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Exhibit 8
CUSTODIAN AGREEMENT
between
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
and
INVESTORS BANK & TRUST COMPANY
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TABLE OF CONTENTS
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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 . . . . . . . . . . . . . . . . . . . . . . . . 3
5.3 Distributions and Expenses of Fund . . . . . . . . . . . . 3
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 . . . . . . . . . . . . . . . . . . . . . . . . 4
6. Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
6.1 Segregation and Registration . . . . . . . . . . . . . . . 4
6.2 Voting and Proxies . . . . . . . . . . . . . . . . . . . . 5
6.3 Book-Entry System . . . . . . . . . . . . . . . . . . . . . 5
6.4 Use of a Depository . . . . . . . . . . . . . . . . . . . . 6
6.5 Use of Book-Entry System for Commercial Paper . . . . . . . 7
6.6 Use of Immobilization Programs . . . . . . . . . . . . . . 8
6.7 Eurodollar CDs . . . . . . . . . . . . . . . . . . . . . . 8
6.8 Options and Futures Transactions . . . . . . . . . . . . . 9
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter . . . . . . . . . . . . . 9
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(b) Puts, Calls, and Futures Traded
on Commodities Exchanges . . . . . . . . . . . . . 9
6.9 Segregated Account . . . . . . . . . . . . . . . . . . . . 9
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 . . . . . . . . . . . 15
12. Concerning the Bank . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.1 Performance of Duties and Standard of Care . . . . . . . . 15
12.2 Agents and sub-custodians with Respect to Property
of the Fund Held in the United States . . . . . . . . . . . 16
12.3 Duties of the Bank with Respect to Property
Held Outside of the United States . . . . . . . . . . . . . 17
12.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 21
12.5 Fees and Expenses of Bank . . . . . . . . . . . . . . . . . 21
12.6 Advances by Bank . . . . . . . . . . . . . . . . . . . . . 21
13. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
14. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
17. Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
19. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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CUSTODIAN AGREEMENT
AGREEMENT made as of this [ ] day of [ ] 1996, between
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC, a Maryland corporation
(the "Fund") and INVESTORS BANK & TRUST COMPANY (the "Bank").
The Fund, an open-end management investment company consisting of four
separate portfolios, as listed on Appendix A hereto, 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, as amended, (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 (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 of 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 ("SEC") 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 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 electromechanical 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).
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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 the names and signatures of the Authorized Persons, 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 each portfolio
or in the name of the Bank, as Custodian of each portfolio, and will deposit to
the account of the Fund all of the cash of the Fund, except for cash held by a
sub-custodian appointed pursuant to Section 12.2 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.
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,
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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 sub-custodian 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.
5.9 Termination. Upon the termination of this Agreement
as hereinafter set forth pursuant to Section 8 and Section 13 of this
Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise
provided herein, and except for securities to be delivered to any sub-custodian
appointed pursuant to Section 12.2 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
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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;
(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
belonging to the Fund 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;
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(c) The Bank (or its agent) shall pay for
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 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 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 17f-4 of 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;
(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 negligence, willful misfeasance or bad faith of the Bank or any
of its agents or of any of its or their employees or from any negligence 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 subrogated 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.
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;
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(c) Payment for 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
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
thereof or, in the event Portfolio Securities are loaned, delivery of
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
negligence, willful misfeasance or bad faith of the Bank or its employees or
from any negligence by the Bank of its duty to use its best efforts to enforce
such rights as it may have against a Depository; at the election of the Fund,
it shall be entitled to be subrogated for the Bank in any claim against such
depository 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. 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;
(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
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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 Book-Entry 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
(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 sub-custodian
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
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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 negligence, willful misfeasance or bad faith in the
performance of its duties hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges,
NASDAQ or Over-the-Counter.
1. The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by the Fund
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions between the
Bank, any broker-dealer registered under the Exchange Act and a member of the
National Association of Securities Dealers, Inc. (the "NASD"), and, if
necessary, the Fund relating to the compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange, or of
any similar organization or organizations.
2. Unless another agreement requires it to do
so, the Bank shall be under no duty or obligation to see that the Fund has
deposited or is maintaining adequate margin, if required, with any broker in
connection with any option, nor shall the Bank be under duty or obligation to
present such option to the broker for exercise unless it receives Proper
Instructions from the Fund. The Bank shall have no responsibility for the
legality of any put or call purchased or sold on behalf of the Fund, the
propriety of any such purchase or sale, or the adequacy of any collateral
delivered to a broker in connection with an option or deposited to or withdrawn
from a Segregated Account (as defined in subsection 6.9 below). The Bank
specifically, but not by way of limitation, shall not be under any duty or
obligation to: (i) periodically check or notify the Fund that the amount of
such collateral held by a broker or held in a Segregated Account is sufficient
to protect such broker of the Fund against any loss; (ii) effect the return of
any collateral delivered to a broker; or (iii) advise the Fund that any option
it holds, has or is about to expire. Such duties or obligations shall be the
sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities
Exchanges
1. The Bank shall take action as to puts, calls
and futures contracts ("Futures") purchased or sold by the Fund in accordance
with the provisions of any agreement among the Fund, the Bank and a Futures
Commission Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the
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Commodity Futures Trading Commission and/or any Contract Market, or any similar
organization of organizations, regarding account deposits in connection with
transactions by the Fund.
2. The responsibilities and liabilities of the
Bank as to futures, puts and calls traded on commodities exchanges, any Futures
Commission Merchant account and the Segregated Account shall be limited as set
forth in subparagraph (a)(2) of this Section 6.8 as if such subparagraph
referred to Futures Commission Merchants rather than brokers, and Futures and
puts and calls thereon instead of options.
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, into which Account or Accounts may be transferred
upon receipt of Proper Instructions cash and/or Portfolio Securities:
(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 of 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 of
other arrangements in connection with transactions by the Fund;
(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;
(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
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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.
(g) Assets may be withdrawn from the Segregated
Account pursuant to Proper Instructions only
(i) in accordance with the provisions of any
agreements referenced in (a) above;
(ii) 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;
(iii) for exchange for other liquid assets of equal
or greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding
forward commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase 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
(v) 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 of 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
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(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 payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment 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 sub-custodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;
(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
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security, 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 win 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 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 By-laws 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, 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:
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(a) 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;
(b) 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;
(c) 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, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
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;
(d) 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
(e) 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.
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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
employees of the SEC and will be preserved by the Bank in the manner and in
accordance with the applicable rules and regulations under the 1940 Act. All
records maintained by the Bank in connection with the performance of its duties
under this Agreement will remain the property of the Fund, will be surrendered
promptly on request and in the event of termination of this agreement will be
delivered to the Fund or the successor custodian.
The Bank shall keep the books of account and reader 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.
12. Concerning the Bank.
12.1 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. In order that the indemnification provision
contained in this Section 13.1 shall apply, it is understood that the Fund
shall be fully and promptly advised of all pertinent facts concerning the
situation and that the Fund shall have the option to defend the Bank against
any claim which may be the subject of this indemnification. The Bank shall in
no case confess any claim or make any compromise in any case in which the Fund
will be asked to indemnify the Bank except with the Fund's consent. It is
further understood that the indemnification provision contained in this Section
13.1 does not apply with respect to the acts and omissions of a Selected
Foreign Sub-Custodian constituting negligence or willful misconduct in the
conduct of its responsibilities under the terms of a Foreign Sub-Custodian
Agreement.
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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 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 negligence;
12.2 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 shall be responsible for the acts and
omissions of such agents and sub-custodians as if performed by the Bank
hereunder.
Upon receipt of Proper Instructions, the Bank may employ
sub-custodians, provided that any such sub-custodian 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 any such sub-custodian and the Fund
shall indemnify the Bank and hold it harmless from and against any and all
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actions, suits and claims, arising directly or indirectly out of the
performance of any sub-custodian. 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 any
sub-custodian.
12.3 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 Directors, 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
provided that any such institution shall constitute an "eligible foreign
custodian" within the meaning of Rule l7f-5 under the 1940 Act. 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. The Bank
may authorize one or more of the Selected Foreign Sub-Custodians to use the
facilities of one or more foreign central securities depositories or clearing
agencies provided that any such organization shall constitute an "eligible
foreign custodian". Where the Fund's securities are deposited in a securities
depository, the Selected Foreign Sub-Custodian shall identify as belonging to
such Selected Foreign Sub-Custodian as agent for the customer a quantity of
securities in a fungible bulk of securities shown in such sub-custodian's
account on the books of such securities depository. 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.
(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. Each Selected Foreign Sub-Custodian shall
hold securities of the Fund which
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are not held in a securities depository physically segregated at all times from
those of such Selected Foreign Sub-Custodian and shall identify as belonging to
such Selected Foreign Sub-Custodian as agent for the customer.
(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 provisions conforming to paragraph (a)(i)(iii) of Rule 17f-5 under the
1940 Act (or any successor provision of like import) 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. The Bank represents that
as of the date of this Agreement to the best of its knowledge, after due
inquiry, each of the sub-custodians and securities depositories listed on the
Schedule attached hereto is an "eligible foreign custodian" or an overseas
branch of a "Qualified U.S. Bank", each as defined by Rule 17f-5 under the Act.
The Bank agrees that it shall not amend any sub-custodial agreement in a
manner which would cause the Fund to be in violation of Rule 17f-5 under the
Act and agrees to give the Fund 30 days prior written notice of any amendment
which materially affects the Fund's rights.
(e) Access of lndependent 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 periodic statements as the Fund shall reasonably request 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 and shall furnish to the Fund such notices of transfers of securities,
deposits or other assets to or from the Fund's account by any Selected Foreign
Sub-Custodian as the Fund shall request.
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(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 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 bankruptcy
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or insolvency of, any other depository, clearance system or custodian utilized
by Euroclear in connection with the Fund's securities and other assets.
(i) Liability of Bank. It is understood by both
parties that the use of any such sub-custodian will not effect any of the
Bank's responsibilities to the Fund under this Agreement and that the Custodian
shall be liable for the acts and omissions of each sub-custodian constituting
negligence or willful misconduct in the conduct of its responsibilities under
the terms of the Sub-custodian agreement. 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.
The Bank shall advise the Fund promptly if it learns that any foreign
agent or subcustodian no longer constitutes an "eligible foreign custodian" and
of any failure by any Selected Foreign Sub-Custodian to observe any "material
term" of its appointment within the meaning of Rule l7f-5 under the 1940 Act.
(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.
In the event that any Selected Foreign Sub-Custodian fails to perform
any of its obligations under the terms of its appointment, the Bank shall use
its best efforts to cause such foreign sub-custodian to perform such
obligations and shall notify the Fund as promptly as practicable of any failure
of a sub-custodian to perform its obligations in any material respect. At the
written request of the Fund, the Custodian shall use its best efforts to assert
and collect any claim for liability for any loss or damage incurred by the Fund
arising out of the failure of any such sub-custodian to perform such
obligations. At the election of the Fund, it shall have the right to enforce,
to the extent permitted by the sub-custodian agreement and applicable law, the
Custodian's rights against any such subcustodian for loss of damage caused by
the Fund by such sub-custodian. All the written request of the Fund, the
Custodian will terminate any sub-custodian in accordance with the termination
provisions under the applicable sub-custodian agreement. The Custodian will
not amend any sub-custodian agreement in any way which materially adversely
affects the custody of the Fund's assets, except upon the prior approval of the
Fund.
(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
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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 Bank 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.
12.4 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.
12.5. 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 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.
12.6 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 Banks 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.
13. Termination.
(a) This Agreement may be terminated at any time without
penalty 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,
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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.
(b) 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 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 win 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 13(c), 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.
(c) 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 hold 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.
14. Confidentiality. Both parties hereto agree than 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.
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15. 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:
Salomon Brothers Institutional Series Funds Inc
c/o Salomon Brothers
0 Xxxxx Xxxxx Xxxxxx
XX, XX 00000
Attention: Xxxx Xxxxxx
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
or at such other place as such party may from time to time designate
in writing.
16. 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.
17. 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 13 hereof will not be deemed
to be an assignment within the meaning of this provision.
18. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.
19. 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.
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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.
SALOMON BROTHERS
INSTITUTIONAL SERIES FUNDS INC
By:
---------------------------------
Name:
Title:
ATTEST:
----------------------------
INVESTORS BANK & TRUST COMPANY
By:
---------------------------------
Name:
Title:
ATTEST:
----------------------------
DATE:
------------------------------
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APPENDIX A
DATED APRIL 1, 1996
to
CUSTODY AGREEMENT
between
SALOMON BROTHERS INSTITUTIONAL SERIES FUNDS INC
and
INVESTORS BANK & TRUST COMPANY
Salomon Brothers Institutional High Yield Bond Fund
Salomon Brothers Institutional Emerging Market Debt Fund
Salomon Brothers Institutional Asia Growth Fund
Salomon Brothers Institutional Money Market Fund
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