EX-99.8
CUSTODY AGREEMENT
Agreement made as of this 16th day of August, 1984,
between XXXXXXX XXXXX FEDERAL SECURITIES TRUST, a Massachu-
setts business trust organized and existing under the laws
of the Commonwealth of Massachusetts, having its principal
office and place of business at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (hereinafter called the "Fund"), and THE BANK
OF NEW YORK, a New York corporation authorized to do a bank-
ing business, having its principal office and place of busi-
ness at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (herein-
after called the "Custodian").
W I T N E S S E T H
that for and in consideration of the mutual promises herein-
after set forth the Trust and the Custodian agree as fol-
lows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall
have the following meanings:
1. "Authorized Person" shall be deemed to include the
Treasurer, the Controller or any other person, whether or
not any such person is an officer or employee of the Fund,
duly authorized by the Trustees of the Fund to give Oral
Instructions and Written Instructions on behalf of the Fund
and listed in the Certificate annexed hereto as Appendix A
or such other Certificate as may be received by the Custo-
dian from time to time.
2. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and
federal agency securities, its successor or successors and
its nominee or nominees.
3. "Certificate" shall mean any notice, instruction,
or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian which is actu-
ally received by the Custodian and signed on behalf of the
Fund by any two officers of the Fund.
4. "Call option" shall mean an exchange traded option
with respect to Securities other than Futures Contracts and
Futures Contract Options entitling the holder, upon timely
exercise and payment of the exercise price, as specified
therein, to purchase from the writer thereof the specified
underlying Securities.
5. "Clearing Member" shall mean a registered broker-
dealer which is a clearing member under the rules of the
Options Clearing Corporation, a clearing agency registered
under Section 17A of the Securities Exchange Act of 1934,
and a member of a national securities exchange qualified to
act as a custodian for an investment company, or any broker-
dealer reasonably believed by the Custodian to be such a
clearing member.
6. "Depository" shall mean The Depository Trust Com-
pany ("DTC") , a clearing agency registered with the Securi-
ties and Exchange Commission, its successor or successors
and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's
Board of Trustees specifically approving deposits in DTC.
The term "Depository" shall further mean and include any
other person authorized to act as a depository under the
Investment Company Act of 1940, its successor or successors
and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Fund's Board of
Trustees specifically approving deposits therein by the
Custodian.
7. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
but not limited to, U.S. Treasury Bills, U.S. Treasury
Notes, U.S. Treasury Bonds, Government National Mortgage
Association modified pass-through mortgage-backed securities
and domestic bank certificates of deposit, during a speci-
fied month at an agreed upon price.
8. "Futures Contract Option" shall mean an option
with respect to a Financial Futures Contract.
9. "Margin Account" shall mean a segregated account
in the name of a broker, dealer, or futures commission mer-
chant, or in the name of the Fund for the benefit of a
broker, dealer, or futures commission merchant, as the case
2
may be, separate and distinct from the custody account, in
which certain Securities and/or money of the Fund shall be
deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time deter-
mine. Securities held in the Book-Entry System or the
Depository shall be deemed to have been deposited in, or
withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
10. "Money Market Security" shall be deemed to
include, without limitation, certain U.S. government and
agency securities for which the purchase and sale of such
securities normally requires settlement in federal funds on
the same day as such purchase or sale.
II. "Officers" shall be deemed to include the Presi-
dent, any Vice President, the Secretary, the Treasurer, the
Controller, any Assistant Secretary, any Assistant Treasurer
or any other person or persons, whether or not any such
other person is an officer of the Fund, duly authorized by
the Trustees of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the
Fund and listed in the Certificate annexed hereto as
Appendix B or such other Certificate as may be received by
the Custodian from time to time.
12. "Option" shall mean a Call Option and/or a Put
Option,
13. "Put Option" shall mean an exchange traded option
with respect to Securities other than Futures Contracts and
Futures Contract options entitling the holder, upon timely
exercise and tender of the specified underlying Securities,
to sell such Securities to the writer thereof for the exer-
cise price.
14. "Securities Collateral Account" shall mean a
segregated account so denominated which is pledged to the
Custodian as security for, and in consideration of, the Cus-
todian's issuance of any Put Option guarantee letter or
similar document described in paragraph 7 of Article V here-
in.
15. "Oral Instructions" shall mean verbal instruc-
tions actually received by the Custodian from an Authorized
Person or from a person reasonably believed by the Custodian
to be an Authorized Person.
16. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put
Options, Financial Futures Contracts, Futures Contract
3
Options, Government National Mortgage Association mortgaged
backed certificates, Federal National Mortgage Association
mortgaged backed securities, and Federal Home Loan Mortgage
Corporation mortgaged backed securities, and any certifi-
xxxxx, receipts, warrants or other instruments representing
rights to receive, purchase, sell or subscribe for the same,
or evidencing or representing any other rights or interest
therein, or any property or assets.
17. "Senior Security Account" shall mean an account
maintained under the terms of this Agreement as a segregated
account, by recordation or otherwise, within the custody
account in which certain Securities and/or other assets of
the Fund shall be deposited and withdrawn from time to time
in accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time
to time determine.
18. "Shares" shall mean the shares of beneficial
interest of the Fund.
19. "Written Instructions" shall mean written com-
munications actually received by the Custodian from an
Authorized Person or from a person reasonably believed by
the Custodian to be an Authorized Person by telex or any
other such system whereby the receiver of such communica-
tions is able to verify by codes or otherwise with a reason-
able degree of certainty the identity of the sender of such
communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the
Custodian as custodian of the Securities and moneys at any
time owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties- thereof as here-
inafter set forth.
4
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, the Fund will deliver or
cause to be delivered to the Custodian all Securities and
all moneys owned by it, at any time during the period of
this Agreement. The Custodian will not be responsible for
any Securities and moneys not actually received by it. The
Custodian will be entitled to reverse any credits made on
the Fund's behalf where such credits have been previously
made and moneys are not finally collected. The Fund shall
deliver to the Custodian a certified resolution of the
Trustees of the Fund approving, authorizing and instructing
the Custodian on a continuous and on-going basis to deposit
in the Book-Entry System all Securities eligible for deposit
therein, and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder,
including, without limitation, in connection with settle-
ments of purchases and sales of Securities, loans of Securi-
ties, and deliveries and returns of Securities collateral.
Prior to a deposit of Securities in the Depository the Fund
shall deliver to the Custodian a certified resolution of the
Trustees of the Fund approving, authorizing and instructing
the Custodian on a continuous and on-going basis until
instructed to the contrary by a Certificate actually
received by the Custodian to deposit in the Depository all
Securities eligible for deposit therein and to utilize the
Depository to the extent possible with respect to such
Securities in connection with its performance hereunder,
including, without limitation, in connection with settle-
ments of purchases and sales of Securities, loans of Securi-
ties, and deliveries and returns of Securities collateral.
Securities and moneys deposited in either the Book-Entry
System or the Depository will be represented in accounts
which include only assets held by the Custodian for custo-
mers, including, but not limited to, accounts in which the
Custodian acts in a fiduciary or. representative capacity.
Prior to the Custodian's accepting, utilizing and acting
with respect to Clearing Member confirmations for Options
and transactions in options as provided in this Agreement,
the Custodian shall have received a certified resolution of
the Trustees of the Fund approving, authorizing and
instructing the Custodian on a continuous and on-going
basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and
act in accordance with such confirmations as provided in
this Agreement.
5
2. The Custodian shall credit to the separate account
in the name of the Fund all moneys received by it for the
account of the Fund, and shall disburse the same only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the
name and address of the person to whom the payment is to be
made, and the purpose for which payment is to be made; or
(c) In payment of the fees and in reimbursement
of the expenses and liabilities of the Custodian.
3. Promptly after the close of business on each day
the Custodian shall furnish the Fund with confirmations and
a summary of all transfers to or from the account of the
Fund either hereunder or with any co-custodian or sub-
custodian appointed in accordance with this Agreement during
said day. Where Securities are transferred to the account
of the Fund, the Custodian shall also by book entry or
otherwise identify as belonging to the Fund a quantity of
Securities in a fungible bulk of Securities registered in
the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or
the Depository. At least monthly and from time to time, the
Custodian shall furnish the Fund with a detailed statement
of the Securities and moneys held by the Custodian for the
Fund.
4. Except as otherwise provided in paragraph 7 of
this Article and in Article VIII, all Securities held by the
Custodian hereunder, which are issued or issuable only in
bearer form, except such Securities as are held in the
Book-Entry System, shall be held by the Custodian in that
form; all other Securities held hereunder may be registered
in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may
from time to time determine, or in the name of the Book-
Entry System or the Depository or their successor or succes-
sors, or their nominee or nominees., The Fund agrees to fur-
nish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or
to register in the name of its registered nominee or in the
name of the Book-Entry System or the Depository any Securi-
ties which it may hold hereunder and which may from time to
time be registered in the name of the Fund. The Custodian
shall hold all such Securities not held in the Book-Entry
System or in the Depository in a separate account in the
name of the Fund physically segregated at all times from
those of any other person or persons.
6
5. Except as otherwise provided in this Agreement,
unless otherwise instructed to the contrary by a Certifi-
cate, the Custodian by itself, or through the use of the
Book-Entry System or the Depository with respect to Securi-
ties held hereunder and therein deposited, shall with
respect to all Securities held for the Fund hereunder:
(a) Collect all income and principal due or
payable;
(b) Present for payment and collect the amount
payable upon all Securities which may mature or be called
but only if either (i) the Custodian receives a written
notice of such call, or (ii) notice of such call appears in
one or more of the publications listed in Appendix C annexed
hereto, which may be amended at any time by the Custodian
without prior notification or consent of the Fund;
(c) Present for payment and collect the amount
payable upon all securities which may mature or be retired,
or retired, or otherwise become payable;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as custodian, any necessary declara-
tions or certificates of ownership under the Federal Income
Tax Laws or the laws or regulations of any other taxing
authority now or hereafter in effect; and
(f) Hold directly, or through the Book-Entry
System or the Depository with respect to Securities therein
deposited, for the account of the Fund all rights and simi-
lar securities issued with respect to any Securities held by
the Custodian hereunder.
6. Upon receipt of a Certificate and not otherwise,
the Custodian, directly or through the use of the Book-Entry
System or the Depository shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authoriza-
tions, and any other instruments whereby the authority of
the Fund as owner of any Securities held by the Custodian
hereunder specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian
hereunder specified in such Certificate in exchange for
other Securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger, con-
7
solidation or recapitalization of any corporation, or the
exercise of any conversion privilege and receive and hold
hereunder any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian
hereunder to any protective committee, reorganization com-
mittee or other person in connection with the reorganiza-
tion, refinancing, merger, consolidation, recapitalization
or sale of assets of any corporation, and receive and hold
hereunder such certificates of deposit, interim receipts or
other instruments or documents as may the issued to it to
evidence such delivery;
(d) Make such transfers or exchanges of the
assets of the Fund and take such other steps as shall be
stated in such Certificate to be for the purpose of effec-
tuating any duly authorized plan of liquidation, reorganiza-
tion, merger, consolidation or recapitalization of the Fund;
(e) Present for payment and collect the amount
payable upon Securities not described in preceding paragraph
5(b) of this Article which may be called as specified in the
Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain pos-
session of any instrument or certificate representing any
Futures Contract, any Option, or any Futures Contract Option
until after it shall have determined, or shall have received
a Certificate from the Fund stating, that any such instru-
ments or certificates are available. The Fund shall deliver
to the Custodian such a Certificate no later than the busi-
ness day preceding the availability of any such instrument
or certificate. Prior to such availability, the Custodian
shall comply with Section 17(f) of the Investment Company
Act of 1940 as amended, in connection with the purchase,
sale, settlement, closing out or writing of Future
Contracts, Options, and Futures Contract Options, by making
payments or deliveries specified in Certificates received by
the Custodian in connection with any such purchase, sale,
writing, settlement or closing out upon its receiving from a
broker, dealer, or futures commission merchant a statement
or confirmation reasonably believed by the Custodian to be
in the form customarily used by brokers, dealers, or future
commission merchants with respect to such Futures Contracts,
Option, or Futures Contract Option, as the case may be, con-
firming that such Security is held by such broker, dealer or
futures commission merchant, in book-entry form or other-
wise, in the name of the Custodian (or any nominee of the
Custodian) as custodian for the Fund. Whenever any such
instruments or certificates are available, the Custodian
8
shall, notwithstanding any provision in this Agreement to
the contrary, make payment for any Futures Contract, Option,
or Futures Contract option for which such instruments or
such certificates are available only against the delivery to
the Custodian of such instrument or such certificate. Any
such instrument or certificate delivered to the Custodian
shall be held by the Custodian hereunder in accordance with,
and subject to, the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS-OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the
Fund to be held by the Custodian hereunder, other than a
purchase of an Option, a Futures Contract, or a Futures
Contract Option, the Fund shall deliver to the Custodian (i)
with respect to each purchase of Securities which are not
Money Market Securities, a Certificate, and (ii) with
respect to each purchase of Money Market Securities, a Cer-
tificate, Oral Instructions or Written Instructions, speci-
fying with respect to each such purchase: (a) the name of
the issuer and the title of the Securities; (b) the number
of shares or the principal amount purchased and accrued
interest, if any; (c) the date of purchase and settlement;
(d) the purchase price per unit; (e) the total amount pay-
able upon such purchase; (f) the name of the person from
whom or the broker through whom the purchase was made, and
the name of the clearing broker, if any; (g) the name of the
broker to whom payment is to be made; and (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
deposited in the Senior Security Account. The Custodian
shall upon receipt of Securities purchased by or for the
Fund pay to the broker specified in the Certificate out of
the moneys held for the account of the Fund the total amount
payable upon such purchase, provided that the same conforms
to the total amount payable as set forth in such Certifi-
cate, Oral Instructions or Written Instructions.
2. Promptly after each sale by the Fund of Securities
held by the Custodian hereunder, other than a sale of any
Option, Futures Contract, or Futures Contract Option, the
Fund shall deliver to the Custodian (i) with respect to each
sale of Securities which are not Money Market Securities, a
Certificate, and (ii) with respect to each sale of Money
Market Securities, a Certificate, Oral Instructions or
Written Instructions, specifying with respect to each such
9
sale: (a) the name of the issuer and the title of the
Security; (b) the number of shares or principal amount sold,
and accrued interest, if any; (c) the date of sale; (d) the
sale price per unit; (e) the total amount payable to the
Fund upon such sale; (f) the name of the broker through whom
or the person to whom the sale was made, and the name of the
clearing broker, if any; and (g) the name of the broker to
whom the Securities are to be delivered. The Custodian
shall deliver the Securities to the broker specified in the
Certificate upon receipt of the total amount payable to the
Fund upon such sale, provided that the same conforms to the
total amount payable as set forth in such Certificate, Oral
Instructions or Written Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver to the Custodian a Certificate
specifying with respect to each option purchased: (a) the
type of Option (put or call), (b) the title and aggregate
principal. amount of securities subject to such option; (c)
the expiration date; (d) the exercise price (e) the dates
of purchase and settlement; (f) the total amount payable by
the Fund in connection with such purchase; (g) the name of
the broker through whom such option was purchased and the
name of the clearing broker, if any; and (h) the name of the
broker to whom payment is to be made. The Custodian shall
pay to the broker specified in the Certificate, upon receipt
of a Clearing Member's statement confirming the purchase of
such option which is held by such Clearing Member in the
name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, out of moneys held for the account
of Fund the total amount payable upon such purchase,
provided that the same conforms to the total amount payable
as set forth in such Certificate.
2. Promptly after the sale of any option purchased by
the Fund pursuant to paragraph l hereof, the Fund shall
deliver to the Custodian a Certificate specifying with
respect to each such sale: (a) that it is a Closing Trans-
action as hereinafter referred to; (b) the type of option
(put or call); (c) the title and aggregate principal amount
of securities subject to such option; (d) the date of sale;
(e) the sale price; (f) the date of settlement; (g) the
total amount payable to the Fund upon such sale; and (h) the
name of the Clearing Member through whom the sale was made.
The Custodian shall consent to the through whom 'the sale was
10
made against payment to the Custodian of the total amount
payable to the Fund, provided that the same conforms to the
total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any
Call Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certifi-
cate specifying with respect to such Call Option: (a) the
title and aggregate principal amount of securities subject
to the Call Option; (b) the expiration date; (c) the date of
exercise and settlement; (d) the exercise price; (e) the
total amount to be paid by the Fund upon such exercise; and
(f) the name of the Clearing Member through whom such Call
Option was exercised. The Custodian shall, upon receipt of
the Securities underlying the Call option which was exer-
cised pay out of the moneys held for the account of the Fund
the total amount payable to the Clearing Member through whom
the Call Option was exercised, provided that the same con-
forms to the total amount payable as set forth in such
Certificate.
4. Promptly after the exercise by the Fund of any Put
option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver to the Custodian a Certificate speci-
fying with respect to such Put Options: (a) the title and
aggregate principal amount of securities subject to the Put
option; (b) the expiration date; (c) the date of exercise
and settlement; (d) the exercise price; (e) the total amount
to be paid to the Fund upon such exercise; (f) the name of
the Clearing Member through whom such Put Option was exer-
cised. The Custodian shall upon receipt of the amount pay-
able upon the exercise of the Put Option, deliver or cause
the Depository to deliver the Securties subject to such Put
Option, provided the same conforms to the amount payable to
the Fund as set forth in such Certificate.
5. Whenever the Fund writes a Call Option, the Fund
shall promptly deliver to the Custodian a Certificate speci-
fying with respect to such Call Option: (a) the title and
aggregate principal amount of securities for which the Call
Option was written and which underlie the same; (b) the
expiration date; (c) the exercise price; (d) the premium to
be received by the Fund; (e) the date such Call option was
written; (f) the date of settlement; (g) the name of the
Clearing Member through whom the Call Option was written.
The Custodian shall deliver or cause to be delivered, in
exchange for receipt of the premium specified in the
Certificate with respect to such Call Option, such receipts
as are required in accordance with the customs prevailing
11
among Clearing members in Call Options, and shall impose, or
direct the Depository to impose, upon the underlying Securi-
ties specified in the Certificate such restrictions as may
be required by such receipts. Notwithstanding the fore-
going, the Custodian has the right, upon prior written noti-
fication to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian
and not deposited with the Depository, underlying a Call
Option.
6. Whenever a Call Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian
a Certificate instructing the Custodian to deliver, or to
direct the Depository to deliver, the Securities subject to
such Call option and specifying: (a) the particular Call
option being exercised; (b) the title and aggregate princi-
pal amount of securities subject to the Call option; (c) the
Clearing Member to whom the underlying Securities are to be
delivered; and (d) the total amount payable to the Fund upon
such delivery. Upon the return and/or cancellation of any
receipts delivered pursuant to paragraph 5 of this Article,
the Custodian shall deliver, or cause the Depository to
deliver, the Securities subject to such receipts, or, if
possible and so specified in the Certificate, other Securi-
ties equal to the underlyng Securities against receipt of
the amount to be received, provided the same conforms to the
amount payable to the Fund as set forth in such Certifi-
cate.
7. Whenever the Fund writes a Put Option, the Fund
shall promptly deliver to the Custodian a Certificate speci-
fying with respect to such Put Option: (a) the title and
aggregate principal amount of securities for which the Put
Option is written and which underly the same; (b) the
expiration date; (c) the exercise price; (d) the premium to
be received by the Fund; (e) the date such Put Option is
written; (f) the date of settlement; (g) the name of the
Clearing Member through whom such Put Option was written;
(h) the amount of cash and/or the amount and kind of Securi-
ties, if any, to be deposited in the Senior Security
Account; and (i) the amount of cash and/or the amount and
kind of Securities to be deposited into the Securities
Collateral Account. The Custodian shall, after making the
deposits into the Securities Collateral Account specified in
the Certificate, issue a Put option guarantee letter sub-
stantially in the form utilized by the Custodian on the date
hereof, and deliver the same to the Clearing Member speci-
fied in the Certificate against receipt of the premium
specified in said Certificate. Notwithstanding the fore-
going, the Custodian shall be under no obligation to issue
any Put Option guarantee letter or similar document if it is
12
unable to make any of the representations contained there-
in.
8. Whenever a Put Option written by the Fund and
described in the preceding paragraph is exercised, the Fund
shall promptly deliver to the Custodian a Certificate speci-
fying: (a) the particular Put Option being exercised; (b)
the title and aggregate principal amount of securities sub-
ject to the Put Option; (c) the Clearing Member from whom
the underlying Securities are to be received; and (d) the
total amount payable by the Fund upon such delivery; (e) the
amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Securities Collateral Account;
and (f) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account. Upon the return and/or cancellation of any Put
Option guarantee letter or similar document issued by the
Custodian in connection with such Put option, the Custodian
shall upon receipt of the Securities to be received by the
Fund pay out of the moneys held for the account of the Fund
the total amount payable to the Clearing Member, provided
the same conforms to the amount specified in the Certifi-
cate.
9. Whenever the Fund purchases any option identical
to a previously written Option described in paragraph 5 or 7
of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its
position as a writer of an Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with
respect to the option being purchased: (a) that the trans-
action is a Closing Purchase Transaction; (b) the title and
aggregate principal amount of securities subject to the
option; (c) the exercise price; (d) the premium to be paid
by the Fund; (e) the expiration date; (f) the date of such
purchase; (g) the name of the Clearing Member to whom the
premium is to be paid; (h) and the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from
the Securities Collateral Account, a specified Margin
Account or the Senior Security Account. Upon the return
and/or cancellation of any receipt issued pursuant to para-
graph 5 or paragraph 7 of this Article with respect to the
option being liquidated through the Closing Purchase Trans-
action, the Custodian shall make payment out of the moneys
held for the account of the Fund of the premium specified in
the Certificate.
10. Upon the expiration of, exercise of, or consumma-
tion of a Closing Transaction with respect to, any Option
purchased or written by the Fund and described in this Arti-
cle, the Custodian shall (a) delete such option from the
13
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein, (b) if such expired Option was a Call
option written by the Fund, free, or instruct the Depository
to free, the Securities underlying such Call Option from any
restrictions imposed by receipts issued in connection there-
with, and (c) if such expired option was a Put Option, make
an appropriate withdrawal from the Securities Collateral
Account, as may be specified in a Certificate.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Con-
tract, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Futures Contract, (or with
respect to any number of identical Futures Contract(s)): (a)
the category of Futures Contract (the name of the underlying
financial instrument); (b) the number of identical Futures
Contracts entered into; (c) the delivery or settlement date
of the Futures Contract(s); (d) the date the Futures Con-
tract(s) was (were) entered into and the maturity date; (e)
whether the Fund is buying (going long) or selling (going
short) on such Futures Contract(s); (f) the amount of cash
and/or the amount and kind of Securities, if any, to be
deposited by the Custodian in a Margin Account with respect
to such Futures Contract and the name in which such Margin
Account has been, or is to be, established; (g) the amount
of cash and/or the amount and kind of Securities, if any, to
be deposited in the Senior Security Account; (h) the name of
the broker, dealer, or futures commission merchant through
whom the Futures Contract was entered into and the name of
the clearing broker, if any; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such payment
is to be made. The Custodian shall upon receipt of a state-
ment from the broker, dealer, or futures commission
merchant, or from the clearing broker, if any, confirming
the purchase (creation of a long position) or sale (creation
of a short position) of a Futures Contract(s) which is (are)
held by such broker, dealer, or futures commission merchant
in the name of the Custodian (or any nominee of the Custo-
dian) as custodian for the Fund, make payment out of the
moneys held for the account of the Fund of the fee or com-
mission, if any, specified in the Certificate and deposit in
such Margin Account and/or in the Senior Security Account
the amount of cash and/or the amount and kind of securities
specified in said Certificate.
14
2 (a) Whenever the Fund shall be required to make
any variation margin payment or similar payment to a broker,
dealer, or futures commission merchant with respect to an
outstanding Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) such information as
may be necessary to identify the Futures Contract to which
such payment relates; (b) the amount of cash and/or the
amount and kind of Securities to be paid or delivered and
the date on which such payment or delivery is to be made;
and (c) the name of the broker, dealer, or futures commis-
sion merchant to whom such payment or delivery is to be
made. The Custodian shall in accordance with such Certifi-
cate make the payments and deliveries out of the money and
Securities held hereunder.
(b) Whenever the Fund shall be entitled to
receive a variation margin payment or similar payment from a
broker, dealer, or futures commission merchant with respect
to an outstanding Futures Contract, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the amount of
cash and/or the amount in kind of Securities to be paid, or
delivered, to the Fund in the date of such payment or
delivery; and (b) the name of the broker, dealer, or futures
commission merchant who shall make such payment and or
delivery. The Custodian shall accept the money and/or
Securities delivered by such broker, dealer, or futures com-
mission merchant and hold the same hereunder, provided that
such payment or delivery conforms to such Certificate.
3. Whenever a Futures Contract is retained by the
Fund until delivery or settlement is made on such Futures
Contract, the Fund shall deliver to the Custodian a Certifi-
cate specifying: (a) the particular Futures Contract; (b)
the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission
merchant to or from whom payment or delivery is to be made
or received; and (d) the amount of cash and/or Securities to
be withdrawn from the related Margin Account and/or the
Senior Security Account. Upon the receipt of a broker's,
dealer's, or futures commission merchant's statement con-
firming that the Futures Contract is being settled and that
the Fund's position in such Futures Contract is thereby
terminated, the Custodian shall make out of the moneys held
for the account of the Fund or receive, as the case may be,
the payment or delivery specified in the Certificate, and
delete such Futures Contract from the statements delivered
to the Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Con-
tract to offset a Futures Contract, the Fund shall deliver
to the Custodian a Certificate specifying: (a) the amount to
15
be paid or received by the Fund; (b) the Futures Contract
being offset; and (c) the broker, dealer, or futures com-
mission merchant to whom, or from whom such amount is to be
paid or received. The Custodian shall, upon receipt of a
broker's, dealer's, or futures commission merchant's state-
ment confirming the offsetting transaction, make payment out
of the moneys held for the account of the Fund of the fee or
commission, if any, specified in the Certificate and delete
the Futures Contract being offset from the statements
delivered to the Fund pursuant to paragraph 3 of Article III
herein, and make such withdrawals from the Senior Security
Account and/or the Margin Account as may be specified in
such Certificate.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
option by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the type of Futures Contract
option (put or call) ; (b) the type of Futures Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option pur-
chased; (c) the expiration date; (d) the exercise price; (e)
the dates of purchase and settlement; (f) the amount premium
to be paid by the Fund upon such purchase; (g) the name of
the broker' or futures commission merchant through whom such
option was purchased, and the name of the clearing broker,
if any; and (h) the name of the broker, or futures
commission merchant to whom payment is to be made. The
Custodian shall pay, upon receipt of a broker's or futures
commission merchant's or clearing broker's statement con-
firming the purchase of such Futures Contract Option which
is held by such broker or futures commission merchant in the
name of the Custodian (or any nominee of the Custodian) as
custodian for the Fund, out of the moneys held for the
account of the Fund, the amount to be paid by the Fund upon
such purchase to the person from whom or the broker or
futures commissions merchant through whom the purchase was
made, provided that the same conforms to the amount set
forth in such Certificate.
2. Promptly after the sale of any Futures Contract
Option purchased by the Fund pursuant to paragraph I hereof,
the Fund shall promptly deliver to the Custodian a Certifi-
cate specifying with respect to each such sale: (a) that the
sale is a Closing Transaction; (b) the type of Futures Con-
16
tract Option (put or call); (c) the type of Futures Contract
and such other information as may be necessary to identify
Futures Contract underlying the Futures Contract Option; and
(d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the broker of futures commis-
sion merchant through whom the sale was made. The Custodian
shall consent to the cancellation of the Futures Contract
option being closed against payment to the Custodian of the
total amount payable to the Fund, provided the same conforms
to the total amount payable as set forth in such
Certificate.
3. Whenever a Futures Contract option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the particular Futures Contract Option (put
or call) being exercised; (b) the type of Futures Contract
underlying the Futures Contract option; (c) the date of
exercise; (d) the name of the broker or futures commission
merchant through whom the Futures Contract option is exer-
cised; (d) the net total amount, if any, payable by the
Fund; (e) the amount, if any, to be received by the Fund;
(f) the amount of cash and/or the amount and kind of Securi-
ties to be deposited in a Margin Account, and the name in
which such Margin Account is to be or has been established;
and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account.
The Custodian shall, upon its receipt from such broker or
futures commission merchant of a statement confirming that
the underlying Futures Contract is held by such broker or
futures commission merchant in the name of the Custodian (or
any nominee of the Custodian) as custodian for the Fund and
its receipt of the net total amount payable to the Fund, if
any, specified in the Certificate, make out of the moneys
held for the account of the Fund the payments, if any, and
the deposits, if any, into the Margin Account and the Senior
Security Account specified in the Certificate.
4. Whenever the Fund writes a Futures Contract
option, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Futures Contract
option: (a) the type of Futures Contract Option (put or
call); (b) the type of Futures Contract,and such other
information as may be necessary to identify the Futures
Contract underlying the Futures Contract option; (c) the
expiration date; (d) the exercise price; (e) the premium to
be received by the Fund; (f) the name of the broker or
futures commission merchant through whom the premium is to
be received; (g) if the Futures Contract Option is a put,
the amount of cash and/or the amount and kind of Securities,
17
ties, if any, to be deposited by the Custodian in a Margin
Account relating to such Futures Contract Option, and the
name in which such Margin Account is to be, or has been
established; and (h) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in the
Senior Security Account. The Custodian shall upon receipt
of the premium specified in the Certificate make the
deposits into the Margin Account and/or into the Senior
Security Account specified in the Certificate.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the
particular Futures Contract Option exercised; (b) the type
of Futures Contract underlying the Futures Contract Option;
(c) the name of the broker or futures commission merchant
through whom such option is exercised; (d) the net total
amount payable to the Fund upon such exercise, if any; (e)
the net total amount, if any, payable by the Fund upon such
exercise; (f) the amount of cash and/or amount and kind of
Securities to be deposited in a Margin Account, and the name
in which such account is to be or has been established; and
(g) the amount of cash and/or the amount and kind of Securi-
ties to be deposited in the Senior Security Account. The
Custodian shall, upon its receipt of the net total amount
payable to the Fund, if any, specified in such Certificate,
and its receipt from such broker or dealer of a statement
confirming that the underlying Futures Contract is held by
such broker or dealer in the name of the Custodian (or any
nominee of the Custodian) as custodian for the Fund, make
the payments, if any, and the deposits, if any, into the
Margin Account and/or the Senior Security Account specified
in the Certificate.
6. Whenever a Futures Contract option which is written
by the Fund which is a put is exercised, the Fund shall
promptly deliver to the Custodian a Certificate specifying:
(a) the particular Futures Contract Option exercised; (b)
the type of Futures Contract underlying such Futures
Contract option; (c) the name of the broker or futures
commission merchant through whom such option is exercised;
(d) the net total amount payable to the Fund, upon such
exercise, if any; (e) the net total amount, if any, payable
by the Fund, upon such exercise; and (f) the amount and kind
of Securities and/or cash to be withdrawn from or deposited
in, the Senior Security Account, if any, and/or the related
Margin Account, if any. The Custodian shall, upon its
receipt of a broker's or futures commission merchant's
statement confirming that the Futures Contract, if any,
specified in the Certificate is held by such broker or
future commission merchant in the name of the Custodian (or
18
any nominee of the Custodian) as custodian for the Fund, and
upon its receipt of the net total amount payable to the
Fund, if any, specified in the Certificate, make out of the
moneys held for the Account of the Fund the payments, if
any, and the deposits, if any, into the Margin Account and/
or the Senior Security Account specified in the Certifi-
cate.
7. Whenever the Fund purchases any Futures Contract
option identical to a previously written Futures Contract
option described in this Article in order to liquidate its
position as a writer of such Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to the Futures Option Contract being
purchased: (a) that the transaction is a closing transac-
tion; (b) the type of Future Contract and such other infor-
mation as may be necessary to identify the Futures Contract
underlying the Futures Option Contract (c) the exercise
price, (d) the premium to be paid by the Fund; (e) the
expiration date; (f) the name of the broker or futures com-
mission merchant to whom the premium is to be paid; and (g)
the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the related Margin Account
and/or the Senior Security Account. The Custodian shall
upon receipt of a broker's or futures commission merchant's
statement confirming the liquidation of the Fund's position
as the writer of such Futures Contract, make the payments
and effect the withdrawals from the related Margin Account
and/or the Senior Security Account specified in the Certifi-
cate and delete such Futures Contract Option from statements
delivered to the Fund by the Custodian pursuant to paragraph
3 of Article III herein.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any of Futures Contract
option purchased by the Fund pursuant to paragraph 1 of this
Article or of any Futures Contract Option written or pur-
chased by the Fund and described in this Article, the Custo-
than shall (a) delete such Futures Contract Option from the
statements delivered to the Fund pursuant to paragraph 3 of
Article III herein and, (b) make such withdrawals from,
and/or in the case of an exercise such deposits into, the
Margin Account and/or the Senior Security Account as may be
specified in a Certificate.
9. Futures Contracts purchased by the Fund pursuant to
an exercise of a Futures Contract Option described in this
Article shall be subject to Article VI hereof.
19
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by the Fund, the
Fund shall promptly deliver to the Custodian a Certificate
specifying: (a) the name of the issuer and the title of the
Security; (b) the principal amount sold, and accrued inter-
est, if any; (c) the dates of the sale and settlement; (d)
the sale price per unit; (e) the total amount credited to
the Fund upon such sale, if any, (f) the amount of cash
and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which
such Margin Account has been or is to be established; (g)
the amount of cash and/or the amount and kind of U.S.
Government Securities, if any, to be deposited in a Senior
Security Account, and (h) the name of the broker through
whom such short sale was made. The Custodian shall upon its
receipt of a statement from such broker confirming such sale
and that the total amount credited to the Fund upon such
sale, if any, as specified in the Certificate is held by
such broker for the account of the Custodian (or any nominee
of the Custodian) as custodian of the Fund, make the
deposits into the Margin Account and the Senior Security
Account specified in the Certificate. Notwithstanding the
foregoing, transactions by the Fund which constitute selling
short "against the box", if not effected in accordance with
the foregoing, shall be effected in accordance with the
terms of a separate agreement between the Custodian and
Fund.
2. In connection with the closing-out of any short
sale, the Fund shall promptly deliver, to the Custodian a
Certificate specifying with respect to each such closing-
out: (a) the name of the issuer and the title of the Secur-
ity; (b) the principal amount, and accrued interest, if any,
required to- effect such closing-out to be delivered to the
broker; (c) the dates of closing-out and settlement; (d) the
purchase price per unit; (e) the net total amount payable to
the Fund upon such closing-out; (f) the net total amount
payable to the broker upon such closing-out; (g) the amount
of cash and the amount and kind of Securities to be with-
drawn, if any, from the Margin Account; (h) the amount of
cash and/or the amount and kind of Securities, if any, to be
withdrawn from the Senior Security Account; and (i) the name
of the broker through whom the Fund is effecting such
closing-out. The Custodian shall, upon receipt of the net
total amount payable to the Fund upon such closing-out, pay
out of the moneys held for the account of the, Fund to the
broker the net total amount payable to the broker, and make
20
the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certifi-
cate.
ARTICLE IX
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Within 24 hours after each loan of portfolio
Securities held by the Custodian hereunder the Fund shall
deliver or cause to be delivered to the Custodian a Certifi-
cate specifying with respect to each such loan: (a) the
name of the issuer and the title of the Securities, (b) the
principal amount loaned, (c) the date of loan and delivery,
(d) the total amount to be delivered to the Custodian
against the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately identi-
fied, and (e) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer
or financial institution to which the loan was made upon
receipt of the total amount designated as to be delivered
against the loan of Securities. The Custodian may accept
payment in connection with a delivery otherwise than through
the Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of
the Fund or the Custodian drawn on New York Clearing House
funds and may deliver Securities in accordance with the
customs prevailing among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to
be delivered to the Custodian a Certificate specifying with
respect to each such loan termination and return of securi-
ties: (a) the name of the issuer and the title of the Secu-
rities to be returned, (b) the number of shares or the prin-
cipal amount to be returned, (c) the date of termination,
(d) the total amount to be delivered by the Custodian
(including the cash collateral for such Securities minus any
offsetting credits as described in said Certificate), and
(e) the name of the broker, dealer, or financial institution
from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker,
dealer, or financial institution to which such Securities
were loaned and upon receipt thereof shall pay, out of the
moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the
Certificate.
21
ARTICLE X
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND THE SECURITIES COLLATERAL ACCOUNT
1. The Custodian shall, from time to time, make addi-
tional deposits to, or withdrawals from, a Senior Security
Account as directed by a Certificate received by the Custo-
dian specifying the amount of cash and/or the amount and
kind of Securities to be deposited in, or withdrawn from,
such Senior Security Account. In the event that the Fund
fails to specify in a Certificate the name of the issuer,
the title and the principal amount of any particular Securi-
ties to be deposited by the Custodian into, or withdrawn
from, the Senior Securities Account, the Custodian shall be
under no obligation to make any such deposit and shall so
notify the Fund.
2. The Custodian shall make deliveries or payments
from a Margin Account to the broker, dealer, or futures com-
mission merchant in whose name, or for whose benefit, the
account was established only upon the receipt of a certifi-
cation signed by an officer, director, or employee of such
broker, dealer, or futures commission merchant stating that
all conditions precedent to its right under its agreement
with the Fund to direct disposition of the assets held
therein have been satisfied and specifying the amount of
money and/or the amount and kind of Securities to be paid or
delivered to such broker, dealer, or futures commission
merchant and the date of such payment. After receipt of
such a certification, the Custodian shall orally so advise
an Officer or Authorized Person of such receipt, and make
the payments and/or deliveries to the broker, dealer, or
futures commission merchant therein specified, provided,
however that payments and/or deliveries pursuant to such a
certification may be delayed until the business day next
succeeding the Custodian's receipt of such certification.
Except as otherwise expressly provided herein above,
the Custodian shall be under no duty or obligation to act in
accordance with or with respect to any Certificate, or with
any other order, direction or request of the Fund, in what-
ever form, with respect to any cash or Securities deposited
in any Margin Account, including, without limitation, any
Certificate, order, direction, or request to pay, deliver,
transfer or withdraw any such cash or Securities unless such
order direction or request is contained in a Certificate
believed by the Custodian to bear the signed consent thereto
of an officer, director, or employee of the broker, dealer,
futures commission merchant or Clearing Member in whose
22
name, or for whose benefit the Margin Account was estab-
lished.
3. unless otherwise instructed by a Certificate,
amounts received by the Custodian as payments or distribu-
tions with respect to Securities deposited in any Margin
Account shall be held by the Custodian hereunder and neither
credited to, nor deposited in, such Margin Account.
4. The Custodian shall have a continuing lien and
security interest in and to any property at any time held by
the Custodian in any Securities Collateral Account described
herein. In accordance with applicable law the Custodian may
enforce its lien and realize on any such property whenever
the Custodian has made payment or delivery pursuant to any
Put Option guarantee letter or similar document or any
receipt issued hereunder by the Custodian. In the event the
Custodian should realize on any such property net proceeds
which are less than the Custodian's obligations under any
Put Option guarantee letter or similar document or any
receipt, such deficiency shall be a debt owed the Custodian
by the Fund within the scope of Article XIV herein.
5. In the event the Fund furnishes the Custodian with
an order of exemption under the Investment Company Act of
1940, as amended, permitting the Fund to establish with
brokers and/or futures commission merchants accounts (here-
inafter "Exempt Accounts") intended to replace any Margin
Account, then, notwithstanding any other provisions con-
tained herein, the Fund may substitute an instruction to
deliver Securities and/or money to a broker or futures com-
mission merchant for deposit into an Exempt Account for an
instruction to deposit Securities and/or money into a Margin
Account. The Custodian shall be under no duty or obligation
with respect to any Securities and/or money so delivered for
deposit into an Exempt Account, including any obligation to
provide the Fund with any statements with respect to any
Exempt Account, nor shall the Custodian have any duty or
obligation with respect to the operation or terms of the
Exempt Account, the timely return, or withdrawal, of any
such Securities or money delivered for deposit therein, or
the payment by such broker or futures commission merchant of
amounts to be paid to the Fund with respect to any such
Exempt Account. The Custodian shall accept from any such
broker and/or futures commission merchant any Securities
and/or moneys purportedly paid out of, or distributed with
respect to, any Exempt Account, when so instructed in a
Certificate.
6. Promptly after the close of business on each busi-
ness day the Custodian shall furnish the Fund with a state-
23
ment with respect to each Margin Account in which money or
Securities are deposited specifying: (a) the name of the
Margin Account, (b) the amount and kind of Securities on
deposit therein; and (c) the amount of money on deposit
therein. The Custodian shall make available upon request to
any broker, dealer, or futures commission merchant specified
in the name of a Margin Account a copy of the statement
furnished the Fund with respect to such Margin Account.
7. Promptly after the close of business on each busi-
ness day in which cash and/or Securities are maintained in
the Securities Collateral Account, the Custodian shall furn-
ish the Fund with a Statement with respect to such Securi-
ties Collateral Account specifying the amount of cash and/or
the amount and kind of Securities held therein. No later
than the close of business next succeeding the delivery to
the Fund of such statement, the Fund shall furnish to the
Custodian a Certificate or Written Instructions specifying
the then market value of the Securities described in such
statement. In the event such then market value is indicated
to be less than the Custodian's obligation with respect to
any outstanding Put Option guarantee letter or similar docu-
ment, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such
Securities Collateral Account to eliminate such deficiency.
ARTICLE XI
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of
the resolution of the Trustees of the Fund, certified by the
Secretary or any Assistant Secretary, either (i) setting
forth the date of the declaration of a dividend or distribu-
tion, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined,
the amount payable per Share to the shareholders of record
as of that date and the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the
Fund on the payment date, or (ii) authorizing the declara-
tion of dividends and distributions on a daily or other
periodic basis and authorizing the Custodia'n to rely on oral
Instructions, Written Instructions or a Certificate setting
forth the date of the declaration of such dividend or dis-
tribution, the date of payment thereof, the record date as
of which shareholders entitled to payment shall be deter-
mined, the amount payable per Share of such Series to the
shareholders of record as of that date and the total amount
payable to the Dividend Agent on the payment date.
24
2. Upon the payment date specified in such resolu-
tion, Oral Instructions, Written Instructions or Certifi-
cate, as the case may be, the Custodian shall pay out of the
moneys held for the account of the Fund the total amount
payable to the Dividend Agent, and any sub-dividend agent or
co-dividend agent of the Fund.
ARTICLE XII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver to the Custodian a Certificate duly specifying:
(a) The number of Shares sold, trade date, and
price; and
(b) The amount of money to be received by the
Custodian for the sale of such Shares.
2. Upon receipt of - such money from the Transfer
Agent, the Custodian shall credit such money to the account
of the Fund.
3. Upon issuance of any Shares, the Custodian shall
pay, out of the money held for the account of the Fund, all
original issue or other taxes required to be paid by the
Fund in connection with such issuance upon the receipt of a
Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
shall redeem any Shares, it shall furnish to the Custodian a
Certificate specifying:
(a) The number of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice
setting forth the number of Shares received by the Transfer
Agent for redemption and that such Shares are in good form
for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held for the account of the
Fund the total amount specified in the Certificate issued
pursuant to the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
25
pursuant to any check redemption privilege which may from
time to time be offered by the Fund, the Custodian, unless
otherwise instructed by a Certificate, shall, upon receipt
of an advice from the Fund or its agent setting forth that
the redemption is in good form for redemption in accordance
with the check redemption procedure, honor the check pre-
sented as part of such check redemption privilege out of the
money held in the account of the Fund for such purpose.
ARTICLE XIII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion
advance funds on behalf of the Fund which results in an
overdraft because the moneys held by the Custodian for the
account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities, as set forth
in a Certificate, Written Instructions or Oral Instructions,
or which results in an overdraft for some other reason, or
if the Fund is any other reason indebted to the Custodian,
(except a borrowing for investment or for temporary or
emergency purposes using Securities as collateral pursuant
to a separate agreement and subject to the provisions of
paragraph 2 of this Article), such overdraft or indebtedness
shall be deemed to be a loan made by the Custodian to the
Fund payable on demand and shall bear interest from the date
incurred at a rate per annum (based on a 360-day year for
the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from
time to time, such rate to be adjusted on the effective date
of any change in such prime commercial lending rate but in
no event to be less than 6% per annum. In addition, the
Fund hereby agrees that the Custodian shall have a continu-
ing lien and security interest in and to any property at any
time held by it for the benefit of the Fund or in which the
Fund may have an interest which is then in the Custodian's
possession or control or in possession or control of any
third party acting in the Custodian's behalf. The Fund
authorizes the Custodian, in its sole discretion, at any
time to charge any such overdraft or indebtedness together
with interest due thereon against any balance of account
standing to the Fund's credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custo-
dian by any bank (including, if the borrowing is pursuant to
a separate agreement, the Custodian) from which it borrows
money for investment or for temporary or emergency purposes
using Securities held by the Custodian hereunder as colla-
26
teral for such borrowings, a notice or undertaking in the
form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall
promptly deliver to the Custodian a Certificate specifying
with respect to each such borrowing: (a) the name of the
bank, (b) the amount and terms of the borrowing, which may
be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan
agreement, (c) the time and date, if known, on which the
loan is to be entered into, (d) the date on which the loan
becomes due and payable, (e) the total amount payable to the
Fund on the borrowing date, (f) the market value of Securi-
ties to be delivered as collateral for such loan, including
the name of the issuer, the title and the number of shares
or the principal amount of any particular Securities, and
(g) a statement specifying whether such loan is for invest-
ment purposes or for temporary or emergency purposes and
that such loan is in conformance with the Investment Company
Act of 1940 and the Fund's prospectus and statement of addi-
tional information. The Custodian shall deliver on the bor-
rowing date specified in a Certificate the specified col-
lateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may,
at the option of the lending bank, keep such collateral in
its possession, but such collateral shall be subject to all
rights therein given the lending bank by virtue of any
promissory note or loan agreement. The Custodian shall
deliver such Securities as additional collateral as may be
specified in a Certificate to collateralize further any
transaction described in this paragraph. The Fund shall
cause all Securities released from collateral status to be
returned directly to the Custodian, and the Custodian shall
receive from time to time such return of collateral as may
be tendered to it. In the event that the Fund fails to
specify in a Certificate the name of the issuer, the title
and number of shares or the principal amount of any particu-
lar Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation
to deliver any Securities.
ARTICLE XIV
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custo-
dian nor its nominee shall be liable for any loss or damage,
including counsel fees, resulting from its action or omis-
27
sion to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct.
The Custodian may, with respect to questions of law, apply
for and obtain the advice and opinion of counsel to the Fund
or of its own counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted
by it in good faith in conformity with such advice or opin-
ion. The Custodian shall be liable to the Fund for any loss
or damage resulting from the use of the Book-Entry System or
any Depository arising by reason of any negligence, misfeas-
ance or willful misconduct on the part of the Custodian or
any of its employees or agents.
2. without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into,
and shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety
of the amount paid or received therefor;
(b) The legality of the sale or redemption of
any Shares, or the propriety of the amount to be received or
paid therefor;
(c) The legality of the declaration or payment of
any dividend by the Fund;
(d) The legality of any borrowing by the Fund
using Securities as collateral;
(e) The legality of any loan of portfolio Securi-
ties, nor shall the Custodian be under any duty or obliga-
tion to see to it that any cash collateral delivered to it
by a broker, dealer, or financial institution or held by it
at any time as a result of such loan of portfolio Securities
of the Fund is adequate collateral for the Fund against any
loss it might sustain as a result of such loan. The Custo-
dian specifically, but not by way of limitation, shall not
be under any duty or obligation periodically to check or
notify the Fund that the amount of such cash collateral held
by it for the Fund is sufficient collateral for the Fund,
but such duty or obligation shall be the sole responsibility
of the Fund. In addition, the Custodian shall be under no
duty or obligation to see that any broker, dealer or xxxxx-
cial institution to which portfolio Securities of the Fund
are lent pursuant to Article IX of this Agreement makes pay-
ment to it of any dividends or interest which are payable to
or for the account of the Fund during the period of such
loan or at the termination of such loan, provided, however,
28
that the Custodian shall promptly notify the Fund in the
event that such dividends or interest are not paid and
received when due; or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account, Exempt Account or Securities Collateral
Account in connection with transactions by the Fund. In
addition, the Custodian shall be under no duty or obligation
to see that any broker, dealer, futures commission merchant
or Clearing Member makes payment to the Fund of any
variation margin payment or similar payment which the Fund
may be entitled to receive from such broker, dealer, futures
commission merchant or Clearing Member, to see that any pay-
ment received by the Custodian from any broker, dealer,
futures commission merchant or Clearing Member is the amount
the Fund is entitled to receive, or to notify the Fund of
the Custodian's receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or con-
sidered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until
the Custodian actually receives and collects such money
directly or by the final crediting of the account represent-
ing the Fund's interest at the Book-Entry System or the
Depository.
4. The Custodian shall not be under any duty or obli-
gation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take
any action to effect payment or distribution by the Transfer
Agent of the Fund of any amount paid by the Custodian to the
Transfer Agent of the Fund in accordance with this Agree-
ment.
5. The Custodian shall not be under any duty or obli-
gation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in
default, or if payment is refused, after due demand or pre-
sentation, unless and until (i) it shall be directed to take
such action by a Certificate and (ii) it shall be assured to
its satisfaction of reimbursement of its costs and expenses
in connection with any such action.
6. The Custodian may appoint one or more banking
institutions as Depository or Depositories, as Sub-Custodian
or Sub-Custodians, or as Co-Custodian or Co-Custodians
including, but not limited to, banking institutions located
in foreign countries, of Securities and moneys at any time
owned by the Fund, upon such terms and conditions as may be
29
approved in a Certificate or contained in an agreement exe-
cuted by the Custodian, the Fund and the appointed institu-
tion.
7. The custodian shall not be under any duty or obli-
gation (a) to ascertain whether any Securities at any time
delivered to, or held by it, for the account of the Fund are
such as properly may be held by the Fund under the provi-
sions of its Declaration of Trust and its then current
prospectus and statement of additional information, or (b)
to ascertain whether any transactions by the Fund, whether
or not involving the Custodian, are such transactions as may
properly be engaged in by the Fund.
8. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all out-of-pocket expen-
ses and such compensation as may be agreed upon from time to
time between the Custodian and the Fund. The Custodian may
charge such compensation and any expenses incurred by the
Custodian in the performance of its duties pursuant to such
agreement against any money held by it for the account of
the Fund. The Custodian shall also be entitled to charge
against any money held by it for the account of the Fund of
the amount of any loss, damage, liability or expense,
including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement. The
expenses for which the Custodian shall be entitled to xxxx-
bursement hereunder shall include, but are not limited to,
the expenses of sub-custodians and foreign branches of the
Custodian incurred in settling outside of New York City
transactions involving the purchase and sale of Securities
of the Fund.
9. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received
by the Custodian and reasonably believed by the Custodian to
be a Certificate. Such reliance by the Custodian shall
include, without limitation, reliance on the validity,
legality and propriety of any instructions continued there-
in. The Custodian shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received
by the Custodian hereinabove provided for. The Fund agrees
to forward to the Custodian a Certificate or facsimile
thereof confirming such Oral Instructions or Written
Instructions in such manner so that such Certificate or
facsimile thereof is received by the Custodian, whether by
hand delivery, telecopier or other similar device, or other-
wise, by the close of business of the same day that such
Oral Instructions or Written Instructions are given to the
Custodian. The Fund agrees that the fact that such confirm-
ing instructions are not received by the Custodian shall in
no way affect the validity of the transactions or enforce-
30
ability of the transactions hereby authorized by the Fund.
The Fund agrees that the Custodian shall incur no liability
to the Fund in acting upon Oral Instructions or Written
Instructions given to the Custodian hereunder concerning
such transactions provided such instructions reasonably
appear to have been received from an Authorized Person.
10. The Custodian shall be entitled to rely upon any
instrument or notice in writing received by the Custodian
and reasonably believed by the Custodian to be a certifica-
tion described in paragraph 2 of Article X herein. Without
limiting the generality of the foregoing, the Custodian
shall be under no duty to acquire into, and shall not be
liable for, the accuracy of any statements or representa-
tions contained in any such instrument or other notice
including, without limitation, any specification of any
amount to be paid to a broker, dealer, or futures commission
merchant.
11. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property
of the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of
1940, as amended, and other applicable securities laws and
rules and regulations. The Fund, or the Fund's authorized
representatives, shall have access to such books and records
during the Custodian's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and
records shall be provided by the Custodian to the Fund or
the Fund's authorized representative, and the Fund shall
reimburse the Custodian its expenses of providing such
copies.
12. The Custodian shall provide the Fund - with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System or the Deposi-
tory, and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from
time to time.
13. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees,
howsoever arising or incurred because of or in connection
with the Custodian's payment or non-payment of checks pursu-
ant to paragraph 6 of Article XIII as part of any check
redemption privilege program of the Fund, except for any
such liability, claim, loss and demand arising out of the
Custodian's own negligence or willful misconduct.
31
14. Subject to the foregoing provisions of this Agree-
ment, the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accord-
ance with the customs prevailing from time to time among
brokers or dealers in such Securities.
15. The Custodian shall have no duties or responsibil-
ities whatsoever except such duties and responsibilities as
are specifically set forth in this Agreement, and no
covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XV
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it
shall be accompanied by a copy of a resolution of the Trus-
tees of the Fund, certified by the Secretary or any Xxxxx-
xxxx Secretary, electing to terminate this Agreement and
designating a successor custodian or custodians, each of
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by the Custodian,
the Fund shall, on or before the termination date, deliver
to the Custodian a copy of a resolution of its Trustees,
certified by the Secretary or any Assistant Secretary,
designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may
designate a successor custodian which shall be a bank or
trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set
forth in such notice this Agreement shall terminate, and the
Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the
successor custodian all Securities and moneys then owned by
the Fund and held by it as Custodian, after deducting all
fees, expenses and other amounts for the payment or xxxx-
bursement of which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding para-
graph, the Fund shall upon the date specified in the notice
of termination of this Agreement and upon the delivery by
32
the Custodian of all Securities (other than Securities held
in the Book-Entry System which cannot be delivered to the
Fund) and moneys then owned by the Fund be deemed to be its
own custodian and the Custodian shall thereby be relieved of
all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the
Book Entry System which cannot be delivered to the Fund to
hold such Securities hereunder in accordance with this
Agreement.
ARTICLE XVI
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present officers of the Fund under its
seal, setting forth, the names and the signatures of the
present Authorized Persons. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event
that any such present Authorized Person ceases to be an
Authorized Person or in the event that other or additional
Authorized Persons are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully
protected in acting tinder the provisions of this Agreement
upon Oral Instructions or signatures of the present Author-
ized Persons as set forth in the last delivered Certificate.
2. Annexed hereto as Appendix B is a Certificate
signed by two of the present Officers of the Fund under its
seal, setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to
the Custodian a new Certificate in similar form in the event
any such present officer ceases to be an Officer of the
Fund, or in the event that other or additional officers are
elected or appointed. Until such new Certificate shall be
received, the Custodian shall be fully protected in acting
under the provisions of this Agreement upon the signatures
of the officers as set forth in the last delivered Certifi-
cate.
3. Any notice or other instrument in writing, author-
ized or required by this Agreement to be given to the Custo-
dian, shall be sufficiently given if addressed to the Custo-
dian and mailed or delivered to it at its offices at 00
Xxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as the Custodian may from time to time designate
in writing.
33
4. Any notice or other instrument in writing, author-
ized or required by this Agreement to be given to the Fund
shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 or at such other place as the Fund
may from time to time designate in writing.
5. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both
parties with the same formality as this Agreement and
approved by a resolution of the Trustees of the Fund. For
purposes of this paragraph, the execution by the Custodian
and the Fund of any agreement described in paragraph I of
Article VIII hereof shall not be deemed an amendment of this
Agreement.
6. This Agreement shall extend to and shall be bind-
ing upon the parties hereto, and their respective successors
and assigns; provided, however, that this Agreement shall
not be assignable by the Fund without the written consent of
the Custodian, or by the Custodian without the written con-
sent of the Fund, authorized or approved by a resolution of
its Trustees.
7. This Agreement shall be construed in accordance
with the laws of the State of New York.
8. The Declaration of Trust establishing the Fund,
dated July 20, 1984, a copy of which, together with all
amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachu-
setts, provides that the name "Xxxxxxx Xxxxx Federal Securi-
ties Trust" refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or per-
sonally; and no Trustee, shareholder, officer, employee or
agent of the Fund shall be held to any personal liability,
nor shall resort be had to their private property for the
satisfaction of any obligation or claim of said Fund but the
"Trust Property" only shall be liable.
9. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an origi-
nal, but such counterparts shall, together,,-constitute only
one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers,
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above
written.
34
XXXXXXX XXXXX FEDERAL SECURITIES
TRUST
By:/s/
-----------------------------
Attest:
/s/ Xxxxxxx Xxxxxxxxxxx
-----------------------
THE BANK OF NEW YORK
By:/S/
------------------------------
Attest:
/s/
-----------------------
- 35 -
