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EXHIBIT 99.B8
CUSTODIAN AGREEMENT
Between
XXXXXXX XXXXX MUTUAL FUNDS, INC.
and
INVESTORS BANK & TRUST COMPANY
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TABLE OF CONTENTS
Page
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1. Bank Appointed Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Authorized Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Portfolio Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Certification as to Authorized Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Custody of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.1 Purchase of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5.2 Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.3 Distributions and Expenses of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.4 Payment in Respect of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.5 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.6 Repayment of Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.7 Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.8 Other Authorized Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.9 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.1 Segregation and Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.2 Voting and Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.3 Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6.4 Use of a Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.5 Use of Book-Entry System for Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.6 Use of Immobilization Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.7 Eurodollar CDs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.8 Options and Futures Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.9 Segregated Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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6.10 Interest Bearing Call or Time Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.11 Transfer of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7. Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. Merger, Dissolution, etc. of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. Actions of Bank Without Prior Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10. Collections and Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Maintenance of Records and Accounting Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Fund Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Concerning the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.1 Performance of Duties and Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.2 Agents and Subcustodians with Respect to
Property of the Fund Held in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.3 Duties of the Bank with Respect to Property
of the Fund Held Outside of the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.5. Fees and Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
13.6 Advances by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
17. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
20. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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CUSTODIAN AGREEMENT
AGREEMENT made as of this 26th day of February, 1996, between XXXXXXX
XXXXX MUTUAL FUNDS, INC., a Maryland corporation (the "Fund"), and INVESTORS
BANK & TRUST COMPANY (the "Bank").
The Fund, an open-end management investment company, desires to place
and maintain all of its portfolio securities and cash in the custody of the
Bank. The Bank has at least the minimum qualifications required by Section
17(f)(1) of the Investment Company Act of 1940 (the "1940 Act") to act as
custodian of the portfolio securities and cash of the Fund, and has indicated
its willingness to so act, subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank
as custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below
will have the following meaning:
2.1 Authorized Person. Authorized Person will mean any
of the persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of its Board of Directors or the
Board of Trustees as the case may be ("the Board"), and set forth in a
certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have
the same meaning as when such term is used in the Securities Act of 1933, as
amended, including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege entered into
on a national securities exchange relating to a foreign currency, or, in
general, any interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to, or option
contract to purchase or sell any of the foregoing, and futures, forward
contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any
Security owned by the Fund.
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2.4 Officers' Certificate. Officers' Certificate will
mean, unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the Fund.
2.5 Book-Entry System. Book-Entry System shall mean the
Federal Reserve-Treasury Department Book Entry System for United States
government, instrumentality and agency securities operated by the Federal
Reserve Bank, its successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository
Trust Company ("DTC"), a clearing agency registered with the Securities and
Exchange Commission under Section 17A of the Securities Exchange Act of 1934
("Exchange Act"), its successor or successors and its nominee or nominees. The
term "Depository" shall further mean and include any other person authorized to
act as a depository under the 1940 Act, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a
resolution of the Board.
2.7 Proper Instructions. Proper Instructions shall mean
(i) instructions (which may be continuing instructions) regarding the purchase
or sale of Portfolio Securities, and payments and deliveries in connection
therewith, given by an Authorized Person as shall have been designated in an
Officers' Certificate, such instructions to be given in such form and manner as
the Bank and the Fund shall agree upon from time to time, and (ii) instructions
(which may be continuing instructions) regarding other matters signed or
initialed by such one or more persons from time to time designated in an
Officers' Certificate as having been authorized by the Board. Oral
instructions will be considered Proper Instructions if the Bank reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund shall cause
all oral instructions to be promptly confirmed in writing. The Bank shall act
upon and comply with any subsequent Proper Instruction which modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up
or confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to
report such discrepancy to the Fund. The Fund shall be responsible, at the
Fund's expense, for taking any action, including any reprocessing, necessary to
correct any such discrepancy or error, and to the extent such action requires
the Bank to act the Fund shall give the Bank specific Proper Instructions as to
the action required. Upon receipt of an Officers' Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by the Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank are satisfied that such procedures afford adequate
safeguards for the Fund's assets.
3. Separate Accounts. If the Fund has more than one series or
portfolio, the Bank will segregate the assets of each series or portfolio to
which this Agreement relates into a separate account for each such series or
portfolio containing the assets of such series or portfolio (and all investment
earnings thereon). Unless the context otherwise requires, any reference in
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this Agreement to any actions to be taken by the Fund shall be deemed to refer
to the Fund acting on behalf of one or more of its series, any reference in
this Agreement to any assets of the Fund, including, without limitation, any
Portfolio Securities and cash and earnings thereon, shall be deemed to refer
only to assets of the applicable series, any duty or obligation of the Bank
hereunder to the Fund shall be deemed to refer to duties and obligations with
respect to the individual series, and any obligation or liability of the Fund
hereunder shall be binding only with respect to the individual series, and
shall be discharged only out of the assets of such series.
4. Certification as to Authorized Persons. The Secretary or
Assistant Secretary of the Fund will at all times maintain on file with the
Bank his or her certification to the Bank, in such form as may be acceptable to
the Bank, of (i) the names and signatures of the Authorized Persons and (ii)
the names of the members of the Board, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the
most recent certification who is no longer an Authorized Person as designated
therein), the Secretary or Assistant Secretary of the Fund, will sign a new or
amended certification setting forth the change and the new, additional or
omitted names or signatures. The Bank will be entitled to rely and act upon
any Officers' Certificate given to it by the Fund which has been signed by
Authorized Persons named in the most recent certification.
5. Custody of Cash. As custodian for the Fund, the Bank will
open and maintain a separate account or accounts in the name of the Fund or in
the name of the Bank, as Custodian of the Fund, and will deposit to the account
of the Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 or Section 13.3 hereof, including borrowed
funds, delivered to the Bank, subject only to draft or order by the Bank acting
pursuant to the terms of this Agreement. Upon receipt by the Bank of Proper
Instructions (which may be continuing instructions) or in the case of payments
for redemptions and repurchases of outstanding shares of common stock of the
Fund, notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of
securities for the Fund, against contemporaneous receipt of such securities by
the Bank or, against delivery of such securities to the Bank in accordance with
generally accepted settlement practices and customs in the jurisdiction or
market in which the transaction occurs, registered in the name of the Fund or
in the name of, or properly endorsed and in form for transfer to, the Bank, or
a nominee of the Bank, or receipt for the account of the Bank pursuant to the
provisions of Section 6 below, each such payment to be made at the purchase
price shown on a broker's confirmation (or transaction report in the case of
Book Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made.
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5.2 Redemptions. In such amount as may be necessary for
the repurchase or redemption of common shares of the Fund offered for
repurchase or redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment
on the account of the Fund of dividends or other distributions to shareholders
as may from time to time be declared by the Board, interest, taxes, management
or supervisory fees, distribution fees, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal, accounting, and
auditing services, or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in
connection with the conversion, exchange or surrender of Portfolio Securities
or securities subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to
the Fund, but, in the case of final payment, only upon redelivery to the Bank
of any Portfolio Securities pledged or hypothecated therefor and upon surrender
of documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to
the Fund for the purpose of collateralizing the obligation to return to the
Fund certificates borrowed from the Fund representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in
connection with foreign exchange contracts or options to purchase and sell
foreign currencies for spot and future delivery which may be entered into by
the Bank on behalf of the Fund upon the receipt of Proper Instructions, such
Proper Instructions to specify the currency broker or banking institution
(which may be the Bank, or any other subcustodian or agent hereunder, acting as
principal) with which the contract or option is made, and the Bank shall have
no duty with respect to the selection of such currency brokers or banking
institutions with which the Fund deals or for their failure to comply with the
terms of any contract or option.
5.8 Other Authorized Payments. For other authorized
transactions of the Fund, or other obligations of the Fund incurred for proper
Fund purposes; provided that before making any such payment the Bank will also
receive a certified copy of a resolution of the Board signed by an Authorized
Person (other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
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5.9 Termination. Upon the termination of this Agreement
as hereinafter set forth pursuant to Section 8 and Section 14 of this
Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise
provided herein, and except for securities to be delivered to any subcustodian
appointed pursuant to Section 13.2 hereof, the Bank as custodian, will receive
and hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for
the account of the Fund. All such Portfolio Securities will be held or
disposed of by the Bank for, and subject at all times to, the instructions of
the Fund pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not physically held
by the Bank, the Bank will register all Portfolio Securities (unless otherwise
directed by Proper Instructions or an Officers' Certificate), in the name of a
registered nominee of the Bank as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, and will execute and
deliver all such certificates in connection therewith as may be required by
such laws or regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee
of the Bank will vote any of the Portfolio Securities held hereunder, except in
accordance with Proper Instructions or an Officers' Certificate. The Bank will
execute and deliver, or cause to be executed and delivered, to the Fund all
notices, proxies and proxy soliciting materials with respect to such
Securities, such proxies to be executed by the registered holder of such
Securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
deposits of Fund assets in the Book-Entry System, and (ii) for any subsequent
changes to such arrangements following such approval, the Board has reviewed
and approved the arrangement and has not delivered an Officer's Certificate to
the Bank indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the
Book-Entry System provided that such Portfolio Securities are
represented in an account ("Account") of the Bank (or its agent) in
such System which shall not include any assets of the Bank (or such
agent) other than assets held as a fiduciary, custodian, or otherwise
for customers;
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(b) The records of the Bank (and any such agent)
with respect to the Fund's participation in the Book-Entry System
through the Bank (or any such agent) will identify by book entry
Portfolio Securities which are included with other securities
deposited in the Account and shall at all times during the regular
business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where
securities are transferred to the Fund's account, the Bank shall also,
by book entry or otherwise, identify as belonging to the Fund a
quantity of securities in fungible bulk of securities (i) registered
in the name of the Bank or its nominee, or (ii) shown on the Bank's
account on the books of the Federal Reserve Bank;
(c) The Bank (or its agent) shall pay for
Portfolio Securities purchased for the account of the Fund or shall
pay cash collateral against the return of Portfolio Securities loaned
by the Fund upon (i) receipt of advice from the Book-Entry System that
such Portfolio Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent)
to reflect such payment and transfer for the account of the Fund. The
Bank (or its agent) shall transfer securities sold or loaned for the
account of the Fund upon
(i) receipt of advice from the
Book-Entry System that payment for securities sold or payment
of the initial cash collateral against the delivery of
Portfolio Securities loaned by the Fund has been transferred
to the Account; and
(ii) the making of an entry on the
records of the Bank (or its agent) to reflect such transfer
and payment for the account of the Fund. Copies of all
advices from the Book-Entry System of transfers of Securities
for the account of the Fund shall identify the Fund, be
maintained for the Fund by the Bank and shall be provided to
the Fund at its request. The Bank shall send the Fund a
confirmation, as defined by Rule 17f4 under the 1940 Act, of
any transfers to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with
any report obtained by the Bank or its agent on the Book-Entry
System's accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Book-Entry System; and
(e) The Bank shall be liable to the Fund for any
loss or damage to the Fund resulting from use of the Book-Entry System
by reason of any gross negligence, wilful misfeasance or bad faith of
the Bank or any of its agents or of any of its or their employees or
from any reckless disregard by the Bank or any such agent of its duty
to use its best efforts to enforce such rights as it may have against
the Book-Entry System; at the election of the Fund, it shall be
entitled to be substituted for the Bank in any claim against the
Book-Entry System or any other person which the Bank or its agent may
have as a consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any loss or damage.
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6.4 Use of a Depository. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
deposits in DTC or other such Depository and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may use a Depository to hold,
receive, exchange, release, lend, deliver and otherwise deal with
Portfolio Securities including stock dividends, rights and other items
of like nature, and to receive and remit to the Bank on behalf of the
Fund all income and other payments thereon and to take all steps
necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be
made in the name of any nominee or nominees used by such Depository;
(c) Payment for Portfolio Securities purchased
and sold may be made through the clearing medium employed by such
Depository for transactions of participants acting through it. Upon
any purchase of Portfolio Securities, payment will be made only upon
delivery of the securities to or for the account of the Fund and the
Fund shall pay cash collateral against the return of Portfolio
Securities loaned by the Fund only upon delivery of the Portfolio
Securities to or for the account of the Fund; and upon any sale of
Portfolio Securities, delivery of the securities will be made only
against payment therefor or, in the event Portfolio Securities are
loaned, delivery of Portfolio Securities will be made only against
receipt of the initial cash collateral to or for the account of the
Fund; and
(d) The Bank shall be liable to the Fund for any
loss or damage to the Fund resulting from use of a Depository by
reason of any gross negligence, willful misfeasance or bad faith of
the Bank or its employees or from any reckless disregard by the Bank
of its duty to use its best efforts to enforce such rights as it may
have against a Depository. In this connection, the Bank shall use its
best efforts to ensure that:
(i) The Depository obtains replacement
of any certificated Portfolio Security deposited with it in
the event such Security is lost, destroyed, wrongfully taken
or otherwise not available to be returned to the Bank upon its
request;
(ii) Any proxy materials received by a
Depository with respect to Portfolio Securities deposited with
such Depository are forwarded immediately to the Bank for
prompt transmittal to the Fund;
(iii) Such Depository immediately forwards
to the Bank confirmation of any purchase or sale of Portfolio
Securities and of the appropriate book entry made by such
Depository to the Fund's account;
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(iv) Such Depository prepares and
delivers to the Bank such records with respect to the
performance of the Bank's obligations and duties hereunder as
may be necessary for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and
(v) Such Depository delivers to the Bank
and the Fund all internal accounting control reports, whether
or not audited by an independent public accountant, as well as
such other reports as the Fund may reasonably request in order
to verify the Portfolio Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper.
Provided (i) the Bank has received a certified copy of a resolution of the
Board specifically approving participation in a system maintained by the Bank
for the holding of commercial paper in book-entry form ("Book-Entry Paper") and
(ii) for each year following such approval the Board has received and approved
the arrangements, upon receipt of Proper Instructions and upon receipt of
confirmation from an Issuer (as defined below) that the Fund has purchased such
Issuer's Book-entry Paper, the Bank shall issue and hold in book-entry form, on
behalf of the Fund, commercial paper issued by issuers with whom the Bank has
entered into a book-entry agreement (the "Issuers"). In maintaining its
Book-entry Paper System, the Bank agrees that:
(a) the Bank will maintain all Book-entry Paper
held by the Fund in an account of the Bank that includes only assets
held by it for customers;
(b) the records of the Bank with respect to the
Fund's purchase of Book-entry Paper through the Bank will identify, by
book-entry, Commercial Paper belonging to the Fund which is included
in the Book-entry Paper System and shall at all times during the
regular business hours of the Bank be open for inspection by duly
authorized officers, employees or agents of the Fund;
(c) the Bank shall pay for Book-Entry Paper
purchased for the account of the Fund upon contemporaneous (i) receipt of
advice from the Issuer that such sale of Book-Entry Paper has been effected,
and (ii) the making of an entry on the records of the Bank to reflect such
payment and transfer for the account of the Fund;
(d) the Bank shall cancel such Book-Entry Paper
obligation upon the maturity thereof upon contemporaneous (i) receipt
of advice that payment for such BookEntry Paper has been transferred
to the Fund, and (ii) the making of an entry on the records of the
Bank to reflect such payment for the account of the Fund;
(e) the Bank shall transmit to the Fund a
transaction journal confirming each transaction in Book-Entry Paper
for the account of the Fund on the next business day following the
transaction; and
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(f) the Bank will send to the Fund such reports
on its system of internal accounting control with respect to the
Book-Entry Paper System as the Fund may reasonably request from time
to time.
6.6 Use of Immobilization Programs. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving the maintenance of Portfolio Securities in an immobilization program
operated by a bank which meets the requirements of Section 26(a)(1) of the 1940
Act, and (ii) for each year following such approval the Board has reviewed and
approved the arrangement and has not delivered an Officer's Certificate to the
Bank indicating that the Board has withdrawn its approval, the Bank shall enter
into such immobilization program with such bank acting as a subcustodian
hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are
Eurodollar CDs may be physically held by the European branch of the U.S.
banking institution that is the issuer of such Eurodollar CD (a "European
Branch"), provided that such Securities are identified on the books of the Bank
as belonging to the Fund and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and shall have no liability to the Fund
or its shareholders with respect to the actions, inactions, whether negligent
or otherwise of such European Branch in connection with such Eurodollar CDs,
except for any loss or damage to the Fund resulting from the Bank's own gross
negligence, willful misfeasance or bad faith in the performance of its duties
hereunder.
6.8 Options and Futures Transactions. The Fund is not
allowed under its prospectus to enter into any Option or Futures transactions.
6.9 Segregated Account. The Bank shall upon receipt of
Proper Instructions establish and maintain a Segregated Account or Accounts for
and on behalf of the Fund.
1. Upon receipt of Proper Instructions cash and/or
Portfolio Securities may be transferred into the Segregated Account or
Accounts:
(a) in accordance with the provisions of any
agreement among the Fund, the Bank and a broker-dealer registered
under the Exchange Act and a member of the NASD or any Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract
Market, or of any similar organizations regarding escrow or other
arrangements in connection with transactions by the Fund;
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(b) for the purpose of segregating cash or
securities in connection with options purchased or written by the Fund
or commodity futures purchased or written by the Fund;
(c) for the deposit of liquid assets, such as
cash, U.S. Government securities or other high grade debt obligations,
having a market value (marked to market on a daily basis) at all times
equal to not less than the aggregate purchase price due on the
settlement dates of all the Fund's then outstanding forward commitment
or "when-issued" agreements relating to the purchase of Portfolio
Securities and all the Fund's then outstanding commitments under
reverse repurchase agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities
which the Fund has agreed to sell on a forward commitment basis, all
in accordance with Investment Company Act Release No. 10666;
(e) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of Segregated Accounts
by registered investment companies; or
(f) for other proper corporate purposes, but
only, in the case of this clause (f), 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 such Segregated Account and declaring such
purposes to be proper corporate purposes.
2. Upon receipt of Proper Instructions cash and/or
Portfolio Securities may be withdrawn from the Segregated Account or Accounts.
(a) in accordance with the provisions of any
agreements referenced in (a) or (b) above;
(b) for sale or delivery to meet the Fund's
obligations under outstanding firm commitment or when-issued
agreements for the purchase of Portfolio Securities and under reverse
repurchase agreements;
(c) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(d) to the extent that the Fund's outstanding
forward commitment or when issued agreements for the purchase of
portfolio securities or reverse repurchase
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agreements are sold to other parties or the Fund's obligations
thereunder are met from assets of the Fund other than those in the
Segregated Account; or
(e) for delivery upon settlement of a forward
commitment agreement for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank
shall, upon receipt of Proper Instructions relating to the purchase by the Fund
of interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect
to the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the
deposit, if any, as may be forwarded to the Bank by the Deposit Bank. Such
deposits shall be deemed Portfolio Securities of the Fund and the
responsibility of the Bank therefore shall be the same as and no greater than
the Bank's responsibility in respect of other Portfolio Securities of the Fund.
6.11 Transfer of Securities. The Bank will transfer,
exchange, deliver or release Portfolio Securities held by it hereunder, insofar
as such Securities are available for such purpose, provided that before making
any transfer, exchange, delivery or release under this Section the Bank will
receive Proper Instructions requesting such transfer, exchange or delivery
stating that it is for a purpose permitted under the terms of this Section
6.11, specifying the applicable subsection, or describing the purpose of the
transaction with sufficient particularity to permit the Bank to ascertain the
applicable subsection, only:
(a) upon sales of Portfolio Securities for the
account of the Fund, against contemporaneous receipt by the Bank of
payment therefor in full, or, against payment to the Bank in
accordance with generally accepted settlement practices and customs in
the jurisdiction or market in which the transaction occurs, each such
payment to be in the amount of the sale price shown in a broker's
confirmation of sale of the Portfolio Securities received by the Bank
before such transfer is made, as confirmed in the Proper Instructions
received by the Bank before such transfer is made;
(b) in exchange for or upon conversion into other
securities alone or other securities and cash pursuant to any plan of
merger, consolidation, reorganization, share split-up, change in par
value, recapitalization or readjustment or otherwise, upon exercise of
subscription, purchase or sale or other similar rights represented by
such Portfolio Securities, or for the purpose of tendering shares in
the event of a tender offer therefor, provided however that in the
event of an offer of exchange, tender offer, or other exercise of
rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender
in a timely manner unless such Proper Instructions are received by the
Bank at least two business days prior to the date required for tender,
and unless the Bank (or its agent or subcustodian hereunder) has
actual possession of such Security at least two business days prior to
the date of tender;
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(c) upon conversion of Portfolio Securities
pursuant to their terms into other securities;
(d) for the purpose of redeeming in kind shares
of the Fund upon authorization from the Fund;
(e) in the case of option contracts owned by the
Fund, for presentation to the endorsing broker;
(f) when such Portfolio Securities are called,
redeemed or retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of
Portfolio Securities held by the Bank in order to collateralize loans
made to the Fund by any bank, including the Bank; provided, however,
that such Portfolio Securities will be released only upon payment to
the Bank for the account of the Fund of the moneys borrowed, except
that in cases where additional collateral is required to secure a
borrowing already made, and such fact is made to appear in the Proper
Instructions, further Portfolio Securities may be released for that
purpose without any such payment. In the event that any such pledged
Portfolio Securities are held by the Bank, they will be so held for
the account of the lender, and after notice to the Fund from the
lender in accordance with the normal procedures of the lender, that an
event of deficiency or default on the loan has occurred, the Bank may
deliver such pledged Portfolio Securities to or for the account of the
lender;
(h) for the purpose of releasing certificates
representing Portfolio Securities, against contemporaneous receipt by
the Bank of the fair market value of such securities, as set forth in
the Proper Instructions received by the Bank before such payment is
made;
(i) for the purpose of delivering securities lent
by the Fund to a bank or broker dealer, but only against receipt in
accordance with street delivery custom except as otherwise provided
herein, of adequate collateral as agreed upon from time to time by the
Fund and the Bank, and upon receipt of payment in connection with any
repurchase agreement relating to such securities entered into by the
Fund;
(j) for other authorized transactions of the Fund
or for other proper corporate purposes; provided that before making
such transfer, the Bank will also receive a certified copy of
resolutions of the Board, signed by an authorized officer of the Fund
(other than the officer certifying such resolution) and certified by
its Secretary or Assistant Secretary, specifying the Portfolio
Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such
transaction to be an authorized transaction of the Fund or such
purpose to be a proper
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corporate purpose, and naming the person or persons to whom delivery
of such securities shall be made; and
(k) upon termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this
Agreement.
As to any deliveries made by the Bank pursuant to subsections (a),
(b), (c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Fund
held by the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment
shall be made in accordance with the Articles and Bylaws of the Fund, from
assets available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger of the Fund into or the consolidation of the Fund with another
investment company where the Fund is not the surviving entity, the sale by the
Fund of all, or substantially all, of its assets to another investment company,
or the liquidation or dissolution of the Fund and distribution of its assets,
the Bank will deliver the Portfolio Securities held by it under this Agreement
and disburse cash only upon the order of the Fund set forth in an Officers'
Certificate, accompanied by a certified copy of a resolution of the Board
authorizing any of the foregoing transactions. Upon completion of such
delivery and disbursement and the payment of the fees, disbursements and
expenses of the Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an
Officers' Certificate to the contrary, it will without prior authorization or
instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and
in the name of the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and hold for the account of the Fund all income, dividends,
interest and other payments or distribution of cash with respect to the
Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income
items held by it for the account of the Fund which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund;
9.3 Receive and hold for the account of the Fund all
securities received as a distribution on Portfolio Securities as a result of a
stock dividend, share split-up, reorganization,
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recapitalization, merger, consolidation, readjustment, distribution of rights
and similar securities issued with respect to any Portfolio Securities held by
it hereunder;
9.4 Execute as agent on behalf of the Fund all necessary
ownership and other certificates and affidavits required by the Internal
Revenue Code or the regulations of the Treasury Department issued thereunder,
or by the laws of any state, now or hereafter in effect, inserting the Fund's
name on such certificates as the owner of the securities covered thereby, to
the extent it may lawfully do so and as may be required to obtain payment in
respect thereof. The Bank will execute and deliver such certificates in
connection with Portfolio Securities delivered to it or by it under this
Agreement as may be required under the provisions of the Internal Revenue Code
and any Regulations of the Treasury Department issued thereunder, or under the
laws of any state;
9.5 Present for payment all Portfolio Securities which
are called, redeemed, retired or otherwise become payable, and hold cash
received by it upon payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use all reasonable
efforts to collect any funds which may to its knowledge become collectible
arising from Portfolio Securities, including dividends, interest and other
income, and to transmit to the Fund notice actually received by it of any call
for redemption, offer of exchange, right of subscription, reorganization or
other proceedings affecting such Securities. If Portfolio Securities upon
which such income is payable are in default or payment is refused after due
demand or presentation, the Bank will notify the Fund in writing of any default
or refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal. In addition, the Bank will send the Fund
a written report once each month showing any income on any Portfolio Security
held by it which is more than ten days overdue on the date of such report and
which has not previously been reported.
11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act and will furnish the Fund
daily with a statement of condition of the Fund. The Bank will furnish to the
Fund at the end of every month, and at the close of each quarter of the Fund's
fiscal year, a list of the Portfolio Securities and the aggregate amount of
cash held by it for the Fund. The books and records of the Bank pertaining to
its actions under this Agreement and reports by the Bank or its independent
accountants concerning its accounting system, procedures for safeguarding
securities and internal accounting controls will be open to inspection and
audit at reasonable times by officers of or auditors employed by the Fund and
will be preserved by the Bank in the manner and in accordance with the
applicable rules and regulations under the 1940 Act.
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The Bank shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
The books and records maintained by the Bank on behalf of the Fund are
the property of the Fund and will be surrendered upon request in accordance
with Section 14.
12. Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of business on the New York
Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other hours, if any, as may be authorized by the Board
the net asset value and the public offering price of a share of capital stock
of the Fund, such determination to be made in accordance with the provisions of
the Articles and By-laws of the Fund and Prospectus and Statement of Additional
Information relating to the Fund, as they may from time to time be amended, and
any applicable resolutions of the Board at the time in force and applicable;
and promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely
in good faith upon information furnished to it by any Authorized Person in
respect of (i) the manner of accrual of the liabilities of the Fund and in
respect of liabilities of the Fund not appearing on its books of account kept
by the Bank, (ii) reserves, if any, authorized by the Board or that no such
reserves have been authorized, (iii) the source of the quotations to be used in
computing the net asset value, (iv) the value to be assigned to any security
for which no price quotations are available, and (v) the method of computation
of the public offering price on the basis of the net asset value of the shares,
and the Bank shall not be responsible for any loss occasioned by such reliance
or for any good faith reliance on any quotations received from a source
pursuant to (iii) above.
13. Concerning the Bank.
13.1 Performance of Duties and Standard of Care. In
performing its duties hereunder and any other duties listed on any Schedule
hereto, if any, the Bank will be entitled to receive and act upon the advice of
independent counsel of its own selection, which may be counsel for the Fund,
and will be without liability for any action taken or thing done or omitted to
be done in accordance with this Agreement in good faith in conformity with such
advice. In the performance of its duties hereunder, the Bank will be protected
and not be liable, and will be indemnified and held harmless for any action
taken or omitted to be taken by it in good faith reliance upon the terms of
this Agreement, any Officers' Certificate, Proper Instructions, resolution of
the Board, telegram, notice, request, certificate or other instrument
reasonably believed by the Bank to be genuine and for any other loss to the
Fund except in the case of its negligence, willful misfeasance or bad faith in
the performance of its duties or reckless disregard of its obligations and
duties hereunder.
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The Bank will be under no duty or obligation to inquire into and will
not be liable for:
(a) the validity of the issue of any Portfolio
Securities purchased by or for the Fund, the legality of the purchases
thereof or the propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio
Securities by or for the Fund or the propriety of the amount for which
the same are sold;
(c) the legality of an issue or sale of any
common shares of the Fund or the sufficiency of the amount to be
received therefor;
(d) the legality of the repurchase of any common
shares of the Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any
dividend by the Fund or the legality of the distribution of any
Portfolio Securities as payment in kind of such dividend; and
(f) any property or moneys of the Fund unless and
until received by it, and any such property or moneys delivered or
paid by it pursuant to the terms hereof.
Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of the Fund are such as may properly be held by the Fund
under the provisions of its Articles, By-laws, any federal or state statutes or
any rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no
event shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind
resulting from acts of God, earthquakes, fires, floods, storms or
other disturbances of nature, epidemics, strikes, riots,
nationalization, expropriation, currency restrictions, acts of war,
civil war or terrorism, insurrection, nuclear fusion, fission or
radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer
facilities, the unavailability of energy sources and other similar
happenings or events except as results from the Bank's own gross
negligence; or
(b) for special, punitive or consequential
damages arising from the provision of services hereunder, even if the
Bank has been advised of the possibility of such damages.
13.2 Agents and Subcustodians with Respect to Property of
the Fund Held in the United States. The Bank may employ agents in the
performance of its duties hereunder and
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shall be responsible for the acts and omissions of such agents as if performed
by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other
person by reason of any act or omission of such subcustodian and the Fund shall
indemnify the Bank and hold it harmless from and against any and all actions,
suits and claims, arising directly or indirectly out of the performance of such
subcustodian. Upon request of the Bank, the Fund shall assume the entire
defense of any action, suit, or claim subject to the foregoing indemnity. The
Fund shall pay all fees and expenses of such subcustodian.
13.3 Duties of the Bank with Respect to Property of the
Fund Held Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The
Fund hereby authorizes and instructs the Bank to employ as
sub-custodians for the Fund's Portfolio Securities and other assets
maintained outside the United States the foreign banking institutions
and foreign securities depositories designated on the Schedule
attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution
of the Fund's Board of Trustees, the Bank and the Fund may agree to
designate additional foreign banking institutions and foreign
securities depositories to act as Selected Foreign Sub-Custodians
hereunder. Upon receipt of Proper Instructions, the Fund may instruct
the Bank to cease the employment of any one or more such Selected
Foreign Sub-Custodians for maintaining custody of the Fund's assets,
and the Bank shall so cease to employ such sub-custodian as soon as
alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as
may otherwise be agreed upon in writing by the Bank and the Fund,
assets of the Fund shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign
banking institutions serving as Selected Foreign Sub-Custodians
pursuant to the terms hereof. Where possible, such arrangements shall
include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may
otherwise be agreed upon in writing by the Bank and the Fund, the Fund
authorizes the deposit in Euro-clear, the securities clearance and
depository facilities operated by Xxxxxx Guaranty Trust Company of New
York in Brussels, Belgium, of Foreign Portfolio Securities eligible
for deposit therein and to utilize such securities depository in
connection with settlements of purchases and sales of securities and
deliveries and returns of securities, until notified to the contrary
pursuant to subparagraph (a) hereunder.
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(c) Segregation of Securities. The Bank shall
identify on its books as belonging to the Fund the Foreign Portfolio
Securities held by each Selected Foreign Sub-Custodian. Each
agreement pursuant to which the Bank employs a foreign banking
institution shall require that such institution establish a custody
account for the Bank and hold in that account, Foreign Portfolio
Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign
securities depository, that it shall identify on its books as
belonging to the Bank the securities so deposited.
(d) Agreements with Foreign Banking Institutions.
Each of the agreements pursuant to which a foreign banking institution
holds assets of the Fund (each, a "Foreign Sub-Custodian Agreement")
shall be substantially in the form previously made available to the
Fund and shall provide that: (a) the Fund's assets 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 (including, without limitation, any fees or taxes
payable upon transfers or reregistration of securities); (b)
beneficial ownership of the Fund's assets will be freely transferable
without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes
payable upon transfers or reregistration of securities); (c) adequate
records will be maintained identifying the assets as belonging to
Bank; (d) officers of or auditors employed by, or other
representatives of the Bank, 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 Bank;
and (e) assets of the Fund held by the Selected Foreign Sub-Custodian
will be subject only to the instructions of the Bank or its agents.
(e) Access of Independent Accountants of the
Fund. Upon request of the Fund, the Bank will use its best efforts to
arrange for the independent accountants of the Fund to be afforded
access to the books and records of any foreign banking institution
employed as a Selected Foreign Sub-Custodian insofar as such books and
records relate to the performance of such foreign banking institution
under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the
Fund from time to time, as mutually agreed upon, statements in respect
of the securities and other assets of the Fund held by Selected
Foreign Sub-Custodians, including but not limited to an identification
of entities having possession of the Foreign Portfolio Securities and
other assets of the Fund.
(g) Transactions in Foreign Custody Account.
Transactions with respect to the assets of the Fund held by a Selected
Foreign Sub-Custodian shall be effected pursuant to Proper
Instructions from the Fund to the Bank and shall be effected in
accordance with the applicable Foreign Sub-Custodian Agreement. If at
any time any
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Foreign Portfolio Securities shall be registered in the name of the
nominee of the Selected Foreign Sub-Custodian, the Fund agrees to hold
any such nominee harmless from any liability by reason of the
registration of such securities in the name of such nominee.
Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign
Portfolio Securities received for the account of the Fund and delivery
of Foreign Portfolio Securities maintained for the account of the Fund
may be effected in accordance with the customary established
securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
In connection with any action to be taken
with respect to the Foreign Portfolio Securities held hereunder,
including, without limitation, the exercise of any voting rights,
subscription rights, redemption rights, exchange rights, conversion
rights or tender rights, or any other action in connection with any
other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the
Fund such information in connection therewith as is made available to
the Bank by the Foreign Sub-Custodian, and shall promptly forward to
the applicable Foreign Sub-Custodian any instructions, forms or
certifications with respect to such Rights, and any instructions
relating to the actions to be taken in connection therewith, as the
Bank shall receive from the Fund pursuant to Proper Instructions.
Notwithstanding the foregoing, the Bank shall have no further duty or
obligation with respect to such Rights, including, without limitation,
the determination of whether the Fund is entitled to participate in
such Rights under applicable U.S. and foreign laws, or the
determination of whether any action proposed to be taken with respect
to such Rights by the Fund or by the applicable Foreign Sub-Custodian
will comply with all applicable terms and conditions of any such
Rights or any applicable laws or regulations, or market practices
within the market in which such action is to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians.
Each Foreign Sub-Custodian Agreement with a foreign banking
institution shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Bank and each Fund from and against certain losses, damages,
costs, expenses, liabilities or claims arising out of or in connection
with the institution's performance of such obligations, all as set
forth in the applicable Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject
to the Terms and Conditions Governing the Euro-Clear System, a copy of
which has been made available to the Fund. The Fund acknowledges that
pursuant to such Terms and Conditions, Xxxxxx Guaranty Brussels shall
have the sole right to exercise or assert any and all rights or claims
in respect of actions or omissions of, or the
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bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's
securities and other assets.
(i) Liability of Bank. The Bank shall have no
more or less responsibility or liability on account of the acts or
omissions of any Selected Foreign Sub-Custodian employed hereunder
than any such Selected Foreign Sub-Custodian has to the Bank and,
without limiting the foregoing, the Bank 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, political risk (including, but not limited to, exchange
control restrictions, confiscation, insurrection, civil strife or
armed hostilities) other losses due to Acts of God, nuclear incident
or any loss where the Selected Foreign Sub-Custodian has otherwise
exercised reasonable care.
(j) Monitoring Responsibilities. The Bank shall
furnish annually to the Fund, information concerning the Selected
Foreign Sub-Custodians employed hereunder for use by the Fund in
evaluating such Selected Foreign Sub-Custodians to ensure compliance
with the requirements of Rule 17f-5 of the Act. In addition, the Bank
will promptly inform the Fund in the event that the Bank is notified
by a Selected 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) or any other capital adequacy test applicable to it by
exemptive order, or if the Bank has actual knowledge of any material
loss of the assets of the Fund held by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no
responsibility or liability for any obligations now or hereafter
imposed on the Fund or the Bank as custodian of the Fund by the tax
laws of any jurisdiction, and it shall be the responsibility of the
Fund to notify the Bank of the obligations imposed on the Fund or the
Bank as the custodian of the Fund by the tax law of any non-U.S.
jurisdiction, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the 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.
13.4 Insurance. The Bank shall use the same care with
respect to the safekeeping of Portfolio Securities and cash of the Fund held by
it as it uses in respect of its own similar property but it need not maintain
any special insurance for the benefit of the Fund.
13.5. Fees and Expenses of Bank. The Fund will pay or
reimburse the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred
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by the Bank in the performance of this Agreement (including any duties listed
on any Schedule hereto, if any) including any indemnities for any loss,
liabilities or expense to the Bank as provided above. For the services
rendered by the Bank hereunder, the Fund will pay to the Bank such compensation
or fees at such rate and at such times as shall be agreed upon in writing by
the parties from time to time. The Bank will also be entitled to reimbursement
by the Fund for all reasonable expenses incurred in conjunction with
termination of this Agreement by the Fund.
13.6 Advances by Bank. The Bank may, in its sole
discretion, advance funds on behalf of the Fund to make any payment permitted
by this Agreement upon receipt of any proper authorization required by this
Agreement for such payments by the Fund. Should such a payment or payments,
with advanced funds, result in an overdraft (due to insufficiencies of the
Fund's account with the Bank, or for any other reason) this Agreement deems any
such overdraft or related indebtedness, a loan made by the Bank to the Fund
payable on demand and bearing interest at the current rate charged by the Bank
for such loans unless the Fund shall provide the Bank with agreed upon
compensating balances. The Fund agrees that the Bank shall have a continuing
lien and security interest to the extent of any overdraft or indebtedness, in
and to any property at any time held by it for the Fund's benefit or in which
the Fund has an interest and which is then in the Bank's possession or control
(or in the possession or control of any third party acting on the Bank's
behalf). The Fund authorizes the Bank, in its sole discretion, at any time to
charge any overdraft or indebtedness, together with interest due thereon
against any balance of account standing to the credit of the Fund on the Bank's
books.
14. Termination.
14.1 The term of this agreement is three years commencing
upon the date of conversion of the Fund's assets to the Bank. Either party may
terminate this agreement for cause prior to the third anniversary of the
conversion date after a written description of the facts for cause has been
delivered to the other party and the other party has been given a reasonable
opportunity to cure, such opportunity being not less then 90 days in duration.
Either party may terminate the agreement at any time subsequent to the third
anniversary date without cause or penalty. Any termination will be effective
upon sixty days written notice delivered by either party to the other by means
of registered mail, and, upon the expiration of such sixty days this Agreement
will terminate; provided, however, that the effective date of such termination
may be postponed to a date not more than ninety days from the date of delivery
of such notice (i) by the Bank in order to prepare for the transfer by the Bank
of all of the assets of the Fund held hereunder, and (ii) by the Fund in order
to give the Fund an opportunity to make suitable arrangements for a successor
custodian. At any time after the termination of this Agreement, the Fund will,
at its request, have access to the records of the Bank relating to the
performance of its duties as custodian.
14.2 In the event of the termination of this Agreement,
the Bank will immediately upon receipt or transmittal, as the case may be, of
notice of termination, commence and prosecute diligently to completion the
transfer of all cash and the delivery of all Portfolio
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Securities duly endorsed and all records maintained under Section 11 to the
successor custodian when appointed by the Fund. The obligation of the Bank to
deliver and transfer over the assets of the Fund held by it directly to such
successor custodian will commence as soon as such successor is appointed and
will continue until completed as aforesaid. If the Fund does not select a
successor custodian within ninety (90) days from the date of delivery of notice
of termination the Bank may, subject to the provisions of subsection (14.3),
deliver the Portfolio Securities and cash of the Fund held by the Bank to a
bank or trust company of its own selection which meets the requirements of
Section 17(f)(1) of the 1940 Act and has a reported capital, surplus and
undivided profits aggregating not less than $2,000,000, to be held as the
property of the Fund under terms similar to those on which they were held by
the Bank, whereupon such bank or trust company so selected by the Bank will
become the successor custodian of such assets of the Fund with the same effect
as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after
notice of termination has been given, the Fund may furnish the Bank with an
order of the Fund advising that a successor custodian cannot be found willing
and able to act upon reasonable and customary terms and that there has been
submitted to the shareholders of the Fund the question of whether the Fund will
be liquidated or will function without a custodian for the assets of the Fund
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of the Fund held by it, subject as aforesaid, in accordance with one
of such alternatives which may be approved by the requisite vote of
shareholders, upon receipt by the Bank of a copy of the minutes of the meeting
of shareholders at which action was taken, certified by the Fund's Secretary
and an opinion of counsel to the Fund in form and content satisfactory to the
Bank.
15. Confidentiality. Both parties hereto agree that any
non-public information obtained hereunder concerning the other party is
confidential and may not be disclosed to any other person without the consent
of the other party, except as may be required by applicable law or at the
request of a governmental agency. The parties further agree that a breach of
this provision would irreparably damage the other party and accordingly agree
that each of them is entitled, without bond or other security, to an injunction
or injunctions to prevent breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized
or required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
Xxxxxxx Xxxxx Mutual Funds, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
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(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxx Xxxxxx
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case
of the Fund, such alteration or amendment will be authorized and approved by
its Board.
18. Parties. This Agreement will be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement will not be assignable by the
Fund without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided further
that termination proceedings pursuant to Section 14 hereof will not be deemed
to be an assignment within the meaning of this provision.
19. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
21. Limitation of Liability. A copy of the Agreement and
Declaration of Trust of the Fund is on file with the Secretary of State of the
Commonwealth of Massachusetts and notice is hereby given that this Agreement
has been executed on behalf of the Fund by an officer of the Fund as an officer
and not individually and the obligations of the Fund arising out of this
Agreement are not binding upon any of the trustees, officers, or shareholders
of the Fund individually but are binding only upon the assets and property of
the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
day and year first written above.
Xxxxxxx Xxxxx Mutual Funds, Inc.
By:
--------------------------------
Name:
Title:
ATTEST:
------------------------------------
Investors Bank & Trust Company
By:
--------------------------------
Name:
Title:
ATTEST:
------------------------------------
DATE:
-------------------------------
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