MASTER CUSTODIAN AGREEMENT
AGREEMENT made as of the 30th day of
June, 2005, between each Fund listed on Appendix A (each a Fund and collectively
“the Funds”), and INVESTORS BANK & TRUST COMPANY, a Massachusetts trust
company (the “Bank”).
Each Fund, an open-end management
investment company on behalf of its respective portfolios/series listed on
Appendix A hereto (as such Appendix A may be amended from time to time) (each a
“Portfolio” and collectively, the “Portfolios”), desires to place and maintain
all of its portfolio securities and cash in the custody of the Bank. The Bank
meets the 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 each Fund, and has indicated its willingness to so act,
subject to the terms and conditions of this Agreement.
1. Bank Appointed
Custodian. Each 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. For the services rendered pursuant to this Agreement, each
Fund agrees to pay to the Bank fees as may be agreed to from time to time in
writing between the parties.
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, and set forth in a certificate as required
by Section 4 hereof.
2.2 Board. Board
will mean the Board of Directors or the Board of Trustees of each Fund, as the
case may be.
2.3 Security. The
term security as used herein will have the same meaning assigned to such term in
the 1940 Act, including, without limitation, any note, stock, treasury stock,
security future, 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 (including a
certificate of deposit) or on any 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
foreign currency, or, in general, any interest or instrument commonly known as a
"security", or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to or purchase, any of the foregoing.
2.4 Portfolio
Security. Portfolio Security will mean any security owned by a
Fund.
2.5 Officers’
Certificate. Officers’ Certificate will mean, unless otherwise
indicated, any request, direction, instruction, or certification in writing
signed by any two Authorized Persons of a Fund.
2.6 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.
2.7 Depository. Depository
shall mean The Depository Trust Company (“DTC”), a clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934, as amended (“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.
2.8 Proper
Instructions. Unless otherwise provided in this agreement, the
Bank shall act only upon 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, such instructions to be given in such form and manner as the
Bank and a Fund shall agree upon from time to time, and (ii) instructions (which
may be continuing instructions) regarding other matters signed by an Authorized
Person. Oral instructions will be considered Proper Instructions if
the Bank reasonably believes them to have been given by an Authorized Person.
Each Fund shall cause all oral instructions to be promptly confirmed in writing
by an Authorized Person. 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 confirming 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
Authorized Persons of the Fund. Each 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 by the Bank of an Officers’ Certificate as to the
authorization by the Board accompanied by a detailed description of procedures
approved by a Fund, Proper Instructions may include communication effected
directly between electro-mechanical or electronic devices provided that the
Board and the Bank agree in writing that such procedures afford adequate
safeguards for the Fund’s assets.
3.1 Separate
Accounts. Since each Fund has more than one Portfolio, the
Bank will segregate the assets of each Portfolio to which this Agreement relates
into a separate account for each such Portfolio containing the assets of such
Portfolio (and all investment earnings thereon). Unless the context
otherwise requires, any reference in this Agreement to any actions to be taken
by a Fund shall be deemed to refer to the Fund acting on behalf of one or more
of its Portfolios. Any reference in this Agreement to any assets of the Fund,
including, without limitation, any portfolio securities and cash and earnings
thereon, shall be deemed to refer only to assets of the applicable Portfolio,
any duty or obligation of the Bank hereunder to the Fund shall be deemed to
refer to duties and obligations with respect to such individual Portfolio and
any obligation or liability of the Fund hereunder shall be binding only with
respect to such individual Portfolio, and shall be discharged only out of the
assets of such Portfolio.
3.2 Reports. The
Bank shall make available to each Fund each business day as soon as practicable,
typically by 7:00 p.m. EST, all transaction activity posted on each separate
account of the Funds for their respective Portfolios, either hereunder or with
any sub-custodian appointed in accordance with this Agreement during said day,
together with historical transaction activity for such Fund. At least
monthly and from time to time, the Bank will furnish each Fund with a detailed
statement, on a per Portfolio basis, of the Securities and moneys held by the
Bank for the Fund.
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4. Certification as to
Authorized Persons. The Secretary or Assistant Secretary of
each Fund will at all times maintain on file with the Bank his or her
certification to the Bank, in such form as may be acceptable to the Bank, of (i)
the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund will sign a new or amended certification setting forth the
change and the new, additional or omitted names or signatures. The Bank will be
entitled to rely and act upon any Officers’ Certificate given to it by the Fund
which has been signed by Authorized Persons named in the most recent
certification received by the Bank.
5.1 Custody of
Cash. As custodian for the Funds, the Bank will open and
maintain a separate account or accounts in the name of each Fund and each
Portfolio thereof or in the name of the Bank, as Custodian of the Fund, and will
deposit to the account of the Fund all of the cash of the Fund, except for cash
held by a subcustodian appointed pursuant to Sections 13.2 or 13.3 hereof,
including borrowed funds, delivered to the Bank, subject only to draft or order
by the Bank acting pursuant to the terms of this Agreement. Pursuant
to the Bank’s internal policies regarding the management of cash accounts, the
Bank may segregate certain portions of the cash of the Fund into a separate
savings deposit account upon which the Bank reserves the right to require seven
(7) days notice prior to withdrawal of cash from such an
account. 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 a 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 (a) through (g)
below.
(a) Purchase of
Securities. Upon the purchase of securities for a 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 a nominee 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 (as that term is defined in Section 6.6 hereof)) 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;
(b) Redemptions. In
such amount as may be necessary for the repurchase or redemption of common
shares of each Fund offered for repurchase or redemption in accordance with
Section 7 of this Agreement;
(c) Distributions and Expenses
of Fund. For the payment on the account of a Fund of dividends
or other distributions to shareholders as may from time to time be declared by
the Board, interest, taxes, management or supervisory fees, distribution fees,
fees of the Bank for its services hereunder and reimbursement of the expenses
and liabilities of the Bank, fees of any transfer agent, fees for legal,
accounting, and auditing services, or other operating expenses of the
Fund;
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(d) Payment in Respect of
Securities. For payments in connection with the conversion,
exchange or surrender of Portfolio Securities or securities subscribed to by a
Fund held by or to be delivered to the Bank;
(e) 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;
(f) Repayment of
Cash. To repay the cash delivered to a 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;
(i) For
payments in connection with foreign exchange contracts or options to purchase
and sell foreign currencies for spot and future delivery (collectively, “Foreign
Exchange Agreements”) which may be entered into by the Bank on behalf of a Fund
upon the receipt of Proper Instructions, such Proper Instructions to specify the
currency broker or banking institution (which may be the Bank, or any other
subcustodian or agent hereunder, acting as principal) with which the contract or
option is made, and the Bank shall have no duty with respect to the selection of
such currency brokers or banking institutions with which the Fund deals or for
their failure to comply with the terms of any contract or option.
(ii) In
order to secure any payments in connection with Foreign Exchange Agreements
which may be entered into by the Bank pursuant to Proper Instructions, each Fund
agrees that the Bank shall have a continuing lien and security interest, to the
extent of any payment due under any Foreign Exchange Agreement with respect to a
Portfolio, in and to any property at any time held by the Bank for the
Portfolio’s benefit or in which the Portfolio has an interest and which is then
in the Bank’s possession or control (or in the possession or control of any
third party acting on the Bank’s behalf). Such payment liability and
the concomitant liens and security interests are not permitted to exceed a value
equal to 33⅓% of a Portfolio’s total assets. Each Fund authorizes the
Bank, in the Bank’s sole discretion, at any time to charge any such payment due
under any Foreign Exchange Agreement against any balance of account standing to
the credit of the Fund on the Bank’s books;
(h) Other Authorized
Payments. For other authorized transactions of a Fund, or
other obligations of a 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; or
(i) Termination. Upon
the termination of this Agreement as hereinafter set forth pursuant to Section 8
and Section 15 of this Agreement.
5.2 Pledge or Encumbrance of
Securities or Cash. Except as provided in this Agreement, the
Bank may not pledge, assign, hypothecate or otherwise encumber securities or
cash of the Fund held in the Fund’s account without the Fund’s prior written
consent.
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6. Securities.
6.1 Segregation and
Registration. Except as otherwise provided herein, and except
for securities to be delivered to any subcustodian appointed pursuant to
Sections 13.2 or 13.3 hereof, the Bank as custodian will receive and hold
pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of a Fund or in the name of its nominee. 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 for the benefit of the Fund, 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.
Each 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 that 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 promptly execute
and deliver, or cause to be executed and delivered, to the Fund or its agent for
purposes of voting proxies all notices, proxies and proxy soliciting materials
delivered to the Bank with respect to such Securities, such proxies to be
executed by a Fund, its agent or 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 Corporate Action and Class
Action Notices. If at any time the Bank is notified that (a) a
Fund may be eligible to participate in an class action lawsuit involving any
Portfolio Security or (b) an issuer of any Portfolio Security has taken or
intends to take a corporate action that affects the rights, privileges, powers,
preferences, qualifications or ownership of a Portfolio Security, including
without limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend (collectively, a “Corporate Action”), which Corporate Action requires
an affirmative response or action on the part of the holder of such Portfolio
Security (a “Response”), the Bank shall notify the appropriate Fund or its agent
for purposes of responding to Corporate Actions promptly of the Corporate
Action, the Response required in connection with the Corporate Action and the
Bank’s deadline for receipt from the Fund of Proper Instructions regarding the
Response (the “Response Deadline”). The Bank shall forward to the
Fund or its agent via telecopier and/or overnight courier all notices,
information statements or other materials relating to the Corporate Action
promptly after receipt of such materials by the Bank.
(a) The
Bank shall act upon a required Response only after receipt by the Bank of Proper
Instructions from the Fund no later than 5:00 p.m. on the date specified as the
Response Deadline and only if the Bank (or its agent or subcustodian hereunder)
has actual possession of all necessary Securities, consents and other materials
no later than 5:00 p.m. on the date specified as the Response
Deadline.
(b) The
Bank shall have no duty to act upon a required Response if Proper Instructions
relating to such Response and all necessary Securities, consents and other
materials are not received by and in the possession of the Bank no later than
5:00 p.m. on the date specified as the Response
Deadline. Notwithstanding, the Bank will use its best efforts to act
upon a Response for which Proper Instructions and/or necessary Securities,
consents or other materials are received by the Bank after 5:00 p.m. on the date
specified as the Response Deadline, it being acknowledged and agreed by the
parties that any undertaking by the Bank to use its best efforts in such
circumstances shall in no way create any duty upon the Bank to complete such
Response prior to its expiration.
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(c) In
the event that the Fund or its agent notifies the Bank of a Corporate Action
requiring a Response and the Bank has received no other notice of such Corporate
Action, the Response Deadline shall be 48 hours prior to the Response expiration
time set by the depository processing such Corporate Action.
(d) Section
13.3(e) of this Agreement shall govern any Corporate Action involving Foreign
Portfolio Securities held by a Selected Foreign Sub-Custodian.
(e) The
Bank provides the ability for Funds to respond to Corporate Actions through
electronic means using either (i) the Bank’s InvestCaps function or (ii)
appropriate SWIFT messaging. In the event any Fund or its agent provides a
Corporate Action Response other than by the
aforementioned electronic means, the Bank shall not be responsible for any delay
or failure to process such Response in a timely manner. In addition, the
Bank may assess additional processing fees to cover the cost of manually
processing Corporate Actions Responses provided to the Bank other than by the
aforementioned electronic means.
6.4 Book-Entry
System.
(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 a Fund’s participation
in the Book-Entry System through the Bank (or any such agent) will identify by
book entry the Portfolio Securities which are included with other securities
deposited in the Account and shall at all times during the regular business
hours of the Bank (or such agent) be open for inspection by duly authorized
officers, employees or agents of a Fund. Where securities are transferred to a
Fund’s account, the Bank shall also, by book entry or otherwise, identify as
belonging to the Fund a quantity of securities in a fungible bulk of securities
(i) registered in the name of the Bank or its nominee, or (ii) shown on the
Bank’s account on the books of the Federal Reserve Bank;
(c) The
Bank (or its agent) shall pay for securities purchased for the account of the
Fund or shall pay cash collateral against the return of Portfolio Securities
loaned by a 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
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(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 each 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 under the 1940 Act, of any transfers to or from the
account of the Fund;
(d) The
Bank will promptly provide each Fund with any report obtained by the Bank or its
agent on the Book-Entry System’s accounting system and its internal accounting
control and procedures for safeguarding securities deposited in the Book-Entry
System;
(e) Anything
to the contrary notwithstanding, the Bank shall be liable to a Fund for any loss
or damage to the Fund to the extent resulting from any negligence, willful
misfeasance, bad faith or reckless disregard of its duties on the part of the
Bank or any of its agents or any of its or their employees in connection with
its or their use of the Book-Entry System.
6.5 Use of a
Depository.
(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 a
Fund all income and other payments thereon and to take all steps necessary and
proper in connection with the collection thereof;
(b) Registration
of Portfolio Securities may be made in the name of any nominee or nominees used
by such Depository;
(c) Payment
for 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 a 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 therefor 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 use its best efforts to provide 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) 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 promptly forwards to the Bank confirmation of any purchase or sale of
Portfolio Securities and of the appropriate book entry made by such Depository
to the Fund’s account;
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(iv) Such
Depository prepares and delivers to the Bank such records with respect to the
performance of the Bank’s obligations and duties hereunder as may be necessary
for the Fund to comply with the recordkeeping requirements of Section 31(a) of
the 1940 Act and Rule 31(a) thereunder; and
(v) Such
Depository delivers to the Bank 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.
6.6 Use of Book-Entry System for
Commercial Paper. The Bank may maintain a system for the holding of
commercial paper in book-entry form (“Book-Entry Paper”). Upon
receipt of Proper Instructions and upon receipt of confirmation from an Issuer
(as defined below) that each 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 procedures for Book-Entry
Paper, 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 as a fiduciary or custodian for its
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 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;
and
(e) The
Bank will send to the Fund such reports on its system of internal accounting
control with respect to the Book-Entry Paper as the Fund may reasonably request
from time to time.
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
Portfolio Securities are identified on the books of the Bank as belonging to the
Fund and that the books of the Bank identify the European Branch holding such
Portfolio 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.
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(a)
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Puts
and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
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(i) 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 among the Bank, any broker-dealer registered with the
National Association of Securities Dealers, Inc. (the “NASD”), and, if
necessary, a 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.
(ii) 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 or 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.
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(b)
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Puts,
Calls and Futures Traded on Commodities
Exchanges
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(i) 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
entered into upon the receipt of Proper Instructions among the Fund, the Bank
and a Futures Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar organization or
organizations, regarding account deposits in connection with transactions by any
Fund.
(ii) The
responsibilities 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)(ii) 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
each Fund.
(a) Cash
and/or Portfolio Securities may be transferred into a Segregated Account upon
receipt of Proper Instructions in the following circumstances:
(i) in
accordance with the provisions of any agreement among the Fund, the Bank and a
broker-dealer registered under the Exchange Act and a member of the NASD or any
Futures Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Options Clearing Corporation and of
any registered national securities exchange or the Commodity Futures Trading
Commission or any registered contract market, or of any similar organizations
regarding escrow or other arrangements in connection with transactions by the
Fund;
(ii) 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;
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(iii) for
the deposit of liquid assets, such as cash, U.S. Government securities or other
high grade debt obligations, or liquid equity securities 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 of 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;
(iv) 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;
(v) for
other proper Fund purposes, but only, in the case of this clause (v), upon
receipt of, in addition to Proper Instructions, a certified copy of a resolution
of the Board, or of the executive committee of the Board 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 Fund purposes.
(b) Cash
and/or Portfolio Securities may be withdrawn from a Segregated Account pursuant
to Proper Instructions in the following circumstances:
(i)
with respect to assets deposited in accordance with the provisions of any
agreements referenced in (a)(i) or (a)(ii) above, in accordance with the
provisions of such agreements;
(ii) with
respect to assets deposited pursuant to (a)(iii) or (a)(iv) above, for sale or
delivery to meet the Fund’s obligations under outstanding forward 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;
(v) for
delivery upon settlement of a forward commitment or when-issued agreement for
the sale of Portfolio Securities; or
(vi) with
respect to assets deposited pursuant to (a)(v) above, in accordance with the
purposes of such account as set forth in Proper Instructions.
6.10 Interest Bearing Call or
Time Deposits. The Bank shall, upon receipt of Proper Instructions
relating to the purchase by the Fund of interest-bearing fixed-term and call
deposits, transfer cash, by wire or otherwise, in such amounts and to such bank
or banks as shall be indicated in such Proper Instructions. The Bank shall
include in its records with respect to the assets of a 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.
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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 the Bank will allow any transfer,
exchange, delivery or release under this Section only upon receipt of Proper
Instructions. The Proper Instructions shall state that such transfer,
exchange or delivery is for a purpose permitted under the terms of this Section
6.11, and shall specify the applicable subsection, or describe the purpose of
the transaction with sufficient particularity to permit the Bank to ascertain
the applicable subsection. After receipt of such Proper Instructions,
the Bank will transfer, exchange, deliver or release Portfolio Securities only
in the following circumstances:
(a) Upon
sales of Portfolio Securities for the account of a 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
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 subcustodian
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,
provided further, however, 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, Portfolio Securities may be released for that purpose
without any such payment. In the event that any 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 and any loan agreement between the fund and 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;
11
(h) for
the purpose of releasing certificates representing Portfolio Securities, against
contemporaneous receipt by the Bank of the fair market value of such 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 Fund purposes;
provided that before making such transfer, the Bank will also receive a
certified copy of resolutions of the Board, signed by an authorized officer of
the Fund (other than the officer certifying such resolution) and certified by
its Secretary or Assistant Secretary, specifying the Portfolio Securities to be
delivered, setting forth the transaction in or purpose for which such delivery
is to be made, declaring such transaction to be an authorized transaction of the
Fund or such purpose to be a proper Fund 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 15 of this Agreement.
As to any deliveries made by the Bank
pursuant to this Section 6.11, securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In
the case of payment of assets of a 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 of
Incorporation or Declaration of Trust (the “Articles”), By-laws and the
prospectuses and statements of additional information 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 a Fund or Portfolio into, the
consolidation of a Fund or Portfolio with, or the sale by a Fund or Portfolio of
all, or substantially all, of its assets to another investment company, or the
liquidation or dissolution of a Fund or Portfolio and the distribution of its
assets, upon the payment of the fees, disbursements and expenses of the Bank
through the end of the then current term of this Agreement with respect to the
Fund, 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 all such fees, disbursements and
expenses of the Bank, this Agreement will terminate and the Bank shall be
released from any and all obligations hereunder, except for obligations of the
Bank arising prior to the date of such termination and those obligations under
Section 14.
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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, the Bank will take the following actions without prior authorization
or instruction of the Fund or the transfer agent:
9.1 Endorse for collection
and collect on behalf of and in the name of the Fund all checks, drafts, or
other negotiable or transferable instruments or other orders for the payment of
money received by it for the account of the Fund and hold for the account of the
Fund all income, dividends, interest and other payments or distributions of cash
with respect to the Portfolio Securities held thereunder;
9.2 Present for payment all
coupons and other income items held by it for the account of the Fund which call
for payment upon presentation and hold the cash received by it upon such payment
for the account of the Fund;
9.3 Receive and hold for the
account of the Fund all securities received as a distribution on Portfolio
Securities as a result of a stock dividend, share split-up, reorganization,
recapitalization, merger, consolidation, readjustment, distribution of rights
and similar securities issued with respect to any Portfolio Securities held by
it hereunder.
9.4 Execute as agent on
behalf of the Fund all necessary ownership and other certificates and affidavits
required by the Internal Revenue Code or the regulations of the Treasury
Department issued thereunder, or by the laws of any state, now or hereafter in
effect, inserting the Fund’s name on such certificates as the owner of the
securities covered thereby, to the extent it may lawfully do so and as may be
required to obtain payment in respect thereof. The Bank will execute and deliver
such certificates in connection with Portfolio Securities delivered to it or by
it under this Agreement as may be required under the provisions of the Internal
Revenue Code and any Regulations of the Treasury Department issued thereunder,
or under the laws of any State;
9.5 Present for payment all
Portfolio Securities which are called, redeemed, retired or otherwise become
payable, and hold cash received by it upon payment for the account of the Fund;
and
9.6 Exchange interim
receipts or temporary securities for definitive securities.
10. Collections and
Defaults. The Bank will use 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
appropriate 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 appropriate 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.
11. Maintenance of Records and
Accounting Services. The Bank will prepare and 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. The books and
records pertaining to a Fund that are in possession of the Bank shall be the
property of 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 all times during the Bank’s normal business hours, upon reasonable notice, by
officers of or auditors employed by the appropriate Fund. Such books
and records shall include reports of sufficient scope and in sufficient detail
as may reasonably be required by a Fund to provide reasonable assurance that any
material compliance inadequacies would be disclosed by the inspection or audit,
and, if there are no such inadequacies, the appropriate reports shall so
state. The books and records relating to a Fund will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act. The Bank shall surrender these books
and records to the Fund promptly upon request. Upon reasonable
request of the Fund, the Bank shall, during the term of this agreement, provide
copies of any books and records to the Fund or the Fund’s authorized
representative at the Fund’s expense.
13
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. Additional
Services. The Bank shall perform the additional services for a
Fund as are set forth on Appendix B
hereto. Appendix B may be
amended from time to time upon agreement of the parties to include further
additional services to be provided by the Bank to the Fund.
13. Duties of the
Bank.
13.1 Performance of Duties and
Standard of Care. 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 in no event less than a
reasonable 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 written advice of independent counsel of
its own selection, which may be counsel for a 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.
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.
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13.2 Agents and Subcustodians
with Respect to Property of the Fund Held in the United
States. Upon notification to the appropriate Fund, the Bank
may employ agents of its own selection in the performance of its duties
hereunder and shall be responsible for the acts and omissions of such agents as
if performed by the Bank hereunder.
Upon receipt of Proper Instructions,
the Bank may employ subcustodians selected by or at the direction of a Fund,
provided that any such subcustodian meets at least the minimum qualifications
required by Section 17(f)(1) of the 1940 Act to act as a custodian of the Fund’s
assets with respect to property of the Fund held in the United States. The Bank
shall have no liability to the Fund or any other person by reason of any act or
omission of any such subcustodian and the Fund shall indemnify the Bank and hold
it harmless from and against any and all actions, suits and claims, arising out
of the performance of any subcustodian. Upon request of the Bank or if elected
by the Fund, 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 subcustodian.
(i) If
a Fund has appointed the Bank Foreign Custody Manager (as that term is defined
in Rule 17f-5 under the 1940 Act), the Bank’s duties and obligations with
respect to the Fund's Portfolio Securities and other assets maintained outside
the United States shall be, to the extent not set forth herein, as set forth in
the Delegation Agreement between the Fund and the Bank (the “Delegation
Agreement”).
(ii) If
a Fund has appointed any other person or entity Foreign Custody Manager, the
Bank shall act only upon Proper Instructions from the Fund with regard to any of
the Fund’s Portfolio Securities or other assets held or to be held outside of
the United States, and the Bank shall be without liability for any Claim (as
that term is defined in Section 14 hereof) arising out of maintenance of the
Fund’s Portfolio Securities or other assets outside of the United
States. The Fund also agrees that it shall enter into a written
agreement with such Foreign Custody Manager that shall obligate such Foreign
Custody Manager to provide to the Bank in a timely manner all information
required by the Bank in order to complete its obligations
hereunder. The Bank shall not be liable for any Claim arising out of
the failure of such Foreign Custody Manager to provide such information to the
Bank.
(b) Segregation of
Securities. The Bank shall identify on its books as belonging
to the Fund the Foreign Portfolio Securities held by each foreign sub-custodian
(each an “Eligible Foreign Custodian”) selected by the Foreign Custody Manager,
subject to receipt by the Bank of the necessary information from such Eligible
Foreign Custodian if the Foreign Custody Manager is not the Bank.
(c) Access of Independent
Accountants of the Fund. If the Bank is the Fund’s Foreign
Custody Manager, 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 an Eligible
Foreign Custodian insofar as such books and records relate to the performance of
such foreign banking institution with regard to the Fund’s Portfolio Securities
and other assets.
(d) Reports by Bank. If
the Bank is the Fund’s Foreign Custody Manager, the Bank will supply to the Fund
the reports required under the Delegation Agreement.
15
(e) Transactions in Foreign
Custody Account. Transactions with respect to the assets of a
Fund held by an Eligible Foreign Custodian shall be effected pursuant to Proper
Instructions from the Fund to the Bank and shall be effected in accordance with
the applicable agreement between the Foreign Custody Manager and such Eligible
Foreign Custodian.
Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign Portfolio
Securities received for the account of a 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 appropriate Fund such information in connection
therewith as is made available to the Bank by the Eligible Foreign Custodian,
and shall promptly forward to the applicable Eligible Foreign 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 Eligible Foreign 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.
(f) Tax
Law. The Bank shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Bank as custodian of
the Fund by the tax laws of any jurisdiction, and it shall be the responsibility
of the Fund to notify the Bank of the obligations imposed on the Fund or the
Bank as the custodian of the Fund by the tax law of any non-U.S. jurisdiction,
including responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The
sole responsibility of the Eligible Foreign Custodian with regard to such tax
law shall be to use reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of jurisdictions for which the
Fund has provided such information.
13.4 Insurance. The
Bank need not maintain any special insurance for the benefit of a Fund, although
the Bank shall at all times maintain insurance coverage adequate for the nature
of its operations, including directors and officers, errors and omissions,
and fidelity bond insurance coverage. The Bank shall notify the Funds if
there are any material adverse changes to its insurance policies or coverage.
The Bank shall notify the Funds of any material errors or omissions,
interruptions in, or delay or unavailability of the Bank’s abilities to
safeguard and hold the securities and cash of a Fund in accordance with this
Agreement as promptly as practicable, and proceed to correct the same as soon as
is reasonably possible.
13.5 Advances by the
Bank. The Bank may, in its sole discretion, advance funds on
behalf of a 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. Such overdraft shall bear 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 on the part of a Portfolio and to the extent required by law, in
and to any property at any time held by it for the Portfolio’s benefit or in
which the Portfolio has an interest and which is then in the Bank’s possession
or control (or in the possession or control of any third party acting on the
Bank’s behalf). Such payment liability and the concomitant liens and security
interests are not permitted to exceed a value equal to 33⅓% of a Portfolio’s
total assets. The Fund authorizes the Bank, in the Bank’s 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.
16
13.6. Fees and Expenses of the
Bank. For the services rendered by the Bank hereunder, each
Fund will pay to the Bank such fees at such rate as shall be agreed upon in
writing by the parties from time to time. The Fund will also pay or
reimburse the Bank from time to time for any transfer taxes payable upon any
transfers 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
herein. The Bank will also be entitled to reimbursement by the Fund
for all reasonable expenses incurred in conjunction with termination of this
Agreement and any conversion or transfer work done in connection therewith,
except for a termination by a Fund due to a breach of this Agreement by the
Bank.
Fees and expenses will be calculated
monthly. Fees and expenses owed to the Bank for any month may be
charged against any cash balance held by the Fund beginning on the first (1st)
business day after the end of such month based on information then
available. Fees charged to an account may result in an overdraft that
will be subject to normal interest charges. The Fund will have sixty
(60) days after the receipt of an invoice to dispute any charge that appears on
such invoice. After such sixty (60) day period, the invoice will be
deemed to be complete and accurate and may no longer be disputed.
13.7 Cooperation with Fund’s
Independent Public Accountants. The Bank shall cooperate with
each Fund’s independent public accountants and shall take all reasonable action
in the performance of its obligations under this Agreement to assure that all
necessary information is made available to the accountant for the expression of
their unqualified opinion, including but not limited to the opinion included in
the Funds’ registration statements on Form N-1A, and periodic reports made on
Forms N-SAR and N-CSR, and any other reports to the SEC and for any requirement
of the SEC.
13.8 Reports to Fund by Bank’s
Independent Public Accountants. The Bank shall provide each
Fund, at all times as a Fund may reasonably require, with reports from the
Bank’s independent public accountant on the Bank’s accounting systems and
internal accounting controls and procedures for safeguarding securities and cash
of the Fund, including securities deposited and/or maintained in a Securities
Depository or Book-Entry System, relating to the services the Bank provides
under this Agreement and generally made available to the Bank’s
clients. These reports shall be of sufficient scope and in sufficient
detail as a Fund may reasonably require to provide reasonable assurance that the
examination would disclose any material inadequacies and, if there are no
material inadequacies, the reports shall so state.
17
14.1 Notwithstanding
anything in this Agreement to the contrary, in no event shall the Bank or any of
its officers, directors or employees (collectively, the “Bank Indemnified
Parties”) be liable to the Fund or any third party, and the Fund shall indemnify
and hold the Bank and the Bank Indemnified Parties harmless from and against any
and all loss, damage, liability, actions, suits, claims, and reasonable costs
and expenses, including reasonable legal fees, (a “Claim”) arising as a result
of any act or omission of the Bank or any Bank Indemnified Party under this
Agreement, except to the extent any such Claim results from the negligence,
willful misfeasance, bad faith or reckless disregard of its duties on the part
of the Bank or any Bank Indemnified Party. Without limiting the
foregoing, neither the Bank nor the Bank Indemnified Parties shall be liable
for, and the Bank and the Bank Indemnified Parties shall be indemnified against,
any Claim arising as a result of:
(a) Any
act or omission by the Bank or any Bank Indemnified Party in good faith reliance
upon the terms of this Agreement, any Officer’s Certificate, Proper
Instructions, resolution of the Board, telegram, telecopier, notice, request,
certificate or other instrument reasonably believed by the Bank to
genuine;
(b) Any
act or omission of any subcustodian selected by or at the direction of the
Fund;
(c) Any
act or omission of any Foreign Custody Manager other than the Bank or any act or
omission of any Eligible Foreign Custodian if the Bank is not the Foreign
Custody Manager;
(d) Any
Corporate Action, distribution or other event related to Portfolio Securities
which, at the direction of the Fund, have not been registered in the name of the
Bank or its nominee;
(e) Any
Corporate Action requiring a Response for which the Bank has not received Proper
Instructions or obtained actual possession of all necessary Securities, consents
or other materials by 5:00 p.m. on the date specified as the Response Deadline;
or
(f) Any
act or omission of any European Branch of a U.S. banking institution that is the
issuer of Eurodollar CDs in connection with any Eurodollar CDs held by such
European Branch.
14.2 The Bank agrees to
indemnify and hold harmless each Fund and its affiliates and their
Directors/Trustees, officers and employees (“Fund Indemnified Parties”) from and
against any and all Claims arising as a result of any act or omission of the
Bank or any Bank Indemnified Party under this Agreement to the extent any such
Claim results from the negligence, willful misfeasance, bad faith or reckless
disregard of its duties on the part of the Bank or any Bank Indemnified
Party.
14.3 Notwithstanding
anything to the contrary in this Agreement, neither Party shall be liable to the
other party or any third party for lost profits or lost revenues or any special,
consequential, punitive or incidental damages of any kind whatsoever in
connection with this Agreement or any activities hereunder.
14.4 The obligations set forth in this
Section 14 shall survive the termination of this Agreement.
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15. Termination.
15.1 The term of this
Agreement shall be three years commencing upon the date hereof (the “Initial
Term”), unless earlier terminated as provided herein. After the
expiration of the Initial Term, the term of this Agreement shall automatically
renew for successive one-year terms (each a “Renewal Term”) unless written
notice of non-renewal (due to a Party’s violation of a material provision of the
contract or for any other reason) is delivered by the non-renewing party to the
other party no later than ninety days if a Fund is the non-renewing party and
one hundred eighty days if Bank is the non-renewing party prior to the
expiration of the Initial Term or any Renewal Term, as the case may
be.
Either
party hereto may terminate this Agreement prior to the expiration of the Initial
Term or any Renewal Term in the event the other party violates any material
provision of this Agreement, provided that the terminating party gives written
notice of such violation to the other party and such party does not cure such
violation within 90 days of receipt of such notice. The Bank’s right
to termination shall be limited to the Portfolio in respect of which a violation
has occurred. Termination by either party with respect to a Fund or a
Portfolio will not affect the terms of this Agreement with respect to other
Funds or Portfolios.
15.2 In the event of the
termination of this Agreement, the Bank will immediately upon receipt or
transmittal, as the case may be, of notice of termination, commence and
prosecute diligently to completion the transfer of all cash and the delivery of
all Portfolio Securities duly endorsed and all records maintained under Section
11 to the successor custodian when appointed by the Fund. The
obligation of the Bank to deliver and transfer over the assets of the Fund held
by it directly to such successor custodian will commence as soon as such
successor is appointed and will continue until completed as aforesaid. If the
Fund does not select a successor custodian within ninety (90) days from the date
of delivery of notice of termination the Bank may, subject to the provisions of
subsection 15.3, deliver the Portfolio Securities and cash of the Fund held by
the Bank to a bank or trust company of the Bank’s 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. Thereafter, the Bank shall be
released from any and all obligations under this Agreement, except for any
obligations arising prior to the date of delivery of such Portfolio Securities
and cash and those obligations under Section 14.
15.3 Prior to the expiration
of ninety (90) days after notice of termination has been given, the Fund may
furnish the Bank with an order of the Fund advising that a successor custodian
cannot be found willing and able to act upon reasonable and customary terms and
that the Fund will be liquidated or will function without a custodian for the
assets of the Fund held by the Bank. In that event the Bank will deliver the
Portfolio Securities and cash of the Fund held by it, subject as aforesaid, in
accordance with one of such alternatives, upon receipt by the Bank of a copy of
the minutes of the meeting of the Board of Directors/Trustees 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. Thereafter, the
Bank shall be released from any and all obligations under this Agreement, except
for any obligations arising prior to the date of delivery of such Portfolio
Securities and cash and those obligations under Section 14.
15.4 At any time after the
termination of this Agreement, the Fund may, upon written request, have
reasonable access to the records of the Bank relating to its performance of its
duties as custodian.
16. Confidentiality. Both
parties hereto agree than any non-public information obtained hereunder
concerning the other party is confidential and may not be disclosed 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, in addition to all other
remedies at law or in equity to an injunction or injunctions without bond or
other security to prevent breaches of this provision. The parties
agree that they shall abide by the provisions of the Xxxxx-Xxxxx-Xxxxxx Act
(“GLB”) and other applicable privacy laws and shall each establish commercially
reasonable controls to ensure the confidentiality of confidential information
and to ensure that confidential information is not disclosed contrary to the
provisions of this Agreement, GLB or any other applicable privacy laws and
regulations.
19
17. 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 delivered via (i) United States Postal Service registered mail,
(ii) telecopier with written confirmation, (iii) hand delivery with signature to
such party at its office at the address set forth below, namely:
(a) In
the case of notices sent to the Fund to:
Treasurer
Eclipse
Funds
Eclipse
Funds, Inc.
The
MainStay Funds
MainStay
VP Series Fund, Inc.
McMorgan
Funds
000
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
with a
copy to:
Secretary
Eclipse
Funds
Eclipse
Funds, Inc.
The
MainStay Funds
MainStay
VP Series Fund, Inc.
000
Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
and with
a copy to
Secretary
McMorgan
Funds
Xxx Xxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000
(b) In
the case of notices sent to the Bank to:
Investors Bank & Trust
Company
000 Xxxxxxxxx Xxxxxx, X.X. Xxx
0000
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
Attention: Xxxxxxxxxxx X. Xxxxx,
Director - Client Management
With a copy to: Xxxx X.
Xxxxx, General Counsel
or at such other place as such party
may from time to time designate in writing.
20
18. Amendments. This
Agreement may not be altered or amended, except by an instrument in writing,
executed by both parties.
19. 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 15 hereof will not be deemed to be an assignment within the
meaning of this provision.
20. Governing
Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.
21. 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.
22. Entire
Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.
23. Several Obligations of the
Portfolios. This Agreement is an agreement entered into
between the Bank and each Fund with respect to the Fund’s respective
Portfolios. With respect to any obligation of a Fund on behalf of any
Portfolio arising out of this Agreement, the Bank shall look for payment or
satisfaction of such obligation solely to the assets of the Portfolio to which
such obligation relates as though the Bank had separately contracted with such
Fund by separate written instrument with respect to each Portfolio.
24. Fund Disclaimer. It
is expressly agreed that the obligations of the Funds hereunder shall not be
binding upon any of their Directors/Trustees, shareholders, nominees, officers,
agents or employees personally, but shall bind only the property or assets of
the applicable Fund, as the case may be. The execution and delivery
of this Agreement has been authorized by the Directors/Trustees, and this
Agreement has been signed and delivered by an authorized officer of the Funds,
acting as such, and neither such authorization by the Directors/Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the property or assets of the Funds, as the case may be, as
provided in the Funds’ respective organizational documents. With
respect to any Fund that is organized as a Massachusetts business trust,
a copy of such Fund’s Agreement and Declaration of Trust establishing
the Fund is on file with the Secretary of State of The Commonwealth of
Massachusetts.
25. Business Recovery.
The Bank represents and warrants that it has and will continue to have in place
a commercially reasonable business recovery program.
26. Force
Majeure. Notwithstanding anything otherwise to the contrary in
this Agreement, no party shall be liable to the other for any loss or liability
arising from any 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 to the extent that any such loss or liability
results from the failure of the Bank to (a) maintain a commercially reasonable
business recovery program, and (b) act reasonably to mitigate, as soon as
practicable, the specific occurrence or event.
21
27. Use of
Name. Neither party shall use the name of the other in any
prospectus, sales literature or other material in a manner not approved by the
other party prior thereto in writing; provided however, that the approval of a
party shall not be required for any use of its name or that of its affiliates
which merely refers in accurate and factual terms to its appointment hereunder
or which is required by the Securities and Exchange Commission or any state
securities authority or any other appropriate regulatory, governmental or
judicial authority; provided further, that in no event shall such approval be
unreasonably withheld or delayed.
(a) The
Bank shall physically hold at such premises and under such conditions as the
Bank may determine in its sole discretion each “Loan File” (as hereinafter
defined) from time to time delivered to the Bank by a Portfolio, and shall
segregate, keep and maintain the Loan Files for such Portfolio separate and
apart from those of any other Portfolio.
(b) The
Portfolio shall deliver to the Bank: (a) each Loan File relating to such
Portfolio promptly upon the Portfolio’s receipt of the same, and (b) a Proper
Instruction specifying such Loan File as a Loan File of the Portfolio and the
related identifying number described in paragraph (d) of this
Section.
(c) The
Bank shall have no duty or obligation with respect to, and no responsibility
for, the quality, completeness, or authenticity of any Loan File or anything
included therein, nor deemed to have for any purpose whatsoever actual or
constructive knowledge of the contents of, or information contained in, any Loan
File. As used herein the term “Loan File” shall mean a package of
paper documents so designated as such by the Portfolio with respect to any
promissory note or similar obligation purchased by the Portfolio, and any
document received by the Bank with respect to any such promissory note or
similar obligation shall be deemed a part of the Loan File.
(d) Whenever
the Portfolio purchases any promissory note or similar obligation which will be
included in a Loan File, the Portfolio shall provide the Bank with a Proper
Instruction specifying: (a) the amount to be paid therefor; (b) the entity to
which such payment is to be made, together with appropriate wiring instructions;
(c) the date on which such payment is to be made, which date shall be at least
three business days after the Bank’s receipt of the Proper Instruction; and (d)
the name and identifying number to be recorded and utilized by the Bank with
respect to such Loan File and payments made, or received, by the Bank with
respect to such promissory note or similar obligation. The Bank shall
make such payment out of the monies held for the applicable Portfolio, and if
monies are insufficient shall so advise the Portfolio and the Bank shall take no
further action until it has received further instructions in a Proper
Instruction. Any such payments made by the Bank shall not be “against
receipt” of any Loan File unless the Portfolio has otherwise specified in its
Proper Instructions. Where payments are not made “against receipt”,
the Portfolio understands and accepts the risk that the related Loan File may
not be received.
(e) From
time to time upon receipt of a Proper Instruction the Bank shall make such
deliveries of any Loan File held hereunder as may be specified therein,
including any “free” (and not against payment) deliveries. For any
delivery against payment, the Portfolio understands that settlements, payments
and deliveries may be effected by the Bank in accordance with the customary or
established trading or processing practices and procedures in the jurisdiction
in which the transaction occurs, including, without limitation, delivery to a
purchaser or dealer therefor (or agent) against receipt with the expectation of
receiving later payment. The Portfolio assumes full responsibility
for all risks, including, without limitation, credit risks, involved in
connection with such deliveries of Loan Files. When any deliveries
are made “free”, the Portfolio understands and accepts the risk that payments
may not be received. Payments received by the Bank shall be credited
to the account of the Portfolio.
22
(f) The
Portfolio, and not the Bank, shall be solely responsible for obtaining delivery
of each Loan File, and where a payment described in paragraph (d) of this
Section is “against receipt” of a Loan File, such receipt shall be by the Bank
from the Portfolio.
(g) Each
week the Bank shall provide to the Portfolio a report specifying by the related
identifying number described in paragraph (d) of this Section each Loan File not
yet delivered to and received by the Bank.
(h) Whenever
a Portfolio anticipates receipt of any payment of principal or interest or other
amount with respect to any Loan File, it shall provide the Bank, at least three
days before such payment date, a Proper Instruction specifying: (i) the
identifying number (described in paragraph (d) of this Section) of the Loan File
to which such payment relates; (ii) the amount to be received; and (iii) the
date on which payment of such amount is to be received. The Bank
shall receive such amounts and credit the same to the account of the Portfolio
and shall provide to Portfolio an advice setting forth the amount so received
and any amounts which were specified to be received in the Proper Instruction
but not received. The Portfolio, and not the Bank, shall be solely
responsible for making demands for any such payments or taking further action if
any such payment is not received.
(i) Each
Portfolios understands that all credits to its account are provisional, may be
reversed if the same are not finally collected, and that any such reversal may
create indebtedness subject to Section 13.5 of this Agreement. For
purposes of such Section 13.5, the Portfolio agrees that each Loan File and each
right to receive payment shall be property as described therein, and further
agrees that such rights shall constitute “financial assets” within the meaning
of Article 8 of the New York Uniform Commercial Code and that the account of the
Portfolio shall for such purposes be considered a “securities account”
maintained by the Bank as a “financial intermediary”, as such terms are defined
in said Article 8.
(j) In
the event the Bank receives any notices, demands, documents, or other materials
with respect to a Loan File, the Bank’s sole responsibility shall be to deliver
the same to the Portfolio.
(k) In
the event of any conflict between the provisions of this Section and any other
provision of this Agreement, this Section shall control.
23
ECLIPSE
FUNDS
ECLIPSE
FUNDS INC
By:
/s/ Xxxx X.
Xxxxxxxxx
Name: Xxxx X. Xxxxxxxxx
Title: President
Name: Xxxx X. Xxxxxxxxx
Title: President
THE
MAINSTAY FUNDS
By:
/s/ Xxxxxxxxxxx X.
Xxxxx
Name: Xxxxxxxxxxx X. Xxxxx
Title: President
Name: Xxxxxxxxxxx X. Xxxxx
Title: President
MAINSTAY
VP SERIES FUND, INC.
By:
/s/ Xxxx X.
Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President
Name: Xxxx X. Xxxxxxx
Title: President
MCMORGAN
FUNDS
By:
/s/ Xxxx X.
Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President
Name: Xxxx X. Xxxxxx
Title: President
INVESTORS
BANK & TRUST COMPANY
By:
/s/ Xxxxxx X.
Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
24
Appendix
A
to
the
(as of
January 2, 2006)
|
Fund
|
Portfolio
|
|
The
MainStay Funds
|
Capital
Appreciation Fund
|
|
Common
Stock Fund
|
|
|
Convertible
Fund
|
|
|
Diversified
Income Fund
|
|
|
Equity
Index Fund
|
|
|
Global
High Income Fund
|
|
|
Government
Fund
|
|
|
High
Yield Corporate Bond Fund
|
|
|
International
Equity Fund
|
|
|
Large
Cap Growth Fund
|
|
|
MAP
Fund
|
|
|
Mid
Cap Growth Fund
|
|
|
Mid
Cap Value Fund
|
|
|
Money
Market Fund
|
|
|
Small
Cap Growth Fund
|
|
|
Small
Cap Value Fund
|
|
|
Tax
Free Bond Fund
|
|
|
Total
Return Fund
|
|
|
Value
Fund
|
|
|
Eclipse
Funds
|
Balanced
Fund
|
|
Mid
Cap Opportunity Fund
|
|
|
Small
Cap Opportunity Fund
|
|
|
Eclipse
Funds Inc.
|
All
Cap Growth Fund
|
|
All
Cap Value Fund
|
|
|
Cash
Reserves Fund
|
|
|
Conservative
Allocation Fund
|
|
|
Floating
Rate Fund
|
|
|
Growth
Allocation Fund
|
|
|
Growth
Equity Fund
|
|
|
Income
Manager Fund
|
|
|
Indexed
Bond Fund
|
|
|
Intermediate
Term Bond Fund
|
|
|
Large
Cap Opportunity Fund
|
|
|
Moderate
Allocation Fund
|
|
|
Moderate
Growth Allocation Fund
|
|
|
S&P
500 Index Fund
|
|
|
Short
Term Bond Fund
|
|
25
|
Fund
|
Portfolio
|
|
MainStay
VP Series Fund, Inc.
|
Balanced
Portfolio
|
|
Basic
Value Portfolio
|
|
|
Bond
Portfolio
|
|
|
Capital
Appreciation Portfolio
|
|
|
Cash
Management Portfolio
|
|
|
Common
Stock Portfolio
|
|
|
Conservative
Allocation Portfolio
|
|
|
Convertible
Portfolio
|
|
|
Developing
Growth Portfolio
|
|
|
Floating
Rate Portfolio
|
|
|
Government
Portfolio
|
|
|
Growth
Allocation Portfolio
|
|
|
High
Yield Corporate Bond Portfolio
|
|
|
Income
& Growth Portfolio
|
|
|
International
Equity Portfolio
|
|
|
Large
Cap Growth Portfolio
|
|
|
Mid
Cap Core Portfolio
|
|
|
Mid
Cap Growth Portfolio
|
|
|
Mid
Cap Value Portfolio
|
|
|
Moderate
Allocation Portfolio
|
|
|
Moderate
Growth Allocation Portfolio
|
|
|
S&P
500 Index Portfolio
|
|
|
Small
Cap Growth Portfolio
|
|
|
Total
Return Portfolio
|
|
|
Value
Portfolio
|
|
|
McMorgan
Funds
|
Balanced
Fund
|
|
Equity
Investment Fund
|
|
|
Fixed
Income Fund
|
|
|
High
Yield Fund
|
|
|
Intermediate
Fixed Income Fund
|
|
|
Principal
Preservation Fund
|
00
Xxxxxxxx
X
Additional
Services
(as of
January 2, 2006)
None
00000000.0.XXXXXXXX
27