EXHIBIT 8(A)
AMENDED AND RESTATED CUSTODIAN AGREEMENT
AGREEMENT made this 24th day of September, 1992 by and among NEW ENGLAND ZENITH
FUND, a Massachusetts business trust having its principal place of business at
000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter called the "Fund"), on
behalf of its Money Market Series, its Bond Income Series, its Capital Growth
"Series"), NEW ENGLAND MUTUAL LIFE INSURANCE COMPANY, Massachusetts corporation
("The New England"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
banking corporation having its principal place of business at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx (hereinafter called "State Street" or the
"Custodian");
WHEREAS, the Fund, The New England and the Custodian have entered into
Custodian Agreements dated February 27, 1987 and March 30, 1987, as amended to
date (the "Previous Agreement"), governing the terms and conditions under which
the Custodian maintains custody of the securities and other assets of the Fund;
WHEREAS, the fund and the Custodian desire to amend the terms and
conditions of the Previous Agreements to comply with certain regulatory
requirements of the Department of Insurance of the State of California, to
effect certain other changes in the Previous Agreements and the restate the
Previous Agreements by incorporating into the Agreement the terms and conditions
of the Previous Agreements and all amendments thereto;
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and other good and valuable consideration, the Fund, the New England and State
Street, intending to be legally bound, hereby agree as follows:
I. DEPOSITORY
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The fund agrees to and does hereby appoint State Street the depository of
each Series subject to the provisions hereof, and likewise agrees to deliver to
State Street certified or authenticated copies of the Fund's Agreement and
Declaration of Trust and By-Laws, all amendments thereto, a certified copy of
the resolution of the Trustees appointing State Street to act in the capacities
covered by this Agreement and authorizing the signing of this Agreement and
copies of such resolutions of its Trustees, contracts and other documents as may
be required by State Street in the performance of its duties hereunder.
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II. CUSTODIAN
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1. The Fund agrees to and does hereby appoint State Street Custodian of
the assets belonging to each Series, subject to the provisions hereof, and
likewise, subject to the provisions hereof, agrees that State Street shall
retain separately all securities and cash now owned or hereafter acquired by
each Series, and the Fund also agrees to deliver and pay or cause to be
delivered and paid to State Street, as Custodian, all securities and cash
hereafter acquired by each such Series.
2. All securities delivered to state Street (other than in bearer form)
shall be properly endorsed and in form for transfer or in the name of State
Street or of a nominee of State Street or in the name of the applicable Series
or of a nominee of such Series.
3. As Custodian, State Street shall have and perform the following powers
and duties:
A. Safekeeping. To keep safely in a separate account the securities of each
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Series and on behalf of each Series, from time to time, to receive delivery of
certificates for safekeeping and to keep such certificates physically segregated
at all times from those of any other person. State Street shall maintain
records of all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic physical
inspections of certificates representing bonds and other held by it under this
Agreement in such manner as State Street shall determine from time to time to be
advisable in order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Xxxxxxx 0-X xx Xxxxxxx XX,
Xxxxx Xxxxxx may rely upon certificates from such agent, sub-custodian or
foreign sub-custodian as to the holdings of such agent, sub-custodian or foreign
sub-custodian, it being understood that such reliance in no way relieves State
Street of its responsibilities under this Agreement. State Street will promptly
report to the Fund the results of such inspections, indicating any shortages or
discrepancies undercovered thereby, and take appropriate action to remedy any
such shortages or discrepancies.
B. Deposit of Series Assets in Securities Systems. State Street may, upon
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approval by one or more Series, deposit and/or maintain securities owned by such
Series in a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as amended,
which acts as a securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies, collectively
referred to herein as a "Securities System," in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
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(1) State Street may keep securities of such Series in a Securities System
provided that such securities are represented in an account (the "Series'
Account") of State Street in the Securities System which shall not include any
assets of State Street other than assets held as a fiduciary, custodian or
otherwise for customers;
(2) The records of State Street with respect to securities of each Series
which are maintained in a Securities System shall identify (separately for each
Series) by book-entry those securities belonging to each such Series;
(3) State Street shall pay for securities purchased for the account of each
Series upon (I) receipt of advice from the Securities System that such
securities have been transferred to the Series' Account, and (ii) the making of
an entry on the records of State Street to reflect such payment and transfer for
the account of such Series. State Street shall transfer securities sold for the
account of each Series upon (I) receipt of advice from the Securities System of
transfers of securities for the account of each Series shall identify the
applicable Series, be maintained for such Series by State Street shall furnish
the Fund confirmation of each transfer to or from the account of each Series in
the form of a written advice or notice and shall furnish to the Fund copies of
daily transactions sheets reflecting each day's transactions in the Securities
System for the account of such Series on the next business day;
(4) State Street shall provide the Fund with any report obtained by State
Street on the Securities System's accounting system, internal accounting control
and procedures for safeguarding securities deposited in the Securities System;
(5) Anything to the contrary in this agreement notwithstanding, State Street
shall be liable to the Fund for any loss or damage to each Series resulting from
use of the Securities System by reason of any negligence, misfeasance or
misconduct of State Street or any of its agents or of any of its or their
employees or from failure of State Street or any such agent to enforce
effectively such rights as it may have against the Securities System. At the
election of the Fund, it shall be entitled to be subrogated to the rights of
State Street with respect to any claim against the Securities System or any
other person which State Street may have as a consequence of any such loss or
damage if and to the extent that any Series has not been made whole for any such
loss or damage. Security Systems, sub-custodians and correspondents utilized by
the Custodian shall be deemed to be agents of the Custodian.
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C. Registered Name; Nominee. To register securities of each Series held by
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State Street in the name of such Series or of any nominee of such Series or in
the name of State Street or of any nominee of State Street or in the name of any
Security System approved by the California Insurance Commissioner.
Any Security System must be either registered with or approved by the
Securities and Exchange Commission.
Any nominee shall either be a `d.b.a.' of the Custodian or a partnership
consisting solely of the Custodian's employees, officers, directors or
affiliated entities under the legal and operational control of the Custodian.
Only one nominee will be used for all securities of each Series held by the
Custodian.
D. Purchases. Upon receipt of proper instructions, and insofar as cash is
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available for the purpose, to pay for and receive all securities purchased for
the account of each Series, payment being made only upon receipt of the
securities by State Street 9or by any bank, banking firm, responsible commercial
agent or trust company doing business in the United States and/or any foreign
country and appointed by State Street pursuant to Section 6-C of Article II as
State Street's agent for this purpose or appointed Article II as State Street's
agent for this purpose or appointed as sub-custodian pursuant to Section 6-D of
Article II, or appointed as foreign sub-custodian pursuant to Section 7-A of
Article II), registered as provided in Section 3-C of Article II or in form for
transfer satisfactory of State Street, or in the case of repurchase agreements
entered into between the Fund, on behalf of any Series, and State Street, or
another bank, (I) against delivery of the securities either in certificate form
or through an entry crediting State Street's account at the Federal Reserve Bank
with such securities (which account shall comply with Section 3-B of Article II)
or (ii) against delivery of the receipt evidencing purchase by the Fund, on
behalf of the applicable Series, of securities owned by State Street along with
written evidence of the agreement by State Street to repurchase such securities
from the Fund, on behalf of such Series. All securities accepted by State
Street shall be accompanied by payment of, or a "due xxxx" for, any dividends,
interest or other distributions of the issuer, due the purchaser. Except as
otherwise provided with respect to repurchase agreements in this Section 3-D of
Article II, in any and every case of a purchase of securities for the account of
any Series where payment is made by State Street in advance of receipt of the
securities purchased, State Street shall be absolutely liable to such Series for
such securities to the same extent as if the securities had been received by
State Street.
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E. Exchanges. Upon receipt of proper instructions, to exchange securities or
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interim receipts or temporary securities held by it or by any agent appointed by
it pursuant to Section 6-C of Article II or any sub-custodian appointed pursuant
to Section 6-D of Article II or any foreign sub-custodian appointed pursuant to
Section 7-A of Article II for the account of any Series for other securities
alone or for other securities and cash, in connection with any merger,
consolidation, reorganization, recapitalization, split-up of shares, changes of
par value, conversion or in connection with the exercise of warrants,
subscription or purchase rights, or otherwise; to deposit any such securities
and cash in accordance with their terms of any reorganization or protective plan
or otherwise, and to deliver securities to the designated depository or other
receiving agent in response to tender offers or similar offers to purchase
received in writing. Except as instructed by proper instructions received in
timely enough fashion for State Street to act thereon prior to any expiration
date ( which shall be presumed to be three business days prior to such date
unless State Street has advised the Fund of a different period) and giving full
details of the time and method of submitting securities in response to any
tender or similar offer, exercising any subscription or purchase right or making
any exchange pursuant to this Section 3-E and subject to State Street having
fulfilled its obligations under Section 6-G of Article II pertaining to notices
or announcements, State Street shall be under no obligation regarding any tender
or similar offer, subscription or purchase right or exchange except to exercise
its best efforts. When such securities are in the possession of an agent
appointed by State Street pursuant to Section 6-C of Article II, the proper
instructions referred to in the preceding sentence must be received by State
Street in timely enough fashion (which shall be presumed to be three business
days unless State Street has advised the Fund of a different period) for State
Street to notify the agent in sufficient time to permit such agent to act prior
to any expiration date. When the securities are in the possession of a sub-
custodian appointed pursuant to Section 6-D of Article II or a foreign sub-
custodian or the foreign sub-custodian in timely enough fashion as advised to
the Fund by State Street, the sub-custodian or the foreign sub-custodian to
permit the sub-custodian or the foreign sub-custodian to act prior to any
expiration date.
F. Sales. Upon receipt of proper instructions and upon receipt of payment
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therefor to make delivery of securities which have been sold for the account of
any Series. All such payments are to be made in cash, by a certified check upon
or a treasurer's or cashier's check of a bank, by effective bank wire transfer
through the Federal Reserve Wire System or, if appropriate, outside of the
Federal Reserve Wire system and subsequent credit to the Fund's Custodian
account, or, in case of delivery through a stock clearing company, by book-entry
credit by the stock clearing company in accordance with the then current street
custom.
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G. Purchases by Issuer. Upon receipt of proper instructions to release and
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deliver securities owned by any Series t the issuer thereof or its agent when
such securities are called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other consideration is to be
delivered to State Street.
H. Changes of Name and Denomination. Upon receipt of proper instructions to
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release and deliver securities owned by any Series to the Issuer thereof or its
agent for transfer into the name of the Series or State Street or a nominee of
either, or for exchange 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 such case, the new securities are to be delivered to State Street.
I. Street Delivery. Upon receipt of proper instructions, which in the case of
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registered securities may be standing instructions, to release and deliver
securities for the account of the Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance with "street delivery" custom;
provided that in any such case, the Custodian shall have nor responsibility or
liability for any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct.
J. Release of Securities for Use as Collateral. Upon receipt of proper
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instructions, to release securities belonging to any Series to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by such Series; provided, however, that securities shall be released only upon
payment to State Street 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 the purpose.
Upon receipt of proper instructions, to pay such loan upon redelivery to State
Street of the securities pledged or hypothecated therefor and upon surrender of
the note or notes evidencing the loan.
K. Release or Delivery of Securities for Other Purposes. Upon receipt of
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proper instructions, to release or deliver any securities held by it for the
account of the Series for any other purpose (in addition to those specified in
Sections 3-E, 3-F, 3-G, 3-H, 3-I and 3-J of Article II) which the Fund declares
is a proper corporate purpose pursuant to the proper instructions described in
Section 5-A of Article II.
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L. Miscellaneous. In general, to attend to all nondiscretionary details in
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connection with the sale, exchange, substitution, purchase, transfer or other
dealing with such securities or property of each Series except as otherwise from
time to time directed by proper instructions. State Street shall render to the
Fund an itemized statement of the securities for which it is accountable to the
Fund under this Agreement as of the end of each month, as well as a list of all
security transactions that remain unsettled at such time. Transactions
involving securities or any other cash of a particular Series shall be carried
out solely for the account of that Series.
4. As Custodian, State Street shall have and perform the following additional
powers and duties:
A. Bank Account. To retain all cash of each Series, other than cash maintained
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by any Series in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940, in the banking department of
State street in a separate account or accounts in the name of the Series,
subject only to a draft or order by State Street acting pursuant to the terms of
this Agreement. If and when authorized by proper instructions in accordance
with a vote of the majority of the Trustees of the Fund, State Street may open
and maintain an additional account or accounts in such other banks or trust
companies as may be designated by such instructions, such account or accounts,
however, to be in the name of State Street in its capacity as Custodian for a
particular Series and subject only to its draft or order in accordance with the
terms of this Agreement. If requested by the Fund, State Street shall furnish
the Fund, not later than twenty (20) calendar days after the last business day
of each month, a statement reflecting the current status of its internal
reconciliation of the closing balance as of that day in all accounts described
in this Section 4-A to the balance shown on the daily cash report for that day
rendered to the Fund. Any bank account maintained under this Section 4-A shall
be subject to all of the terms and conditions of this Agreement.
B. Collections. Unless otherwise instructed by receipt of proper instructions,
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to collect, receive and deposit in the bank account instructions, to collect,
receive and deposit in the bank account or accounts maintained pursuant to
Section 4-A of Article II all income and other payments with respect to the
securities held hereunder, and to execute ownership and other certificates and
affidavits for all Federal and State tax purposes in connection with the
collection of bond and note coupons, and to do all other things necessary or
proper in connection with the collection of such income, and without waiving the
generality of the foregoing, to:
(1) present for payment on the date of payment all coupons and other
income items requiring presentation;
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(2) present for payment all securities which may mature or be called,
redeemed, retired or otherwise become payable on the date such
securities become payable;
(3) endorse and deposit for collection, in the name of the applicable
Series, checks, drafts or other negotiable instruments on the same day
as received.
In any case in which State Street does not receive any such due and unpaid
income within a reasonable time after it has made proper demands for the same
(which shall be presumed to consist of at least three demand letters and at
least one telephonic demand), it shall so notify the Fund in writing, including
copies of all demand letters, any written responses thereto, and memoranda of
all oral responses thereto and to telephonic demands, and await proper
instructions; State Street shall not be obliged to take legal action for
collection unless and until reasonably indemnified to its satisfaction. It
shall also notify the Fund as soon as reasonably practicable whenever income due
on securities is not collected in due course.
C. Sale of Shares of the Series. To make such arrangements with the Transfer
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Agent of each Series, which may be State Street, as will enable State Street to
make certain it receives the cash consideration due to each such Series for
shares of such Series as may be issued or sold from time to time by the Fund,
all in accordance with the Fund's Agreement and Declaration of Trust. In
connection with such issuance of shares of each Series, State Street shall make
such arrangements with the Transfer Agent as shall insure the timely
notification to the Transfer Agent and to the Fund of the receipt of Federal
funds by State Street by means of the Federal Reserve Wire System or of the
receipt of funds by other bank wire transfers in payment for the issuance of
such shares. Consideration received in connection with the sale of Shares of
any Series shall be credited to the account of that Series only.
At 9:00 a.m. on the second business day after the deposit of a check into a
Series' account, State Street agrees to make Federal funds available to such
Series in the amount of the check.
D. Dividends and Distributions. Upon receipt of proper instructions, which may
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be continuing instructions when deemed appropriate by the parties, to release or
otherwise apply cash appropriate by the parties, to release or otherwise apply
cash insofar as available, for the payment of dividends or other distributions
to shareholders of each Series. Distributions to the shareholders of any Series
shall be made only from the assets of the relevant Series.
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E. Redemption of Shares of the Series. From such funds as may be available for
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the purpose but subject to the limitations of the Agreement and Declaration of
Trust, and applicable resolutions of the Trustees of the Fund pursuant thereto,
to make funds of the applicable Series available for payment to shareholders who
have delivered to the Transfer Agent a request for redemption of their shares by
such Series pursuant to said Agreement and Declaration of Trust. Redemption of
the Shares of any Series shall be made only from the assets of the relevant
Series. In connection with the redemption of shares of each Series pursuant to
the Agreement and Declaration of Trust, State Street is authorized and directed
upon receipt of instructions from the Transfer Agent for such Series to make
funds of such Series available for transfer through the Federal Reserve Wire
System or by other bank wire to a commercial bank account designated by the
redeeming shareholder.
F. Disbursements. Upon receipt of proper instructions, to make or cause to be
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made, insofar as cash of the applicable Series is available for the purpose,
disbursements for the payment on behalf of such Series of interest, taxes,
management or supervisory fees and operating expenses, including registration
and qualification costs and other expenses of issuing and selling shares or
changing its capital structure, whether or not such expenses shall be in whole
or in part capitalized or treated as deferred expenses. The Custodian shall
not, in connection with the Custodian's compensation or expenses, charge the
custodied assets of any Series, attach any lien or withhold delivery of any
asset, in full or in part, it being understood that the Fund will make timely
payment of all compensation due to the Custodian on account of each Series.
G. Other Proper Trust Purposes. Upon receipt of proper instructions, to make
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or cause to be made, insofar as cash is available, disbursements for any other
purpose (in addition to the purposes specified in Sections 3-D, 3-E, 4-D, 4-E
and 4-F of Article II) which the Fund declares is a proper trust purpose
pursuant to the proper instructions described in Section 5-A of Article II.
H. Records. To create, maintain and retain all records relating to its
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activities and obligations under this agreement in such manner as will meet the
obligations of the Fund (with respect to each Series) under the Investment
Company Act of 1940, particularly Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable Federal and State tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund. All
records maintained by State Street in connection with the performance of its
duties under this Agreement will remain the property of the Fund and in the
event of termination of this Agreement will be delivered in accordance with the
terms of Section 9-B Article II below.
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I. Accounts. To keep books of account and render statements, including interim
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monthly and complete quarterly financial statements, or copies thereof from time
to time as requested by the Treasurer or any Executive Officer of the Fund.
J. Appraisals. Unless otherwise directed by receipt of proper instructions, to
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compute and determine, as of the close of business of the New York Stock
Exchange, the "net asset value" of a share of each Series, and shall also
compute and determine such net asset value for each Series on each day during
which there is a sufficient degree of trading in such Series' portfolio
securities that the current net asset value of such Series' shares might be
affected by the change in the value of such portfolio securities, each such
computation and determination to be made pursuant to the provisions of the
Agreement and Declaration of Trust and/or By-Laws of the Fund, by a vice
president, assistant vice president or assistant secretary of the Custodian; and
promptly to notify the Fund of the result of such computation and determination.
In computing the "net asset value" State Street shall rely upon security
quotations received by telephone or otherwise from sources designated by the
Fund by proper instructions and may further rely upon information furnished to
it by an officer of the Fund thereunto duly authorized relative (a) to
liabilities of each Series not appearing on its books of account, (b) to the
existence, status and proper treatment of any reserve or reserves and (c) to the
fair value of any securities or other property for which market quotations are
not readily available.
K. Determination of Net Income. Upon receipt of proper instructions, which may
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be continuing instructions when deemed appropriate by the parties, State Street
shall calculate daily the "net income" of each Series in a manner consistent
with the Agreement and Declaration of Trust and in accordance with the then
current prospectus of the Fund applicable to such Series, and shall advise the
Fund and the Transfer Agent daily of the total amount of such "net income".
L. Miscellaneous. To assist generally in the preparation of routine reports to
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holders of shares of each Series, to the Securities and Exchange Commission,
including Form N-SAR, to State "Blue Sky" authorities and to others in the
auditing of accounts and in other matters of like nature.
5.A. Proper Instructions. State Street shall be deemed to have received proper
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instructions upon receipt of written instructions signed by a majority of the
Trustees of the Fund or by one or more person or persons as the Trustees shall
have from time and time authorized to give the particular class of instructions
in question (hereinafter, "Proper Instructions"). Different persons may be
authorized to give instructions for different purposes. A certified copy of a
resolution or action of the Trustees may be received and accepted by State
Street as conclusive evidence of the authority of any such person persons to act
and may be considered as in full force and effect until receipt of written
notice to the contrary. Such instructions may be general or specific in terms.
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B. Investments, Limitations. In performing its duties generally, and more
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particularly in connection with the purchase, sale and exchange of securities
made by or for each Series, State Street may take congnizance of the provisions
of the Agreement and Declaration of Trust of the Fund as from time to time
amended; however, except as otherwise expressly provided herein, it may assume
unless and until notified in writing to the contrary that instructions
purporting to be proper instructions received by it are not in conflict with or
in any way contrary to any provision of the Agreement and Declaration of Trust
and By-Laws of the Fund as amended, or resolutions or proceedings of the
Trustees of the Fund.
6.A. Indemnification. State Street, as Depository and Custodian, shall be
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entitled to receive and act upon advice of counsel (who may be counsel for The
New England) and, except as provided in the next paragraph of this Section 6-A,
shall be without liability for any action reasonably taken or thing reasonably
done pursuant to such advice, provided that such action is not in violation of
applicable Federal or State laws or regulations, and if the counsel is counsel
for The New England and not for State street, shall be kept indemnified by The
New England and not for State Street, shall be kept indemnified by The New
England and be without liability for any action taken or thing done by it in
carrying out the terms and provisions of this Agreement in good faith and
without negligence. State Street shall not be entitled to indemnification for
any action taken upon advice of its own counsel.
Notwithstanding any other provision of this Agreement, the Custodian shall
be strictly liable for all losses to the property of any Series held by the
Custodian due to fire, burglary, robbery, theft and mysterious disappearance,
whether such a loss occurred while the property was in the possession of the
Custodian, its nominee or any agent of the Custodian at the time of loss.
Notwithstanding any other provision of this Agreement, the Custodian shall be
liable for losses resulting from any cause or causes other than those specified
in the immediately preceding sentence unless the Custodian itself can establish
that the loss was not due to any dishonesty, negligence or misconduct by its
officers, employees or agents or nominee. In the event of loss, damage or
injury to the securities held on deposit for any Series with the Custodian, its
nominee or its agent, the Custodian shall promptly, upon demand of the Fund on
behalf of such Series, cause such securities to be replaced by securities of
like kind and quality, together with all rights and privileges pertaining
thereto, or, if acceptable to the Fund on behalf of the Series, remit cash equal
to the fair market value of sad securities. (Fair market value shall be
determined as of the date such securities suffered the loss, damage or injury.)
Notwithstanding any provision of this Section 6-A, the Custodian shall not be
liable for any loss, damage or injury resulting from nuclear contamination
(other than industrial use of nuclear energy), expropriation by government
order, war, insurrection or revolution and, with respect to a sub-custodian or
foreign sub-custodian, even if the sub-custodian or foreign
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sub-custodian's standards of liability for failure or delay in effecting any
collections or providing any notices may be less than that described in this
Section 6-A, the Custodian shall not be absolved of responsibility if the
failure or delay in effecting collections or giving notice is due to the
Custodian's negligence or misconduct.
Each party shall be liable for its own misconduct and negligence. While there
may be indemnification between the Custodian and The New England, neither of
these parties can immunize themselves from liability to the Fund by relying upon
advice from their own individual counsel. In order that the indemnification
provisions contained in this Section 6-A shall apply, however, it is understood
that in any case in which The New England shall be fully and promptly advised of
all pertinent facts concerning the situation in question, and it is further
understood that State Street will use all reasonable care further understood
that State Street will use all reasonable care to identify and notify The New
England promptly concerning a situation which presents or appears likely to
present the probability of such a claim for indemnification against The New
England. The New England shall have the option to defend State Street against
any claim which may be the subject of this indemnification, and in the event
that The New England so elects it will so notify State Street, and thereupon The
New England shall take over complete defense of the claim, and State Street
shall in such situations initiate no further legal or other expenses for which
it shall seek indemnification under this Section 6-A. State Street shall in no
case confess any claim or make any compromise in any case in which The New
England will be asked to indemnify State Street except with The New England's
prior written consent.
The Fund agrees to indemnify and hold harmless the Custodian and its
nominee from and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) incurred or assessed against the Custodian
or its nominee in connection with the performance of this Agreement, except such
as may arise from it or its nominee's own negligent action, negligent failure to
act or willful misconduct and except for claims by or liabilities to the Fund.
To secure any advances of cash or securities made by the Custodian to or for the
benefit of the Fund for any purposes which result in a Series incurring an
overdraft at the end of any business day or for extraordinary or emergency
purposes during any business day, each Series hereby grants to the Custodian a
security interest in and pledges to the Custodian securities held for it by the
Custodian, in an amount not to exceed the lesser of the dollar amounts borrowed
or two percent (15 percent, in the case of the Money Market Series) of the
Series' total assets ( taken at cost), the specific securities to be designated
in writing from time to time by the Series or its investment adviser; provided,
however, that (1) if from time to time neither the Series nor its investment
adviser shall have designated in writing specific securities in an amount at
least equal to the lesser of the dollar amounts borrowed or two percent (15
percent, in the case of the Money Market Series) of the Series's total assets
(taken at cost), or (2) if as a result of the delivery by the Custodian out of
its custody, pursuant to Proper Instructions, of any securities previously so
designated, the remaining
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amount of securities so designated shall be less than the lesser of the dollar
amounts borrowed or two percent (15 percent, in the case of the Money Market
Series) of the Series's total assets (taken at cost), then the Custodian shall
have a security interest in the Series's securities in an amount that, taken
together with amounts of securities from time to time designated in writing by
the Series or its investment adviser that have not been delivered out of custody
of the Custodian pursuant to Proper Instructions, does not exceed the lesser of
the dollar amounts borrowed or two percent (15 percent, in the case of the Money
Market Series) of the Series's total assets (taken at cost), then the Custodian
shall have a security interest in the Series's securities from time to time
designated in writing any the Series or its investment adviser that have not
been delivered out of custody of the Custodian pursuant to Proper Instructions,
does not exceed the lesser of the dollar amounts borrowed or two percent (15
percent, in the case of the Money Market Series) of the Series's total assets
(taken at cost). Should the Series fail to repay promptly any advances of cash
or securities, the Custodian shall be entitled to use available cash and to
dispose of pledged securities and property as is necessary to repay any such
advances.
State Street in its performance of its duties will exercise the standard of
care that a professional custodian engaged in the banking or trust company
industry and having professional expertise in financial and securities
processing transactions and custody would observe in these affairs.
B. Expense Reimbursement. State Street shall be entitled to receive from The
---------------------
New England on demand reimbursement for its cash disbursements, expenses and
charges in connection with its duties as Depository and Custodian as aforesaid,
but excluding salaries and usual overhead expenses.
C. Appointment of Agents. State Street, as Custodian, may at any time or times
---------------------
appoint (and may at any time remove) any other bank, trust company or
responsible commercial agent as its agent to carry out such of the provisions of
this Agreement as State Street may from time to time direct, provided, however,
that the appointment of such agent shall not relieve State Street of any of its
responsibilities under this Agreement. Notwithstanding any provision contained
herein to the contrary, the Fund retains the ultimate responsibility and
authority for direction and control for the services provided pursuant to this
Agreement.
D. Appointment of Sub-Custodian. State Street, as the Custodian, may from time
----------------------------
to time employ one or more sub-custodians meeting the terms and conditions set
forth in Section 9.4(a) of the Fund's By-Laws, subject to prior approval by the
Fund. Notwithstanding any provision contained herein to the contrary, the Fund
retains the ultimate responsibility and authority for direction and control for
the services provided pursuant to this Agreement.
-13-
E. Reliance on Documents. So long as and to the extent that it is in the
---------------------
exercise of reasonable care, State Street as Depository and Custodian, shall not
be responsible for the title, validity or genuineness of any property or
evidence of title thereto received by it or delivered by it pursuant to this
Agreement, and shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed in accordance with
Section 5-A of Article II and shall, except as otherwise specifically provided
in this Agreement, be entitled to receive as conclusive proof of any fact or
matter required to be ascertained by it hereunder a certificate signed by any
Trustee or the Secretary of the fund or any other person authorized by the
Trustees.
F. Access to Records. Subject to security requirements of State Street
-----------------
applicable to its own employees having access to similar records within State
street and such regulations as to the conduct of such monitors as may be
reasonably imposed by State Street after prior consultation with an officer of
the Fund, the books and records of State Street pertaining to its actions under
this Agreement shall be open to inspection and audit at reasonable times by the
Trustees of, attorneys for, and auditors employed by, the fund.
G. Forwarding of Notices. State Street shall promptly forward to the fund all
---------------------
tender offers, exchange offers, notices and announcements received by it
relating to any securities held by it as Custodian for any Series.
H. Record-Keeping. State Street will keep books of account and render
--------------
statements for each series separately. State Street shall maintain such records
as will enable the Fund to comply with the requirements of all Federal and State
laws and regulations applicable to the Fund with respect to the matters covered
by this Agreement. The Custodian shall submit, upon not more than 48 hours'
notice and during the course of the Custodian's regular business hours, to all
regulatory and administrative bodies having jurisdiction over the services
provided pursuant to this jurisdiction over the services provided pursuant to
this Agreement, present or future, any information, reports or other materials
which any such body by reason of this Agreement may request or require pursuant
to applicable laws and regulations. The Custodian shall not disclose or use any
record it has prepared by reason of this Agreement in any manner except as
expressly authorized herein or directed by the Fund and shall keep confidential
any information obtained by reason of this Agreement.
I. Proxies. The Custodian shall, with respect to the securities held
-------
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of a
Series or a nominee of such Series, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Fund such proxies, all proxy soliciting materials and all notices relating to
such securities.
-14-
7.A. Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
-------------------------------------
instructs the Custodian to employ as sub-custodians for the Fund's securities
and other assets maintained outside the United States the foreign banking
institutions and foreign securities depositories designated on Schedule B hereto
("foreign sub-custodians"). Upon receipt of Proper Instructions, together with
a certified resolution of the Fund's Board of Directors, the Custodian and the
Fund may agree to amend Schedule B hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories to
act as sub-custodians. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any on or more of such sub-
custodians for maintaining custody of the Fund's assets.
B. Assets to be Held. The Custodian shall limit the securities and other
-----------------
assets maintained in the custody of the foreign sub-custodians to: (a) "foreign
securities," as defined in paragraph (c) (1) of Rule 17f-5 under the Investment
Company Act of 1940, as amended, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably necessary to
effect the Fund's foreign securities transactions.
C. Foreign Securities Depositories. The Custodian shall identify on its books
-------------------------------
as belonging to the relevant Series the foreign securities of such Series held
by each foreign sub-custodian. Each agreement pursuant to which the Custodian
employs a foreign banking institution shall require that such institution
establish a custody account for the Custodian on behalf of the relevant Series
and physically segregate in that account securities and other assets of such
Series, and, in the event that such institution deposits such Series's
securities in a foreign securities depository, that is shall identify on its
booked as belonging to the Custodian, as agent for such Series, the securities
so deposited.
E. Agreements with Foreign Banking Institutions. Each agreement with a foreign
--------------------------------------------
banking institution shall be substantially in the form set forth in Exhibit 1
hereto 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 agents, except a claim of
payment for their safe custody or administration; (b) beneficial ownership for
the Fund's assets will be freely transferable without the payment of money or
value other than for custody or administration; (s) adequate records will be
maintained identifying the assets as belonging to the Fund; (d) officers of or
auditors employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public accountants for
the Fund; (d) officers of or auditors employed by, or other representatives of
the Custodian , including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to the books
and records of the foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Fund held by the foreign
sub-custodian will be subject only to the instructions of the Custodian or its
agents.
-15-
F. Access of Independent Accountants of the Fund. Upon request of the Fund,
---------------------------------------------
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a foreign sub-custodian insofar as such
books and records relate to the performance of such foreign banking institution
under its agreement with the custodian.
G. Reports by Custodian. The Custodian will supply to the Fund from time to
--------------------
time, as mutually agreed upon, statements in respect of the securities and other
asset of the Fund held by foreign sub-custodians, including but not limited to
an identification of entities having possession of the Fund's securities and
other assets and advises or notifications of any transfers of securities to or
from each custodial account maintained by a foreign banking institution for the
Custodian on behalf of the Fund indicating, as to securities acquired for the
Fund, the identity of the entity having physical possession of such securities.
H. Transactions in Foreign Custody Account.
---------------------------------------
(a) Except as otherwise provided in subparagraph (b) of this Section &-H,
the provisions of Sections D, E, F, G, I, J and K of Section 3 of Article II of
this Agreement shall apply, mutatis mutandis, to the foreign securities of the
----------------
Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for securities received for the account of the Fund and
delivery of securities received 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.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set forth
in Section 3-C of Article II of this Agreement, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
I. Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
-----------------------------------
Custodian employs a foreign banking institution as a foreign sub-custodian shall
require said sub-custodian to exercise the standard of care that a professional
custodian engaged in the banking or trust company industry and having
professional expertise in financial and securities processing transactions and
custody would observe in the performance of its duties, and to indemnify, and
hold harmless, the Custodian and the Fund from and
-16-
against any loss, damage, cost expense, liability or claim arising out of or in
connection with the institution's performance of such obligations. At the
election of the Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking institution as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Fund has not been made whole for any such loss, damage,
cost, expense, liability or claim.
J. Liability of Custodian. The Custodian shall be liable for the acts or
----------------------
omissions of a foreign banking institution to the same extent as set forth with
respect to sub-custodians generally in this Agreement and, regardless of whether
assets are maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by Section 7-M
of Article II, the Custodian shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions or acts of xxxx or terrorism or any loss where the sub-
custodian has otherwise exercised the standard of care that a professional
custodian engaged in the banking or trust company industry and having
professional expertise in financial and securities processing
transactions and custody would observe. Notwithstanding the foregoing
provisions of this Section 7-J, in delegating custody duties to State Street
London, Ltd., the Custodian shall not be relieved to the Fund for any loss due
to such delegation, except such loss as may result from 9a) political risk
(including, but not limited to , exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife or armed hostilles)
or ( b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk)due to acts of god, nuclear incident or
other losses under circumstances where the Custodian and State Street London
Ltd. have exercised reasonable care.
K. Reimbursement for Advances. Notwithstanding any other provision in this
--------------------------
Agreement, if the Fund requires the Custodian to advance cash or foreign
securities for any purpose including the purchase or sale of foreign exchange or
of contracts for foreign exchange, or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges , expenses, assessments,
claims or liabilities in connection with the performance of Section 7 of Article
II, except such as may arise from it or its nominee's own negligent failure to
act or willful misconduct, each a Series hereby grants to the Custodian in an
amount not to exceed the lesser of the dollar amounts borrowed or two percent
(15 percent, in the case of the Money Market Series) of such Series' total
assets (taken at cost ), the specific securities to be designated in writing
from time to time by the Series or its investment adviser; provided, however,
that (10 if from time to time neither the Series nor its investment adviser
shall have designated in writing specific securities in an amount at least equal
to the lesser of the case of the Money market Series ) of such Series's total
asset taken at cost, or (2) if as a result of the delivery by the Custodian out
of its custody, pursuant to proper Instructions, of any securities previously
so
-17-
designated, the remaining amount of securities so designated shall be less
than the lesser of the dollar amounts borrowed or two percent (15 percent in the
case of the Money market Series) of such Series's total assets, then the
Custodian shall have a security interest in such Series's securities in an
amount that , taken together with amounts of securities from time to time
designated in writing by the Series or its investment adviser that have not been
delivered out of the custody of the Custodian pursuant to Proper Instructions,
does not exceed the lesser of the dollar amounts borrowed or two percent (15
percent in the case of the Money Market Series's total assets (taken at cost) .
Should the Series fail to repay promptly any advances of cash or securities, the
Custodian shall be entitled to use available cash and dispose of pledge
securities and property as is necessary to repay any such advances.
L. Monitoring Responsibilities. The Custodian shall furnish annually to the
----------------------------
Fund , during the month of June, information concerning the foreign sub-
custodians employed by the Custodian. Such information shall be similar in kind
and cope to that furnished to the fund in connection with the initial approval
of the foreign sub-custodial arrangements under this Agreement. In addition,
the Custodian will promptly inform the Fund in the event that the Custodian
learns of a material adverse change in the financial condition of a foreign sub-
custodian or any material loss of assets of the Fund or, in the case of the
foreign sub-custodian not the subject of an appropriate exemptive order from the
Securities and Exchange Commission, in the event that the Custodian is notified
by such foreign sub-custodian that there appears to be a substantial likelihood
that its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof), in each case computed in accordance with generally
accepted U.S. accounting principles).
M. Branches of U.S. Banks.
-----------------------
(a) except as otherwise set forth in this Section 7, the provisions hereof
shall not apply where the custody of the Fund assets is maintained in a foreign
branch of a banking institution which is a "bank" as defined by Section 2(a) (5)
of the Investment Company Act of 1940 , as amended, meeting qualification set
forth in Section 26(a) of said Act. The appointment of any such branch as sub-
custodian shall be governed by Section 6-C of Article II of this Agreement.
(b) Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
custodian, State Street London Ltd. or both.
-18-
8. The New England shall pay State Street as Depository and Custodian the
Compensation set forth on Exhibit A hereto until a different compensation
schedule shall be agreed upon in writing among The New England, the Fund and
State Street.
9.A. Effective Period, Termination and Amendment, and Interpretative and
--------------------------------------------------------------------
Additional Provisions. This Agreement shall become effective as of the date of
---------------------
its execution, shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by agreement of the parties
hereto and may be terminated by The New England and the fund , on behalf of any
or all of the Series, on the one hand, and State Street, on the other hand, by
an instrument in writing delivered o mailed postage paid, to The New England and
the fund or State Street as the case may be, such termination to take effect not
sooner than sixty (60) days after the date of such delivery or mailing;
provided, however, that The New England and the Fund, on behalf of the Series,
shall not amend or terminate this Agreement in contravention of any applicable
Federal or State laws or regulations, or any provision of the Fund's Agreement
and Declaration of Trust or By-Laws as the same may from time to time by
amended, and further provided, that The New England and the Fund by action of
its Trustees may, at any time, substitute another bank or trust company for
State Street by giving notice as above to State Street.
In connection with the operation of this Agreement, State Street, The New
England and the Fund may agree from time to time on such provisions interpretive
of or in addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement, any such
interpretive or additional provisions to be signed by both parties and annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable Federal or State laws or regulations, or any provision
of the Fund's Agreement and Declaration of Trust or By-Laws as the same may from
time to time be amended. No interpretive or additional provisions made as
provided in the preceding sentence shall be deemed to be an amendment of this
Agreement.
B. Successor Custodian. Upon termination hereof, The New England shall pay to
-------------------
State Street such compensation as may be due as of the date of such termination
and shall likewise reimburse State Street for its costs, expenses and
disbursements incurred prior to such termination in accordance with Section 6-B
or Article II and such reasonable costs, expenses and disbursements as may be
incurred by State Street in connection with such termination.
If a successor custodian for any Series is appointed by the Trustees of the
Fund in accordance with its By-Laws, State Street shall, upon termination,
deliver to such successor custodian at the office of State Street, duly endorsed
and in form for transfer, all securities of such Series then held hereunder and
all funds or other properties of such Series deposited with or held by it
hereunder and all records maintained by State Street in connection with the
performance of its duties under this Agreement.
-19-
If no such successor custodian is appointed, State Street shall, in like
manner at its office, upon receipt of a certified copy of a resolution of the
shareholders of such Series pursuant to the By-Laws, deliver such securities,
funds and other properties in accordance with such resolution.
In the event that securities, funds or other properties remain in the
possession of State Street after the date of termination hereof with respect to
any Series owing to failure of the Fund to procure the certified copy above
referred to, or of the Trustees to appoint a successor custodian, State Street
shall be entitled to fair compensation for its services during such period and
the provisions of this Agreement relating to the duties and obligations of State
Street with respect to such Series shall remain in full force and effect.
10. The Fund shall not circulate any printed matter which contains any
reference to State Street without the prior written approval of State Street,
except such printed matter as merely identifies State Street a s Depository
and/or Custodian.
11. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be subject to and be construed according to the laws of
said Commonwealth.
12. Notices and other writings delivered or mailed postage prepaid to the Fund
at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, to The New England at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and to State Street at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000 or to such other address as the Fund, The
New England or State Street may hereafter specify, shall be deemed to have been
properly delivered or given hereunder to the respective address. Notice given
to the Fund with respect to any matter affecting less than all of the Series
shall indicate in such notice the Series to which such matter pertains.
13. This Agreement shall be binding on and shall insure to the benefit of State
Street and its successors. State Street shall xxxx The New England for each
Series separately on account of those custodian fees determined in accordance
with Exhibit A hereto which are attributable to the administration, portfolio
trades, interest accrual and appraisals or other activities of such Series.
Except as otherwise specifically provided in this Agreement, the rights,
obligations and interests of the Fund, any Series and the Custodian under this
Agreement shall not be assignable in whole or in part.
14. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. The Services of the Custodian and The New England under the Agreement
are not deemed to be exclusive and both parties shall be free to render similar
services to others so long as their services are not impaired thereby.
-20-
16. Any securities issued in bearer form shall be maintained in that
form and not be subject to reregistration in definitive form; i.e. in the name
of a nominee or any depository, except upon specific instruction as to a given
security. The bearer securities must be retained by the Custodian itself,
unless deposited with a depository authorized by the Securities and Exchange
Commission and approved by the California Insurance Commissioner.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed in its name and on its behalf by a duly authorized officer as of
the day and year first above written.
NEW ENGLNAD ZENITH FUND,
on behalf of each of its Money Market
Series, its Bond Income Series, its Capital
Growth Series, its Stock Index Series and its
Managed Series.
ATTEST /s/ XXXXXX XXXXX XXXXX X. X. XXXXXXXX
------------------------- -----------------------
STATE STREET BANK AND
TRUST COMPANY
-----------------------
ATTEST: /s/ ILLEGIBLE /s/ ILLEGIBLE
------------------------- -----------------------
NEW ENGLAND MUTUAL LIFE
INSURANCE COMPANY
-----------------------
ATTEST: /s/ XXXXXX XXXXX /s/ XXXXXX X. XXXXXXXXX
------------------------- -----------------------
-21-
