreign Custodian. If the Fund does not deliver to Wachovia a written order
designating a successor custodian or certified copy of a vote of the Board on or
before the date when the termination shall become effective, Wachovia 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 New York, New York, 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, monies, and
other Property Wachovia holds and all instruments Wachovia holds relative
thereto and all other Property it holds under this Agreement and to transfer to
an account of the successor custodian all of the Fund's Securities held in any
Securities Depository, Book-Entry System, Eligible Securities Depository, or
Eligible Foreign Custodian. Thereafter, that bank or trust company shall be the
successor of Wachovia under this Agreement. If Property of the Fund remains in
23
the possession of Wachovia after the date of termination of this Agreement owing
to the Fund's failure to procure the certified copy of the vote referred to or
of the Board to appoint a successor custodian, Wachovia shall be entitled to
fair compensation for its services during the period Wachovia retains possession
of the Property and the provisions of this Agreement relating to the duties and
obligations of Wachovia shall remain in full force and effect.
33. NOTICES. All notices and other communications ("Notice" or "Notices" in
this Paragraph) hereunder shall be in writing and shall first be sent by
telegram, cable, telex, or facsimile sending device, and thereafter by overnight
mail for delivery on the next business day. Notices shall be addressed (a) if to
Wachovia, at Wachovia's address, 000 X. Xxxxx Xxxxxx, XX0000, Xxxxxxxxxxxx, XX
00000; (b) if to the Fund, at the address of the Fund; or (c) if to neither of
the foregoing, at another address as shall have been notified to the sender of
any such Notice or other communication. If the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending,
more than 100 miles apart, the Notice may be sent by first-class mail, in which
case it shall be deemed to have been given three days after it is sent, or if
sent by confirming telegram, cable, telex or facsimile sending device, it shall
be deemed to have been given immediately, and, if the location of the sender of
a Notice and the address of the addressee thereof are, at the time of sending,
not more than 100 miles apart, the Notice may be sent by first-class mail, in
which case it shall be deemed to have been given two days after it is sent, of
if sent by messenger, it shall be deemed to have been given on the day it is
delivered, or if sent by confirming telegram, cable, telex or facsimile sending
device, it shall be deemed to have been given immediately. The sender shall pay
all postage, cable, telegram, telex and facsimile sending device charges arising
from the sending of a Notice.
34. FURTHER ACTIONS. Each party agrees to perform further acts and execute
further documents as are necessary to effectuate the purposes of this Agreement.
35. PORTFOLIOS. If a Fund has more than one Portfolio, then the term
'Fund', as used in this Agreement, shall be deemed to refer to each such
Portfolio, unless the context otherwise requires, and Wachovia will hold assets
of each Portfolio in an account for such Portfolio containing only the assets of
such Portfolio, and any obligation or liability of such Portfolio under the
terms of this Agreement shall be binding only with respect to such Portfolio,
and shall be discharged only out of the assets of such Portfolio. In the event
that the Fund establishes one or more portfolios of a Fund in addition to the
Portfolios listed on Attachment C, for which it desires Wachovia to render
services as custodian under the terms hereof, it shall so notify Wachovia in
writing, and if the Custodian agrees in writing to provide these services, the
portfolios shall become a Portfolio hereunder.
36. MISCELLANEOUS. This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the parties hereto. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall together,
constitute only one instrument. This Agreement shall be deemed to be a contract
made in Pennsylvania and governed by Pennsylvania law. If a court decision,
statute, rule or otherwise holds or invalidates any provision of this Agreement,
the remainder of this Agreement shall not be affected. This Agreement shall be
24
binding upon and shall inure to the benefit of the parties and their respective
successors. The Fund's Articles of Incorporation or Declaration of Trust is on
file with the Secretary of the Commonwealth of Massachusetts. The Fund's
officers have executed this Agreement on behalf of the Fund as officers and not
individually and the obligations this Agreement imposes upon the Fund are not
binding upon any of the Fund's Directors or Trustees, officers or shareholders
individually but are binding only upon the assets and Property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused their officers
designated below to execute this Agreement as of the day and year first above
written.
THE ADVISORS' INNER CIRCLE FUND II
Attest: By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: VP
Attest: By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Legal Services Manager
WACHOVIA BANK, NATIONAL ASSOCIATION
Attest: By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President
25
ATTACHMENT A
FEES
Wachovia Bank, National Association
Arbor Fund
Custody Administrative Fees:
.40 basis points on average daily market value
Transaction Fees:
$4.00 per transaction through Depository Trust Company.
$10.00 per transaction through Federal Reserve.
$30.00 per transaction for GIC contracts / Physical Securities.
$15.00 per option contract.
$4.00 per paydown on mortgage backed securities.
$5.50 per Fed wire charge on Repurchase Agreement collateral in / out.
$5.50 per incoming wire transfers.
$7.50 per outgoing wire transfers.
$5.50 per dividend reinvestment.
$8.00 per futures contracts.
Wachovia Bank, National Association The Advisors' Inner Circle Fund II
By:/s/ Xxxxx X. Xxxxxx By:/s/ Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxx
Title: VP Title: VP
Date: 9/15/04 Date: 9/13/04
26
ATTACHMENT B
AUTHORIZED PERSONS
27
ATTACHMENT C
PORTFOLIOS OF THE FUND
Champlain Small Company Fund
Xxxxxx Select Research Fund
28
EXHIBIT A
PROVISION OF ADDITIONAL INFORMATION
For purposes of Paragraph 8 of the Agreement, the Fund (or its investment
adviser(s)) shall be deemed to have considered the Country Risk as is incurred
by placing and maintaining Foreign Assets in each country for which Wachovia is
serving as Foreign Custody Manager of the Fund. To aid the Fund (and its
investment adviser(s)) in monitoring Country Risk, however, Wachovia shall
provide the Fund (or its investment adviser(s)) the following information with
respect to the foreign countries of Eligible Foreign Custodians that Wachovia
selects pursuant to Paragraph 8.b of the Agreement: (a) opinions of local
counsel or reports concerning whether applicable foreign law would restrict the
access afforded to the Fund's independent public accountants to books and
records kept by an Eligible Foreign Custodian located in that country; whether
applicable foreign law would restrict the Fund's ability to recover its Foreign
Assets and cash in the event of the bankruptcy of an Eligible Foreign Custodian
located in that country; whether applicable foreign law would restrict the
Fund's ability to recover Foreign Assets that are lost while under the control
of an Eligible Foreign Custodian located in the country; and (b) periodic market
reports with respect to securities settlement and registration, taxation, and
depositories (including depository evaluation), if any.
Wachovia will also periodically provide the Fund (or its investment adviser(s))
the following information relating to Country Risk with respect to the foreign
countries of Eligible Foreign Custodians that Wachovia selects pursuant to
Paragraph 8.b of the Agreement, or eligible securities depositories pursuant to
Paragraph 9, as Wachovia receives this information: (y) written information
concerning each foreign country's practices with regard to expropriation,
nationalization, freezes, or confiscation of financial assets; or whether
difficulties in converting the Fund's cash and cash equivalents to U.S. dollars
are reasonably foreseeable; (z) market reports with respect to each foreign
country's securities regulatory environment, foreign ownership restrictions, or
foreign exchange practices. The Fund hereby acknowledges that: (i) this
information is solely designed to inform the Fund (or its investment adviser(s))
of market conditions and procedures and is not intended to be considered
comprehensive or as a recommendation to invest or not invest in particular
markets; and (ii) Wachovia is not the primary source of the information and has
gathered the information from sources it considers reliable, but that Wachovia
shall have no responsibility for inaccuracies or incomplete information.
To aid the Fund or its delegate in its consideration of Country Risks, Wachovia
shall furnish the Fund annually and prior to the initial placing of Foreign
Assets into a country, the following information:
(i) securities settlement and registration, (ii) taxation, and (iii) compulsory
depositories.
Wachovia shall furnish additional information customarily provided to other
investment companies registered under the Investment Company Act of 1940 for
which Wachovia provides foreign custody services.
Wachovia shall furnish additional information regarding Country Risks as the
Fund may reasonably request from time to time.
29
EXHIBIT B
LIST OF ELIGIBLE SECURITIES DEPOSITORIES
30
EXHIBIT C
LIST OF FOREIGN MARKETS
31
