Exhibit 7
AGREEMENT BETWEEN
[NAME OF CUSTODIAN]
AND
EACH OF THE INVESTMENT COMPANIES
LISTED ON SCHEDULE A ATTACHED HERETO
Table of Contents
ARTICLE I. DEFINED TERMS......................................................1
Section 1.01. "Account"...................................................1
Section 1.02. "Affiliate".................................................2
Section 1.03. "Agreement".................................................2
Section 1.04. "Authorized Person(s)"......................................2
Section 1.05. "Bank Account"..............................................2
Section 1.06. "Banking Institution".......................................2
Section 1.07. "Board".....................................................2
Section 1.08. "Business Day"..............................................2
Section 1.09. "Commission"................................................2
Section 1.10. "DR"........................................................3
Section 1.11. "Domestic Subcustodian".....................................3
Section 1.12. "Eligible Securities Depository"............................3
Section 1.13. "Foreign Subcustodian"......................................3
Section 1.14. "Fund"......................................................3
Section 1.15. "Institutional Client"......................................4
Section 1.16. "Interest Bearing Deposits".................................4
Section 1.17. "Investment Company Act"....................................4
Section 1.18. "Loans".....................................................4
Section 1.19. "Overdraft".................................................4
Section 1.20. "Overdraft Notice"..........................................4
Section 1.21. "Person"....................................................4
Section 1.22. "Procedural Agreement"......................................4
Section 1.23. "Proper Instructions".......................................4
Section 1.24. "Property"..................................................5
Section 1.25. "Securities System".........................................5
Section 1.26. "Segregated Account"........................................5
Section 1.27. "Series"....................................................6
Section 1.28. "Shareholder Servicing Agent"...............................6
Section 1.29. "Shares"....................................................6
Section 1.30. "Subcustodian"..............................................6
Section 1.31. "Terminating Fund"..........................................6
ARTICLE II. APPOINTMENT OF CUSTODIAN..........................................6
ARTICLE III. POWERS AND DUTIES OF CUSTODIAN...................................7
Section 3.01. Safekeeping.................................................7
Section 3.02. Manner of Holding Securities................................7
Section 3.03. Security Purchases and Sales................................9
Section 3.04. Exchanges of Securities....................................11
Section 3.05. Depositary Receipts........................................12
Section 3.06. Exercise of Rights; Tender Offers..........................12
Section 3.07. Stock Dividends, Rights, Etc...............................13
Section 3.08. Options....................................................13
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Section 3.09. Futures Contracts..........................................14
Section 3.10. Borrowings.................................................14
Section 3.11. Interest Bearing Deposits..................................16
Section 3.12. Foreign Exchange Transactions..............................16
Section 3.13. Securities Loans...........................................17
Section 3.14. Collections................................................18
Section 3.15. Dividends, Distributions and Redemptions...................19
Section 3.16. Proceeds from Shares Sold..................................19
Section 3.17. Proxies, Notices, Etc......................................20
Section 3.18. Bills and Other Disbursements..............................20
Section 3.19. Nondiscretionary Functions.................................20
Section 3.20. Bank Accounts..............................................20
Section 3.21. Deposit of Fund Assets in Securities Systems...............21
Section 3.22. Maintenance of Assets in Underlying Fund Systems...........23
Section 3.23. Other Transfers............................................24
Section 3.24. Establishment of Segregated Account(s......................24
Section 3.25. Custodian's Books and Records..............................24
Section 3.26. Opinion of Fund's Independent Certified Public Accountants.26
Section 3.27. Reports by Independent Certified Public Accountants........26
Section 3.28. Overdrafts.................................................26
Section 3.29. Reimbursement for Advances.................................28
Section 3.30. Claims.....................................................28
ARTICLE IV. PROPER INSTRUCTIONS AND RELATED MATTERS..........................28
Section 4.01. Proper Instructions........................................28
Section 4.02. Authorized Persons.........................................29
Section 4.03. Persons Having Access to Assets of the Fund or Series......30
Section 4.04. Actions of Custodian Based on Proper Instructions..........30
ARTICLE V. SUBCUSTODIANS.....................................................30
Section 5.01. Domestic Subcustodians.....................................30
Section 5.02. Foreign Subcustodians......................................31
Section 5.03. Termination of a Subcustodian..............................31
Section 5.04. Eligible Securities Depositories...........................31
ARTICLE VI. STANDARD OF CARE; INDEMNIFICATION................................33
Section 6.01. Standard of Care...........................................33
Section 6.02. Liability of Custodian for Actions of Other Persons........36
Section 6.03. Indemnification............................................37
Section 6.04. Fund's Right to Proceed....................................40
ARTICLE VII. COMPENSATION....................................................40
ARTICLE VIII. TERMINATION....................................................41
Section 8.01. Termination of Agreement as to One or More Funds...........39
Section 8.02. Termination as to One or More Series.......................42
ARTICLE IX. MISCELLANEOUS....................................................43
Section 9.01. Execution of Documents, Etc................................43
Section 9.02. Representative Capacity; Nonrecourse Obligations...........43
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Section 9.03. Several Obligations of the Funds and the Series............44
Section 9.04. Representations and Warranties.............................44
Section 9.05. Entire Agreement...........................................45
Section 9.06. Waivers and Amendments.....................................46
Section 9.07. Interpretation.............................................46
Section 9.08. Captions...................................................47
Section 9.09. Governing Law..............................................47
Section 9.10. Notices....................................................47
Section 9.11. Assignment.................................................47
Section 9.12. Counterparts...............................................48
Section 9.13. Confidentiality; Survival of Obligations...................48
Section 9.14. Shareholder Communications.................................48
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CUSTODIAN AGREEMENT
AGREEMENT made this ___ day of __________, between each of the investment
companies listed on Schedule A hereto, as the same may be amended from time to
time and [NAME OF CUSTODIAN] (the "Custodian").
WITNESSETH:
WHEREAS, each Fund (as defined in Section 1.14 below) desires to appoint
the Custodian as custodian on its own behalf and, if a series fund, on behalf of
each of its series, in accordance with the provisions of the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder, under the
terms and conditions set forth in this Custodian Agreement (including any
Schedules or Appendices hereto), and the Custodian has agreed to act as
custodian for such Fund; and
WHEREAS, the Board of Directors/Trustees of each Fund has approved the
appointment of the Custodian as "Foreign Custody Manager," as such term is
defined in Rule 17f-5 under the Investment Company Act of 1940, as amended, of
such Fund, and the Custodian has agreed to assume the responsibilities of a
Foreign Custody Manager under the terms and conditions of this Agreement and the
guidelines and procedures adopted by the Board of Directors/Trustees of each
Fund and annexed hereto as Schedule B.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINED TERMS
The following terms are defined as follows:
Section 1.01 "Account" shall mean an account of the Custodian established
at a bank, Securities System or Subcustodian (as defined in Sections 1.25 and
1.30, respectively), which
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shall include only Property (as defined in Section 1.24) held as custodian or
otherwise for a Fund or a series of a Fund. To the extent required by law or in
accord with standard industry practice in a particular market, an Account may be
an omnibus account in the name of the Custodian or its nominee provided that the
records of the Custodian shall indicate at all times the Fund or other customer
for which Property is held in such Account and the respective interests therein.
Section 1.02. "Affiliate" shall mean any entity that controls, is
controlled by, or is under common control with any other entity.
Section 1.03. Agreement" shall mean this agreement between each of the
Funds and the Custodian and all current or subsequent schedules and appendices
hereto.
Section 1.04. Authorized Person(s)" shall mean all persons authorized in
writing by each Fund to give Proper Instructions (as defined in Section 1.23) or
any other notice, request, direction, instruction, certificate or instrument on
behalf of a Fund or a series thereof.
Section 1.05. "Bank Account" shall mean any demand deposit bank account
(provided that demand may not be made by check), which will be an interest
bearing bank account where permitted by law and agreed between the Custodian and
a Fund, held on the books of the Custodian or a Subcustodian for the account of
a Fund or a series of a Fund.
Section 1.06. "Banking Institution" shall mean a bank or trust company,
including the Custodian, any Subcustodian or any subsidiary or Affiliate of the
Custodian.
Section 1.07. "Board" shall mean the Board of Directors or Trustees, as
applicable, of a Fund.
Section 1.08. "Business Day" shall mean any day on which the New York
Stock Exchange or the Custodian is open for business that is not a Saturday or
Sunday.
Section 1.09. "Commission" shall mean the U.S. Securities and Exchange
Commission.
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Section 1.10. "DR" shall mean an American Depositary Receipt, European
Depositary Receipt, or Global Depositary Receipt or similar instrument issued by
a depositary to represent the underlying securities held by the depositary.
Section 1.11. "Domestic Subcustodian" shall mean any bank as defined in
Section 2(a)(5) of the Investment Company Act (as defined in Section 1.17)
meeting the requirements of a custodian under Section 17(f) of the Investment
Company Act and the rules and regulations thereunder, that acts on behalf of one
or more Funds, or on behalf of the Custodian as custodian for one or more Funds,
as a Subcustodian for purposes of holding cash, securities and other assets of
such Funds and performing other functions of the Custodian within the United
States.
Section 1.12. "Eligible Securities Depository" shall mean a system for the
central handling of securities as defined in Rule 17f-4 under the Investment
Company Act that meets the requirements of an "eligible securities depository"
under Rule 17f-7 under the Investment Company Act, as such may be amended or
interpreted from time to time by the Commission.
Section 1.13. "Foreign Subcustodian" shall mean (i) any bank, trust
company, or other entity meeting the requirements of an "eligible foreign
custodian" under the rules and regulations under Section 17(f) of the Investment
Company Act or by order of the Commission exempted therefrom, or (ii) any bank
as defined in Section 2(a)(5) of the Investment Company Act meeting the
requirements of a custodian under Section 17(f) of the Investment Company Act
and the rules and regulations thereunder to act on behalf of one or more Funds
as a Subcustodian for purposes of holding cash, securities and other assets of
such Fund(s) and performing other functions of the Custodian in countries other
than the United States.
Section 1.14. "Fund" shall mean any registered, open-end or closed-end
investment company listed on Schedule A hereto as it shall be amended from time
to time. Collectively, they shall be referred to as the "Funds."
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Section 1.15. "Institutional Client" shall mean a major commercial bank,
corporation, insurance company, or substantially similar institution that
purchases or sells securities and makes substantial use of custodial services.
Section 1.16. "Interest Bearing Deposits" shall mean interest bearing
fixed term and call deposits.
Section 1.17. "Investment Company Act" shall mean the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
Section 1.18. "Loans" shall mean corporate loans or participation
interests therein, or assignments thereof.
Section 1.19. "Overdraft" shall mean any payment or transfer of funds on
behalf of a Fund or series of a Fund for which there are, at the close of
business on the date of such payment or transfer, insufficient funds held by the
Custodian on behalf of such Fund or series thereof.
Section 1.20. "Overdraft Notice" shall mean any written notification of an
Overdraft by facsimile transmission or any other such manner as a Fund and the
Custodian may agree in writing.
Section 1.21. "Person" shall mean the Custodian or any Subcustodian or
Securities System, or any Eligible Securities Depository used by any such
Subcustodian, or any nominee of the Custodian or any Subcustodian.
Section 1.22. "Procedural Agreement" shall mean any futures margin
procedural agreement among a Fund or series of a Fund, the Custodian and any
futures commission merchant.
Section 1.23. "Proper Instructions" shall mean: (i) either a tested telex
or a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of
the applicable Fund or series of a Fund by one
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or more Authorized Persons; (ii) a telephonic or other oral communication by one
or more Authorized Persons; or (iii) a communication effected directly between
an electro-mechanical or electronic device or system (including, without
limitation, computers) by or on behalf of the applicable Fund that is
transmitted in compliance with the security procedures established for such
communications by the Custodian and the Fund; provided, however, that
communications purporting to be given by an Authorized Person shall be
considered Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect to the
transaction involved. Proper Instructions shall include all information
necessary to permit the Custodian to fulfill its duties and obligations
thereunder. Proper Instructions provided by facsimile transmission or under
subsection (ii) shall be subject to a commercially reasonable authentication
procedure, such as call back.
Section 1.24. "Property" shall mean any securities or other assets of a
Fund or series that are accepted by the Custodian for safekeeping, or cash
accepted by the Custodian for deposit on behalf of a Fund or series of a Fund.
Section 1.25. "Securities System" shall mean (i) the Depository Trust
Company, including its Mortgage Backed Securities Division and/or (ii) any
book-entry system as provided in (1) Subpart O of Treasury Circular Xx. 000, 00
XXX 000, (0) Xxxxxxx X of 31 CFR Part 350, (3) the book-entry regulations of
federal agencies substantially in the form of Subpart O, (4) any other domestic
clearing agency registered with the Commission under Section 17A of the
Securities Exchange Act of 1934, as amended, which acts as a securities
depository. Each such Securities System shall be approved by each Fund's Board.
Section 1.26. "Segregated Account" shall mean an account established for
and on behalf of a Fund in which may be held Property that is maintained: (i)
for the purposes set forth in Section 3.08, 3.09, and 3.10, hereof; (ii) for the
purposes of compliance by the Fund with the
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procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Commission relating to the maintenance of
Segregated Accounts by registered investment companies, or (iii) for any other
lawful purposes as may be deemed necessary by the Fund.
Section 1.27. "Series" shall mean the one or more series of shares into
which a Fund may be organized, each of which shall represent an interest in a
separate portfolio of Property and shall include all of the existing and
additional Series now or hereafter listed on Schedule A.
Section 1.28. "Shareholder Servicing Agent" shall mean a Fund's transfer
agent or person performing comparable duties.
Section 1.29. "Shares" shall mean all classes of shares of a Fund or
Series.
Section 1.30. "Subcustodian" shall mean any duly appointed Domestic
Subcustodian or Foreign Subcustodian.
Section 1.31. "Terminating Fund" shall mean a Fund or Series that has
terminated the Agreement with the Custodian or as to which the Custodian has
terminated the Agreement, all in accordance with the provisions of Section 8.01.
ARTICLE II.
APPOINTMENT OF CUSTODIAN
Each Fund hereby appoints the Custodian as custodian and as Foreign
Custody Manager for the term and subject to the provisions of this Agreement.
Custodian's duties and obligations as Foreign Custody Manager and with respect
to Eligible Securities Depositories shall be as set forth in this Agreement,
including Schedule B hereto. Each Fund shall deliver to the Custodian or a
Subcustodian, or shall cause to be delivered to the Custodian or a Subcustodian,
Property
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owned by such Fund and, where applicable, shall specify to which of its Series
such Property is to be specifically allocated.
ARTICLE III.
POWERS AND DUTIES OF CUSTODIAN
With respect to Property of each Fund or Series, the Custodian shall have
and perform the following powers and duties:
Section 3.01 Safekeeping. The Custodian shall from time to time receive
delivery of Property of a Fund or Series and shall maintain, hold and, with
respect to Property that is not cash, keep safely all Property of each Fund or
each Series that has been delivered to and accepted by the Custodian. Custodian
shall accept and maintain Property received in the form of cash as a deposit
obligation of the Custodian or a Subcustodian.
Section 3.02. Manner of Holding Securities.
(a) The Custodian shall at all times hold securities of each Fund or
Series (i) by physical possession of the share certificates or other instruments
representing such securities in registered or bearer form, or (ii) in book-entry
form by a Securities System or by a transfer agent or registrar of another
investment company (an "Underlying Fund System"), or (iii) with respect to
Loans, by possession of all documents, certificates and other such instruments,
including any schedule of payments ("Financing Documents") as are delivered to
the Custodian.
(b) Upon receipt of Proper Instructions, the Custodian shall open an
Account in the name of each Fund or Series and shall hold registered securities
of each Fund or Series (i) in the name or any nominee name of the Custodian, a
Subcustodian or the Fund, or (ii) in street name. In carrying out the foregoing
obligation, the Custodian shall, to the extent permitted by law and, where
Custodian deems it advisable based upon any legal advice Custodian has
7
obtained with respect to a particular market and upon other factors the
Custodian deems appropriate, hold registered securities of each Fund or Series
in a manner that is appropriate to the Fund's tax domicile and that takes into
consideration the best interests of the Fund with respect to regulatory matters
relating to custody; and provided further that the Custodian shall, on an
ongoing basis, provide accurate information to a Fund and such other persons as
a Fund may designate with respect to the registration status of each Fund's
securities, and an accurate record of securities held by each Fund and such
Fund's respective interest therein.
(c) The Custodian may hold Property for all of its customers,
including a Fund or Series, with any Foreign Subcustodian in an Account that is
identified as belonging to the Custodian for the benefit of its customers or in
a depository account, including an omnibus account, with an Eligible Securities
Depository; provided, however, that (i) the records of the Custodian with
respect to Property of any Fund or Series that are maintained in such Account or
depository account shall identify such Property as belonging to the applicable
Fund or Series and (ii) to the extent permitted and customary in the market in
which the Account or depository account is maintained, the Custodian shall
require that Property so held by a Foreign Subcustodian or Eligible Securities
Depository be held separately from any assets of the Custodian or such Foreign
Subcustodian.
(d) The Custodian shall send each Fund a written statement, advice
or notification of any transfers of any Property of the Fund to or from an
Account or an account at an Eligible Securities Depository (a "depository
account"). Each such statement, advice or notification shall identify the
Property transferred and the entity that has custody of the Property. Unless a
Fund provides the Custodian with a written exception or objection to any such
statement, advice or notification within ninety (90) days of Fund's receipt
thereof, the Fund shall be deemed to have approved such statement, advice or
notification. To the extent permitted by law and the terms of
8
this Agreement, the Custodian shall not be liable for the contents of any such
statement, advice or notification that has been approved by a Fund.
Section 3.03. Security Purchases and Sales.
(a) Upon receipt of Proper Instructions, insofar as funds are
available for the purpose, the Custodian shall pay for and receive securities
purchased for the account of a Fund or Series, payment being made by the
Custodian only: (i) upon receipt of the securities, certificates, or other
acceptable evidence of ownership (1) by the Custodian, or (2) by a clearing
corporation of a national securities exchange of which the Custodian is a
member, (3) by a Securities System or (4) by an Underlying Fund System; or (ii)
otherwise in accordance with (1) Proper Instructions, (2) applicable law, (3)
generally accepted trading practices, or (4) the terms of any instrument
representing the purchase. With respect to a clearing corporation or Securities
System, securities may be held only with an entity approved by a Fund's Board.
Notwithstanding the foregoing, in the case of U.S. repurchase agreements entered
into by a Fund, the Custodian may release funds to a Securities System or to a
Domestic Subcustodian prior to the receipt of advice from the Securities System
or Domestic Subcustodian that the securities underlying such repurchase
agreement have been transferred by book entry into the Account of the Custodian
maintained with such Securities System or Domestic Subcustodian, so long as such
payment instructions to the Securities System or Domestic Subcustodian require
that the Securities System or Domestic Subcustodian may make payment of such
funds to the other party to the repurchase agreement only upon transfer by
book-entry of the securities underlying the repurchase agreement into the
Account. In the case of time deposits, call account deposits, currency deposits,
and other deposits, contracts or options pursuant to Sections 3.08, 3.09, 3.11
9
and 3.12, the Custodian may not make payment therefor without receiving an
instrument or other document evidencing said deposit except in accordance with
standard industry practice.
(b) Upon receipt of Proper Instructions, the Custodian shall make
delivery of securities that have been sold for the account of a Fund or Series,
but only: (i) against payment therefor (1) in the form of cash, by a certified
check, bank cashier's check, bank credit, or bank wire transfer, (2) by credit
to the Account of the Custodian with a clearing corporation of a national
securities exchange of which the Custodian is a member, or (3) by credit to the
Account of the Custodian with a Securities System subject to final end-of-day
settlement in accordance with the rules of the applicable Securities System; or
(ii) otherwise in accordance with (1) Proper Instructions, (2) applicable law,
(3) generally accepted trading practices, or (4) the terms of any instrument
representing the sale.
(c) In the case of the purchase or sale of securities the settlement
of which occurs outside of the United States or the receipt of which and payment
therefor take place in different countries, such securities shall be delivered
and paid for in accordance with local custom and practice generally accepted by
Institutional Clients in the applicable country or countries. In the case of
securities held in physical form, if standard industry practice in the country
so requires, such securities shall be delivered and paid for in accordance with
"street delivery custom" to a broker or its clearing agent (for example, against
delivery to the Custodian or a Subcustodian of a receipt for such securities)
provided that the Custodian shall take reasonable steps (which shall not include
the institution of legal proceedings except pursuant to Section 6.03(c)) in its
discretion to seek to ensure prompt collection of the payment for, or the return
of, such securities by the broker or its clearing agent, and provided further
that the Custodian shall not be responsible for the selection of or the failure
or inability to perform of such broker or its clearing agent.
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Section 3.04. Exchanges of Securities. Upon receipt of Proper
Instructions, the Custodian shall, to the extent permitted by applicable law and
in accord with standard industry practice in the relevant market, exchange
securities held by the Custodian for the account of any Fund or Series for other
securities in connection with any reorganization, recapitalization, stock split,
change of par value, conversion or other event relating to the securities or the
issuer of such securities, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. With respect to tender or
exchange offers, the Custodian shall transmit promptly to a Fund all written
information actually received by the Corporate Actions Department or other
applicable department of the Custodian, or from a Subcustodian, an Eligible
Securities Depository, or a Securities System, or directly from issuers of the
securities whose tender or exchange is sought and from the parties (or their
agents) making the tender or exchange offer. If the Fund desires to take action
with respect to any tender offer, exchange offer, or any other similar
transaction, the Fund shall notify the Custodian, within a time period set by
the Custodian and communicated promptly to the Fund, prior to the date on which
the Custodian is to take such action. Without receiving such instructions, the
Custodian may surrender securities in temporary form for definitive securities,
may surrender securities for transfer into a name or nominee name as permitted
in Section 3.02(b), and may surrender securities for a different number of
certificates or instruments representing the same number of shares or same
principal amount of indebtedness, provided that the securities to be issued will
be delivered to the Custodian or nominee of the Custodian and further provided
that the Custodian shall, consistent with local market practice, at the time of
surrendering the securities or instruments (i) receive a receipt or other
instrument or document evidencing the ownership thereof or (ii) take other
reasonable steps to seek to ensure proper delivery of the securities and
adequate protection of a Fund's ownership interest in the securities.
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Section 3.05. Depositary Receipts. Upon receipt of Proper Instructions,
the Custodian shall instruct a Subcustodian appointed pursuant to Article V
hereof to surrender securities to the depositary that holds securities of an
issuer that are represented by DRs for such securities against a written receipt
therefor adequately describing such securities and written evidence satisfactory
to the Subcustodian that the depositary has acknowledged receipt of instructions
to issue DRs with respect to such securities in the name of the Custodian, or a
nominee of the Custodian, for delivery to the Custodian in [Location of
Custodian], or at such other place as the Custodian may from time to time
designate.
Upon receipt of Proper Instructions, the Custodian shall surrender DRs to
the issuer thereof against a written receipt therefor adequately describing the
DRs surrendered and written evidence satisfactory to the Custodian that the
issuer of the DRs has acknowledged receipt of instructions to cause its
depositary to deliver the securities underlying such DRs to a Subcustodian.
Section 3.06. Exercise of Rights; Tender Offers. Upon receipt of Proper
Instructions, the Custodian shall deliver to the issuer or trustee thereof, or
to the agent of either, warrants, puts, calls, rights or similar securities, for
the purpose of being exercised or sold, provided that the new Property, if any,
acquired by such action is to be delivered to the Custodian, and, upon receipt
of Proper Instructions, to deposit securities upon invitations for tenders of
securities, provided that the consideration for such securities is to be paid or
delivered to the Custodian, or the tendered securities are to be returned to the
Custodian. Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all commercially reasonable action, unless otherwise
directed to the contrary in Proper Instructions, to comply with the terms of all
mandatory or compulsory exchanges, calls, tenders, redemptions, or similar
rights of security ownership of which the Custodian has actual knowledge, and
shall promptly notify each
12
applicable Fund of such action in writing by facsimile transmission or in such
other manner as such Fund and the Custodian may agree in writing.
Section 3.07. Stock Dividends, Rights, Etc. The Custodian shall receive
and collect all stock dividends, rights, foreign tax reclaims and other items of
a like nature, and deal with the same pursuant to Proper Instructions relative
thereto. Custodian duties and obligations under this Section 3.07 may from time
to time be limited by written agreement between the Custodian and a Fund or
Series. With respect to securities held by the Custodian in street name,
Custodian's duties and obligations under this Section 3.07 shall be limited to
those stock dividends, foreign tax reclaims and other items of a like nature
that the Custodian is able, using commercially reasonable methods (which shall
not include the institution of legal proceedings except pursuant to Section
6.03(c)) in its discretion, to receive and collect from the record holders of
such securities. The Custodian's further duties and obligations with respect to
tax reclaims shall be as set forth in Schedule C hereto.
Section 3.08. Options. Upon receipt of Proper Instructions and in
accordance with the provisions of any agreement between the Custodian, any
registered broker-dealer and, if necessary, a Fund on its own behalf or on
behalf of any applicable Series relating to compliance with the rules of the
Options Clearing Corporation or of any registered national securities exchange
or similar organization(s), the Custodian shall: (i) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing of
an option on a security or securities index by the applicable Fund or Series;
(ii) deposit and maintain Property in a Segregated Account; and (iii) pay,
release and/or transfer such Property in accordance with notices or other
communications evidencing the expiration, termination or exercise of such
options furnished by the Options Clearing Corporation, the securities or options
exchange on which such options are traded, or such other organization as may be
responsible for handling
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such option transactions. Each Fund or Series (severally and not jointly) and
the broker-dealer shall be responsible for the sufficiency of assets held in any
Segregated Account established in compliance with applicable margin maintenance
requirements and the performance of other terms of any option contract, or
releases of the Commission or interpretive positions of the Commission staff.
Section 3.09. Futures Contracts. Upon receipt of Proper Instructions, or
pursuant to the provisions of any Procedural Agreement among a Fund, the
Custodian, and any futures commission merchant regarding "margin," the Custodian
shall: (i) receive and retain confirmations, if any, evidencing the purchase or
sale of a futures contract or an option on a futures contract by the applicable
Fund; (ii) segregate and maintain in a Segregated Account Property designated as
initial, maintenance or variation margin deposits intended to secure the
performance by the applicable Fund or Series of its obligations under any
futures contracts purchased or sold or any options on futures contracts written
by the Fund, in accordance with the provisions of any Procedural Agreement
designed to comply with the rules of the Commodity Futures Trading Commission
and/or any commodity exchange or contract market (such as the Chicago Board of
Trade), or any similar organization(s), regarding such margin deposits; and
(iii) release assets from and/or transfer assets into such margin accounts only
in accordance with any such Procedural Agreement. Alternatively, the Custodian
may deliver assets in accordance with Proper Instructions to a futures
commission merchant for purposes of the margin requirements in accordance with
Rule 17f-6 under the Investment Company Act. If delivery is made in accordance
with Proper Instructions, Custodian shall be deemed to have acted in accordance
with Rule 17f-6. Each Fund or Series (severally and not jointly) and such
futures commission merchant shall be responsible for the sufficiency of assets
held in the Segregated
14
Account in compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
Section 3.10. Borrowings. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of any Fund or Series thereof to lenders or
their agents or otherwise establish a Segregated Account at the Custodian as
agreed to by the applicable Fund or Series and the Custodian and, where
applicable, any third-party lender, as collateral for borrowings effected by
such Fund, provided that such borrowed money is payable to or upon the
Custodian's order as Custodian for the applicable Fund and concurrently with the
delivery of such securities.
Section 3.11. Interest Bearing Deposits. Upon receipt of Proper
Instructions directing the Custodian to purchase Interest Bearing Deposits for
the account of a Fund or Series, the Custodian shall purchase such Interest
Bearing Deposits in the name of the Custodian on behalf of the applicable Fund
or Series with such Banking Institutions and in such amounts as the applicable
Fund or Series may direct pursuant to Proper Instructions. Such Interest Bearing
Deposits may be denominated in U.S. dollars or other currencies, as the
applicable Fund or Series may determine and direct pursuant to Proper
Instructions. The Custodian shall include in its records with respect to the
assets of each Fund or Series appropriate notation as to the amount and currency
of each such Interest Bearing Deposit, the accepting Banking Institution and all
other appropriate details, and shall receive and retain such forms of advice or
receipt, if any, evidencing such Interest Bearing Deposit as may be forwarded to
the Custodian by the Banking Institution. The responsibilities of the Custodian
to each Fund for Interest Bearing Deposits accepted on the Custodian's books in
the United States on behalf of a Fund or Series shall be that of an U.S. bank
for a similar deposit.
With respect to Interest Bearing Deposits other than those accepted on the
Custodian's books (i) the Custodian shall be responsible for the collection of
income as set forth in Section
15
3.14 and the transmission of cash and instructions to and from such Interest
Bearing Deposit; and (ii) except upon the request of a Fund and as agreed by the
Custodian, the Custodian shall have no duty with respect to the selection of the
Banking Institution. So long as the Custodian acts in accordance with Proper
Instructions, the Custodian shall have no responsibility for the failure of such
Banking Institution to pay upon demand. As mutually agreed from time to time by
a Fund and the Custodian, the Custodian shall be responsible for the prudent
selection and monitoring of a Banking Institution. The Custodian shall not be
liable for the insolvency of any Banking Institution that is not a branch or
Affiliate of the Custodian. Upon receipt of Proper Instructions, the Custodian
shall take such commercially reasonable actions as the applicable Fund deems
necessary or appropriate to cause each such Interest Bearing Deposit to be
insured to the maximum extent possible by all applicable deposit insurers
including, without limitation, the Federal Deposit Insurance Corporation (it
being understood and acknowledged that such deposits are not eligible for
"pass-through" insurance).
Section 3.12. Foreign Exchange Transactions.
(a) Foreign Exchange Transactions Other Than as Principal. Upon
receipt of Proper Instructions, the Custodian shall settle foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf of and for the account of a Fund or Series with such currency
brokers or Banking Institutions as the applicable Fund or Series may determine
and direct pursuant to Proper Instructions. The Custodian shall be responsible
for the transmission of cash to and receipt of cash from the currency broker or
Banking Institution with which the contract or option is made, the safekeeping
of all certificates and other documents and agreements delivered to the
Custodian or a Subcustodian evidencing or relating to such foreign exchange
transactions and the maintenance of proper records as set forth in Section 3.25.
Except as agreed upon in writing by the Custodian and a Fund from time to time,
the Custodian
16
shall have no duty under this Section 3.12(a) with respect to the selection of
the currency brokers or Banking Institutions with which the Fund or a Series
deals or, so long as the Custodian acts in accordance with Proper Instructions,
for the failure of selected brokers or Banking Institutions to comply with the
terms of any contract or option.
(b) Foreign Exchange Contracts as Principal. The Custodian shall not
be obligated to enter into foreign exchange transactions as principal. However,
if the Custodian has made available to a Fund its services as a principal in
foreign exchange transactions, upon receipt of Proper Instructions, the
Custodian shall enter as principal into foreign exchange contracts or options to
purchase and sell foreign currencies for spot and future delivery on behalf of
and for the account of a Fund or Series. When acting as principal, the Custodian
shall be responsible for the prudent selection of the currency brokers or
Banking Institutions and the failure of such currency brokers or Banking
Institutions to comply with the terms of any contract or option. In cases where
the Custodian, or its subsidiaries, Affiliates, or Subcustodians enter into a
separate master foreign exchange contract with a Fund that covers foreign
exchange transactions for an Account, the terms and conditions of that foreign
exchange contract, and, to the extent not inconsistent, this Agreement, shall
apply to such transactions.
Section 3.13. Securities Loans. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of any Fund in connection with loans of
securities by such Fund, to the borrower thereof or a securities lending agent
identified by the Fund, upon, or, upon Proper Instructions, prior to, the
receipt of cash collateral, if any, for such borrowing. In the event U.S.
Government securities are to be used as collateral, the Custodian will not
release the securities to be loaned until it has received confirmation that such
collateral has been delivered to the Custodian. The Custodian and each Fund
understand that the timing of receipt of such confirmation will normally require
that the delivery of securities to be loaned will be made one
17
day after receipt of collateral in the form of U.S. Government securities. To
the extent the Custodian acts as lending agent for a Fund, each party's duties
and obligations with respect to that arrangement will be governed by a separate
written agreement mutually agreed upon by the Fund and the Custodian.
Section 3.14. Collections. Consistent with standard industry practice in
the applicable market, the Custodian shall, and shall cause any Subcustodian to,
take all commercially reasonable steps (which shall not include the institution
of legal proceedings except pursuant to Section 6.03(c)) at its discretion to:
(i) collect amounts due and payable to each Fund or Series with respect to
portfolio securities and other assets of each such Fund or Series; (ii) promptly
credit to the Account of each applicable Fund or Series all income and other
payments relating to portfolio securities and other assets held by the Custodian
hereunder no later than upon Custodian's receipt of such income or payments or
as otherwise agreed in writing by the Custodian and the applicable Fund; (iii)
promptly endorse and deliver any instruments required by standard industry
practice in each market to effect such collections; and (iv) pursuant to Proper
Instructions, promptly execute ownership and other certificates and affidavits
for all federal, state and foreign tax purposes in connection with receipt of
income, capital gains or other payments with respect to portfolio securities and
other assets of each applicable Fund or Series, or in connection with the
purchase, sale or transfer of such securities or other assets. The Custodian
shall promptly notify each applicable Fund in accordance with standard operating
procedures if any amount payable with respect to portfolio securities or other
assets of the Fund or Series is not received by the Custodian when due. The
Custodian shall not be responsible for the collection of amounts due and payable
with respect to portfolio securities or other assets that are in default. With
respect to amounts due and payable on portfolio securities held by the Custodian
in street name, Custodian's duties and obligations under this Section 3.14 shall
be
18
limited to the collection of amounts of which Custodian has actual knowledge and
that it is able, using commercially reasonable methods, to collect from the
record holder of such securities. Subject to the provisions of any separate
written agreement entered into by the Custodian and a Fund pursuant to Section
3.13, income due each Fund or Series on securities loaned shall be the
responsibility of such Fund or Series, provided that the Custodian shall use all
commercially reasonable methods to assist the Fund or Series to collect such
income.
Section 3.15. Dividends, Distributions and Redemptions. Upon receipt of
Proper Instructions, the Custodian shall promptly release funds or securities to
the Shareholder Servicing Agent or otherwise apply funds or securities, insofar
as available, for the payment of dividends or other distributions to Fund
shareholders. Upon receipt of Proper Instructions, the Custodian shall release
funds or securities, insofar as available, to the Shareholder Servicing Agent or
as such Shareholder Servicing Agent shall otherwise instruct for payment to Fund
shareholders who have delivered to such Shareholder Servicing Agent a request
for repurchase or redemption of their shares of capital stock of such Fund.
Section 3.16. Proceeds from Shares Sold. The Custodian shall receive funds
representing cash payments received for Shares issued or sold from time to time
by a Fund or Series and shall promptly credit such funds to the Account(s) of
the applicable Fund or Series. The Custodian shall promptly notify each
applicable Fund or Series of Custodian's receipt of cash in payment for Shares
issued by such Fund or Series by facsimile transmission or in such other manner
as the Fund or Series and Custodian may agree in writing. Upon receipt of Proper
Instructions, the Custodian shall: (i) deliver all federal funds received by the
Custodian in payment for Shares in payment for such investments as may be set
forth in such Proper Instructions and at a time agreed upon between the
Custodian and the applicable Fund or Series; and (ii) make federal funds
received by the Custodian available to the applicable Fund or Series
19
as of specified times agreed upon from time to time by the applicable Fund or
Series and the Custodian, in the amount received in payment for Shares which are
deposited to the Accounts of each applicable Fund or Series.
Section 3.17. Proxies, Notices, Etc. The Custodian shall provide each Fund
or Series with proxy services in accordance with the terms and conditions set
forth in Schedule D to this Agreement.
Section 3.18. Bills and Other Disbursements. Upon receipt of Proper
Instructions, the Custodian shall pay or cause to be paid, insofar as funds are
available for the purpose, bills, statements, or other obligations of each Fund
or Series.
Section 3.19. Nondiscretionary Functions. The Custodian shall attend to
all non-discretionary details in connection with the sale, exchange,
substitution, purchase, transfer or other dealings with securities or other
assets of each Fund held by the Custodian, except as otherwise directed from
time to time pursuant to Proper Instructions.
Section 3.20. Bank Accounts.
(a) Accounts with the Custodian and any Subcustodians. The Custodian
shall open and operate a Bank Account on the books of the Custodian or any
Subcustodian or a Banking Institution other than the Custodian or any
Subcustodian provided that such Bank Account(s) shall be in the name of the
Custodian or a nominee of the Custodian, for the account of a Fund or Series,
and shall be subject only to the draft or order of the Custodian; provided,
however, that such Bank Accounts in countries other than the United States may
be held in an Account of the Custodian containing only assets held by the
Custodian as a fiduciary or custodian for customers, and provided further, that
the records of the Custodian shall indicate at all times the Fund or other
customer for which Property is held in such Account and the respective interests
therein. Such Bank Accounts may be denominated in either U.S. Dollars or
20
other currencies. The responsibilities of the Custodian to each applicable Fund
or Series for deposits accepted on the Custodian's books in the United States
shall be that of a U.S. bank for a similar deposit. The responsibilities of the
Custodian to each applicable Fund or Series for deposits accepted on any
Subcustodian's books shall be governed by the provisions of Section 6.01. ).
Except upon the request of a Fund and as agreed by the Custodian, the Custodian
shall have no duty with respect to the selection of a Banking Institution. As
mutually agreed from time to time by a Fund and the Custodian, the Custodian
shall be responsible for the prudent selection and monitoring of a Banking
Institution. The Custodian shall not be liable for the insolvency of any
Subcustodian or Banking Institution that is not a branch or Affiliate of the
Custodian.
(b) Deposit Insurance. Upon receipt of Proper Instructions, the
Custodian shall take such commercially reasonable actions as the applicable Fund
deems necessary or appropriate to cause each deposit account established by the
Custodian pursuant to this Section 3.20 to be insured to the maximum extent
possible by all applicable government deposit insurers including, without
limitation, the Federal Deposit Insurance Corporation.
Section 3.21. Deposit of Fund Assets in Securities Systems. The Custodian
may deposit and/or maintain securities owned by a Fund or Series in a Securities
System provided that such Fund's Board has specifically approved such Securities
System prior to its use. Use of a Securities System shall be in accordance with
applicable Federal Reserve Board and Commission rules and regulations, if any,
and Custodian's duties and obligations with respect to securities deposited or
maintained therein will at all times be subject to the rules and procedures of
the applicable Securities System. To the extent permitted by the foregoing, use
of a Securities System shall also be subject to the following provisions:
21
(a) The Custodian may deposit and/or maintain Fund securities,
either directly or through one or more Subcustodians appointed by the Custodian
(provided that any such Subcustodian shall be qualified to act as a custodian of
such Fund pursuant to the Investment Company Act and the rules and regulations
thereunder), in a Securities System provided that such securities are
represented in an Account of the Custodian or such Subcustodian in the
Securities System, which Account shall not include any assets of the Custodian
or Subcustodian other than assets held as a fiduciary, custodian, or otherwise
for customers and shall be so designated on the books and records of the
Securities System.
(b) The Securities System shall be obligated to comply with the
directions of the Custodian or Subcustodian, as the case may be, with respect to
the securities held in such Account.
(c) Each Fund or Series hereby designates the Custodian, or the
Custodian's or Securities System's nominee, as the case may be, as the party in
whose name or nominee name any securities deposited by the Custodian in the
Account at the Securities System are to be registered.
(d) The books and records of the Custodian with respect to
securities of a Fund or Series that are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund or Series.
(e) Upon receipt of Proper Instructions and subject to the
provisions of Section 3.03, the Custodian shall pay for securities purchased for
the account of any Fund or Series upon (i) receipt of
22
advice from the Securities System that such securities have been transferred to
the Account of the Custodian, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the account of such Fund
or Series. The Custodian shall transfer securities sold for the account of any
Fund or Series upon (i) receipt of an advice from the Securities System that
payment for such securities has been transferred to the Account of the
Custodian, and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of such Fund or Series. Copies
of all advices from the Securities System of transfers of securities for the
account of a Fund or Series shall identify the Fund or Series, be maintained for
the Fund or Series by the Custodian or Subcustodian as referred to in Section
3.21(a), and be provided to the Fund or Series at its request. The Custodian
shall furnish to each Fund or Series confirmation of each transfer to or from
the account of such Fund or Series in the form of a written report or notice and
shall furnish to each Fund or Series copies of daily transaction reports
reflecting each day's transactions in the Securities System for the account of
that Fund or Series on the next succeeding Business Day. Such transaction
reports shall be delivered to each applicable Fund or Series, or any
Subcustodian designated by such Fund or Series, pursuant to Proper Instructions
by computer or in any other manner as such Fund or Series and the Custodian may
agree in writing.
(f) The Custodian shall provide each Fund with any report obtained
by the Custodian or Subcustodian as referred to in Section 3.21(a) on the
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities System.
(g) Upon receipt of Proper Instructions, the Custodian shall
terminate the use of any such Securities System on behalf of that Fund or Series
as promptly as practicable and shall take all actions reasonably practicable to
safeguard the securities of any Fund or Series maintained with such Securities
System.
Section 3.22 Maintenance of Assets in Underlying Fund Systems. The
Custodian may maintain securities owned by each Fund or Series by book-entry in
an Underlying Fund System provided that the Custodian's books and records
identify the specific type and amount of
23
securities so held and the Custodian reconciles those records against the
book-entry records of the Underlying Fund System on a monthly basis.
Section 3.23. Other Transfers. Upon receipt of Proper Instructions, the
Custodian shall deliver securities, funds and other Property of each Fund to a
Subcustodian or another custodian of such Fund; and, upon receipt of Proper
Instructions, make such other disposition of securities, funds or other Property
of such Fund in a manner other than, or for purposes other than, as enumerated
elsewhere in this Agreement, provided that Proper Instructions relating to such
disposition shall include a statement of the amount of securities to be
delivered and the name of the person or persons to whom delivery is to be made.
Section 3.24 Establishment of Segregated Account(s). Upon receipt of
Proper Instructions, the Custodian shall establish and maintain on its books a
Segregated Account for and on behalf of a Fund or Series in which Segregated
Account may be held Property of such Fund or Series, including securities
maintained by the Custodian in a Securities System pursuant to Section 3.21
hereof, said Segregated Account to be maintained: (i) for the purposes set forth
in Section 3.08, 3.09, and 3.10, hereof; (ii) for the purposes of compliance by
the Fund with the procedures required by Investment Company Act Release No.
10666 (pub. avail. Apr. 18, 1979), or any subsequent release or releases of the
Commission relating to the maintenance of Segregated Accounts by registered
investment companies, or (iii) for any other lawful purposes as may be deemed
necessary by the Fund.
Section 3.25. Custodian's Books and Records. The Custodian shall provide
any assistance reasonably requested by a Fund in the preparation of reports to
such Fund's shareholders and others, audits of accounts, and other ministerial
matters of like nature. The Custodian shall maintain complete and accurate
records with respect to securities and other assets held for the account of each
Fund or Series as required by the rules and regulations of the
24
Commission applicable to investment companies registered under the Investment
Company Act, including, without limitation: (i) journals or other records of
original entry containing a detailed and itemized daily record of all receipts
and deliveries of securities (including certificate and transaction
identification numbers, if any), and all receipts and disbursements of cash;
(ii) ledgers or other records reflecting (1) securities in transfer, (2)
securities in physical possession, (3) securities borrowed, loaned or
collateralizing obligations of each Fund, (4) monies borrowed and monies loaned
(together with a record of the collateral therefor and substitutions of such
collateral), (5) dividends and interest received, (6) the amount of tax withheld
by any person in respect of any collection made by the Custodian or any
Subcustodian, and (7) the amount of reclaims or refunds for foreign taxes paid;
and (iii) canceled checks and bank records related thereto. The Custodian shall
keep such other books and records of each Fund or Series as such Fund or Series
shall reasonably request and Custodian shall agree, which agreement shall not be
unreasonably withheld. All such books and records maintained by the Custodian
shall be maintained in a form acceptable to the applicable Fund or Series and in
compliance with the rules and regulations of the Commission, including, but not
limited to, books and records required to be maintained by Section 31(a) of the
Investment Company Act and the rules and regulations from time to time adopted
thereunder. All books and records maintained by the Custodian pursuant to this
Agreement shall at all times be available upon reasonable prior notice during
normal business hours for inspection and use by such Fund or Series and its
agents, including, without limitation, its independent certified public
accountants. Notwithstanding the preceding sentence, no Fund or Series shall
take any actions or cause the Custodian to take any actions that would cause the
Custodian, either directly or indirectly, to violate any applicable laws,
regulations or orders.
25
Section 3.26. Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all commercially reasonable actions as a Fund may
request to obtain from year to year favorable opinions from such Fund's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Fund's Form N-1A
and the Fund's Form N-SAR or other periodic reports to the Commission and with
respect to any other requirements of the Commission.
Section 3.27. Reports by Independent Certified Public Accountants. At the
request of a Fund, the Custodian shall deliver to such Fund a written report
prepared by the Custodian's independent certified public accountants with
respect to the custodial services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting controls and procedures for safeguarding Property, including
Property deposited and/or maintained in a Securities System or Eligible
Securities Depository or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by any Fund and as
may reasonably be obtained by the Custodian. Delivery by the Custodian of its
then current SAS 70 Report shall constitute compliance with this Section 3.27.
Section 3.28. Overdrafts. In the event that the Custodian is directed by
Proper Instructions to make any payment or transfer of funds on behalf of a Fund
for which there are, at the close of business on the date of such payment or
transfer, insufficient funds held by the Custodian on behalf of such Fund, the
Custodian may, in its discretion, provide an Overdraft to the applicable Fund,
in an amount sufficient to allow the completion of such payment. Overdrafts may
also arise by reason of the Custodian's reversal of any provisional credit
extended to a Fund. Any Overdraft provided hereunder (i) shall be payable on
demand or at such time as shall be agreed upon by the applicable Fund and the
Custodian; and (ii) shall accrue
26
interest from the date of the Overdraft to the date of payment in full by the
applicable Fund at a rate agreed upon in writing, from time to time, by the
Custodian and the applicable Fund. The Custodian and each Fund acknowledge that
the purpose of such Overdrafts is to support on a temporary basis the purchase
or sale of securities for prompt delivery in accordance with the terms hereof,
or to meet emergency cash needs not reasonably foreseeable by such Fund. The
Custodian shall promptly provide an Overdraft Notice of any Overdraft by
facsimile transmission or in such other manner as such Fund and the Custodian
may agree in writing. If, pursuant to Proper Instructions, a Fund or Series
requests the Custodian to take any action with respect to securities, which
action involves the payment of money or which action may, in the reasonable
opinion of the Custodian, result in the Custodian or its nominee assigned to the
Fund or Series being liable for the payment of money or incurring liability in
some other form, the Fund, or the Fund on behalf of a Series, shall, as a
prerequisite to the Custodian agreeing to take such action, provide indemnity to
the Custodian in an amount and form satisfactory to the Fund and the Custodian.
Section 3.29. Reimbursement for Advances. If, in carrying out Proper
Instructions, the Custodian advances cash or securities or makes any payment
from Custodian's own funds for any purpose for the benefit of a Fund or Series,
including the purchase or sale of foreign exchange or of contracts for foreign
exchange, or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Agreement, except such as may arise from
the Custodian's or its nominee's own negligence, fraud, willful default or
willful misconduct, any Property held for the account of that Fund or Series
shall be security for such advance or payment in an amount not to exceed the
amount of such advance or payment. If the applicable Fund or Series fails to
promptly repay the advance, the Custodian shall be entitled to use such Fund's
or Series' available cash and to dispose of the
27
Property of such Fund or Series to the extent necessary to obtain reimbursement
in full for the amount of such advance or payment. The security interest granted
to the Custodian under this Section 3.29 shall apply to all advances provided by
the Custodian to a Fund or Series, including Overdrafts as defined in Section
1.19 and intraday overdrafts that arise and are settled during the same Business
Day, for the period during which any such advance remains outstanding.
Section 3.30. Claims. The Custodian agrees that all claims upon a Fund
with respect to subjects covered by the attached Schedule E shall be made in
accordance with Schedule E. In the event that the Custodian needs to make a
claim against a Fund pursuant to Schedule E, the Custodian must make such claim
within ninety (90) Business Days of the event causing the necessary claim, or
within such other period as may be mutually agreed upon from time to time by the
Custodian and a Fund. Claims not covered by Schedule E shall be made within such
period as may be mutually agreed upon from time to time by the Custodian and a
Fund. The applicable Fund will research the cause and make payment if
applicable, or forward the claim to the appropriate party.
ARTICLE IV.
PROPER INSTRUCTIONS AND RELATED MATTERS
Section 4.01. Proper Instructions.
(a) Oral Communications. Proper Instructions in the form of oral
communications shall be confirmed on the same day as such instructions are given
by the applicable Fund or Series by tested telex or in a writing (including a
facsimile transmission) signed or initialed by or on behalf of the applicable
Fund or Series by one or more Authorized Persons, but the lack of such
confirmation shall in no way affect any action taken by the Custodian in
reasonable reliance upon such oral instructions prior to the Custodian's receipt
of
28
such confirmation. Each Fund and the Custodian are hereby authorized to record
any and all telephonic or other oral instructions communicated to the Custodian.
(b) Form of Proper Instructions. Proper Instructions may relate to
specific transactions or to types or classes of transactions, and may be in the
form of standing instructions. Proper Instructions may be transmitted
electronically or by computer, provided that a Fund or Series has followed any
relevant security procedures agreed to from time to time by the Fund and the
Custodian. Each Fund shall be responsible for safeguarding any testkeys,
identification codes or other security devices that the Custodian makes
available to the Fund. The Custodian shall be without liability for relying on
any instruction, including any instruction transmitted via facsimile, that it
reasonably believes to be a Proper Instruction.
(c) Address for Proper Instructions. Proper Instructions shall be
delivered to the Custodian at the address and/or telephone, telecopy or telex
number, or appropriate electronic address, agreed upon from time to time by the
Custodian and the applicable Fund.
Section 4.02. Authorized Persons. Concurrently with the execution of this
Agreement and from time to time thereafter, as appropriate, each Fund shall
deliver to the Custodian, duly certified as appropriate by a Treasurer or
Secretary of such Fund, a certificate setting forth the names, titles,
signatures and scope of authority of Authorized Person(s) of such Fund. Such
certificate may be accepted and relied upon by the Custodian as conclusive
evidence of the facts set forth therein and shall be considered to be in full
force and effect until delivery to the Custodian of a similar certificate to the
contrary. Upon delivery of a certificate that deletes the name(s) of a person
previously authorized by a Fund to give Proper Instructions, such persons shall
no longer be considered an Authorized Person or authorized to issue Proper
Instructions for that Fund and the Custodian shall promptly notify the Fund of
any outstanding notice, request, direction, instruction, certificate or
instrument(s) signed by such person on behalf of such Fund.
29
Section 4.03. Persons Having Access to Assets of the Fund or Series.
Notwithstanding anything to the contrary contained in this Agreement, no
Authorized Person, Director, Trustee, officer, employee or agent of any Fund or
Series shall have physical access to the assets of the Fund or Series held by
the Custodian nor shall the Custodian deliver any assets of such Fund or Series
for delivery to an account the Custodian knows or should know to be the account
of such person; provided, however, that nothing in this Section 4.03 shall
prohibit (i) any Authorized Person from giving Proper Instructions so long as
such action does not result in delivery of or access to assets of any Fund or
Series prohibited by this Section 4.03; or (ii) each Fund's independent
certified public accountants from examining or reviewing the assets of the Fund
or Series held by the Custodian. Each Fund or Series shall deliver to the
Custodian a written certificate (duly certified by the Secretary or Treasurer of
the Fund) identifying all Authorized Persons, Directors, Trustees, officers,
employees and agents of such Fund or Series.
Section 4.04. Actions of Custodian Based on Proper Instructions. So long
as and to the extent that the Custodian acts in accordance with (a) Proper
Instructions and (b) the terms of this Agreement, the Custodian shall not be
responsible for the title, validity or genuineness of any property, or evidence
of title thereof, received by it or delivered by it pursuant to this Agreement.
ARTICLE V.
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the relevant
provisions of this Article V, select and appoint one or more Domestic
Subcustodians and/or Foreign Subcustodians to act on behalf of a Fund or Series.
Section 5.01. Domestic Subcustodians. Upon receipt of Proper Instructions
and in accordance therewith, the Custodian may from time to time select and
appoint one or more
30
Domestic Subcustodians to hold and maintain Property of a Fund or a Series in
the United States. The Custodian may also, at any time and from time to time,
without instructions from a Fund or Series, appoint a Domestic Subcustodian;
provided, that, the Custodian shall notify each applicable Fund in writing of
the identity and qualifications of any proposed Domestic Subcustodian at least
thirty (30) days prior to appointment of such Domestic Subcustodian, and such
Fund may, in its sole discretion, by written notice to the Custodian executed by
an Authorized Person disapprove of the appointment of such Domestic
Subcustodian. If, following notice by the Custodian to each applicable Fund
regarding appointment of a Domestic Subcustodian and the expiration of thirty
(30) days after the date of such notice, such Fund shall have failed to notify
the Custodian of its disapproval thereof, the Custodian may, in its discretion,
appoint such proposed Domestic Subcustodian as its Subcustodian.
Section 5.02. Foreign Subcustodians. The Custodian may, at any time and
from time to time, select and appoint a Foreign Subcustodian, subject to the
provisions of the 17f-5 Procedures and Guidelines included in Schedule B
attached hereto. Each Foreign Subcustodian and the countries where it may hold
securities and other assets of the applicable Funds shall be listed on Schedule
F attached hereto, as it may be amended from time to time in accordance with the
provisions of Section 9.06 hereof. Each Fund shall be responsible for informing
the Custodian sufficiently in advance of a proposed investment of the Fund or
one of its Series that is to be held in a country in which no Foreign
Subcustodian is authorized to act, in order that there shall be sufficient time
for the Custodian (i) to effect the appropriate arrangements with a proposed
foreign subcustodian or (ii) to determine in its sole discretion and timely
inform the Fund that such appropriate arrangements are not available through the
Custodian.
Section 5.03. Termination of a Subcustodian. The Custodian shall monitor
each Domestic Subcustodian and Foreign Subcustodian on a continuing basis and
shall take all
31
reasonable actions to ensure that each such Subcustodian performs all of its
obligations in accordance with the terms and conditions of the subcustodian
agreement between the Custodian and such Subcustodian. In the event that the
Custodian determines that a Subcustodian has failed to substantially perform its
obligations thereunder, the Custodian shall promptly notify each applicable Fund
of such failure to perform. Upon receipt of Proper Instructions, the Custodian
shall terminate a Subcustodian with respect to a Fund and either (i) select and
appoint in its sole discretion a replacement Subcustodian in accordance with the
provisions of Section 5.01 or Section 5.02, as the case may be, or (ii)
determine in its sole discretion and inform the Fund in a timely manner that
appropriate alternate arrangements are not available through the Custodian. In
addition to the foregoing, the Custodian may, at any time in its discretion,
upon written notification to each applicable Fund, terminate any Domestic
Subcustodian or Foreign Subcustodian.
Section 5.04. Eligible Securities Depositories. The Custodian or a
Subcustodian may at any time and from time to time place and maintain Property
of a Fund or Series with an Eligible Securities Depository subject to the
provisions of this Agreement, including the 17f-7 Procedures and Guidelines
included in Schedule B. Each Eligible Securities Depository through which the
Custodian or any Subcustodian may hold securities and other assets of the Funds
shall be listed on Schedule G attached hereto, as it may be amended from time to
time. Each Fund or Series and the Custodian understand and acknowledge that a
Fund or Series may maintain Property with an Eligible Securities Depository
prior to the receipt of the initial risk analysis required by Schedule B and
prior to its inclusion on Schedule G; provided, however, that such analysis
shall be completed by the Custodian and provided to the Fund or Series as soon
as practicable after such Property is placed with the Eligible Securities
Depository.
32
ARTICLE VI.
STANDARD OF CARE; INDEMNIFICATION
Section 6.01. Standard of Care.
(a) General Standard of Care. The Custodian shall be responsible for
the performance only of those duties and obligations set forth in this
Agreement, including any Schedules or Appendices hereto, and/or in Proper
Instructions, and shall have no implied duties or obligations hereunder. The
Custodian shall exercise reasonable care, diligence, and prudence in carrying
out all of these duties and obligations. The Custodian shall be liable to each
Fund or Series for all losses, damages and expenses suffered or incurred by such
Fund or Series as a direct result of the failure of the Custodian to exercise
such reasonable care, diligence and prudence, or as a result of the negligence,
fraud, willful default or willful misconduct of the Custodian.
(b) General Limitation on Liability. The Custodian shall have no
liability for any indirect, consequential, special or speculative losses,
damages, or expenses incurred by a Fund or Series even if Custodian has been
advised of the possibility of same and regardless of the form of action. The
Custodian shall not be liable for any loss that results from (i) the general
risk of investing or (ii) the risk of investing or holding assets in a
particular country. The Custodian shall not be liable for the insolvency of a
Securities System or Eligible Securities Depository, nor shall the Custodian be
liable for the insolvency of any Subcustodian that is not a branch or Affiliate
of the Custodian unless the Custodian was negligent in the appointment of such
Subcustodian. The Custodian also shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from, or caused by, force majeure,
including but not limited to, nationalization, expropriation, or other
governmental actions such as currency restrictions or devaluations, strikes or
33
work stoppages (except with respect to employees of the Custodian or a branch or
affiliate of the Custodian), insurrection, revolution, acts of war or terrorism,
or acts of God.
(c) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if any Person is prevented, forbidden or
delayed from performing, or omits to perform, any act that this Agreement
provides shall be performed or omitted to be performed, by reason of: (i) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or of any foreign country, or political
subdivision thereof or of any court of competent jurisdiction; or (ii) any act
of God or war or other similar circumstance beyond the control of the Custodian,
unless and to the extent that, in each case, such delay or nonperformance is
caused by (1) the negligence, fraud, willful default or willful misconduct of
the applicable Person, or (2) a malfunction or failure of equipment operated or
used by the applicable Person other than a malfunction or failure beyond such
Person's control that could not reasonably be anticipated and/or prevented by
such Person.
(d) Mitigation by Custodian. Upon the occurrence of any event that
causes or that the Custodian believes or a Fund reasonably believes will
imminently cause any loss, damage or expense to any Fund or Series, the
Custodian (i) shall take and (ii) shall take all reasonable steps to cause any
applicable Domestic Subcustodian or Foreign Subcustodian to take all
commercially reasonable steps to mitigate the effects of such event and to avoid
continuing harm to a Fund or Series. If the Custodian must seek Proper
Instructions from a Fund or Series in order either to take such commercially
reasonable steps itself or to take all reasonable steps to cause any applicable
Domestic Subcustodian or Foreign Subcustodian to take all commercially
reasonable steps and timely requests such Proper Instructions, but the
applicable Fund or Series
34
does not provide such Proper Instructions, the Custodian (both as to itself and
with respect to any applicable Subcustodian) shall have no further obligations
under this Section 6.01(d).
(e) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be without
liability for any action reasonably taken or omitted in good faith pursuant to
the advice of (i) counsel for the applicable Fund or Funds, or (ii) at the
expense of the Custodian, such other counsel as the Custodian may choose;
provided, however, with respect to the performance of any action or omission of
any action upon such advice, the Custodian shall be required to conform to the
standard of care set forth in Section 6.01(a).
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any loss, damage or expense suffered by a Fund, insofar
as such loss, damage or expense arises from the performance of the Custodian's
duties hereunder by reason of the Custodian's reliance upon records that were
maintained for such Fund by entities other than the Custodian prior to the
Custodian's appointment as custodian for such Fund.
(g) Authorization to Take Action. Subject to the provisions of this
Agreement, each Fund or Series authorizes the Custodian to take such actions as
may be necessary to fulfill Custodian's duties and obligations under this
Agreement notwithstanding that Custodian or any of its divisions or Affiliates
may have a material interest in a transaction or circumstances are such that
Custodian may have a potential conflict of duty or interest in connection with a
transaction, including a conflict arising from the fact that the Custodian or
any of its Affiliates may provide brokerage services to other customers, act as
financial adviser to the issuer of Property, act as a lender to the issuer of
Property, act as agent for more than one customer in the same transaction, have
a material interest in the issuance of Property or earn profits from any of the
activities set forth above.
35
Section 6.02. Liability of Custodian for Actions of Other Persons.
(a) Domestic Subcustodians and Foreign Subcustodians. The Custodian
shall be liable for the actions or omissions of any Domestic Subcustodian
selected by the Custodian, or, subject to the provisions of the Rule 17f-5
Procedures and Guidelines included in Schedule B, any Foreign Subcustodian to
the same extent as if such action or omission were performed by the Custodian
itself. If a Fund directs the Custodian to appoint a specific Domestic
Subcustodian, the Custodian shall, with respect to such Domestic Subcustodian,
be responsible only for losses arising from its own negligence, fraud, willful
default or willful misconduct. In the event of any loss, damage or expense
suffered or incurred by a Fund caused by or resulting from the actions or
omissions of any Domestic Subcustodian or Foreign Subcustodian for which the
Custodian is liable, the Custodian shall reimburse such Fund in the amount of
any such loss, damage or expense.
(b) Securities Systems. Notwithstanding the provisions of Sections
6.01 and 6.02(a) to the contrary, the Custodian shall only be liable to a Fund
for any loss, damage or expense suffered or incurred by such Fund resulting from
the use by the Custodian or a Subcustodian of a Securities System to the extent
the Custodian or Subcustodian, as applicable, is able to recover from the
Securities System, unless such loss, damage or expense is caused by, or results
from, the Custodian's or Subcustodian's negligence, fraud, willful default or
willful misconduct in its interactions with the Securities System; provided,
however, that in the event of any such loss, damage or expense, the Custodian
shall, or cause its Subcustodians to, take all commercially reasonable steps to
enforce such rights as it may have against the Securities System to protect the
interests of the Fund.
(c) Eligible Securities Depositories. With respect to Eligible
Securities Depositories, the Custodian shall be responsible only for those
duties and obligations set forth in
36
the 17f-7 Procedures and Guidelines included in Schedule B to this Agreement
pursuant to the requirements of Rule 17f-7 under the Investment Company Act. The
Custodian shall exercise reasonable care, diligence and prudence in carrying out
its duties and responsibilities with respect to Eligible Securities
Depositories.
(d) Reimbursement of Expenses. Each Fund shall reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian on
behalf of such Fund in connection with the fulfillment of its obligations under
this Section 6.02; provided, however, that such reimbursement shall not apply to
expenses occasioned by or resulting from the negligence, fraud, willful default
or willful misconduct of the Custodian.
Section 6.03. Indemnification.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, each Fund or Series severally and not jointly agrees to
indemnify and hold harmless the Custodian and its nominees, directors, officers,
agents, and employees (collectively, the "Indemnitees") from all loss, damage
and expense (including reasonable attorneys' fees), including but not limited to
those arising out of claims of negligence made by third parties, suffered or
incurred by the Indemnitees arising out of or related to actions taken by the
Custodian on behalf of such Fund or Series in the performance of its duties and
obligations under this Agreement; provided, however, that such indemnity shall
not apply to any loss, damage and expense arising out of or related to the
negligence, fraud, willful default or willful misconduct of any Indemnitee or to
any consequential, special, or speculative loss, damage or expense. In addition,
each Fund or Series agrees severally and not jointly to indemnify any Person
against any liability incurred by reason of taxes assessed to such Person, or
other loss, damage or expenses incurred by such Person, resulting solely from
the fact that securities and other property of such Fund or Series are
registered in the name of such Person; provided, however, that in no
37
event shall such indemnification be applicable to income, franchise or similar
taxes that may be imposed or assessed against any Person.
(b) Notice of Litigation, Right to Prosecute, Etc. No Fund or Series
shall be liable for indemnification for losses or expenses arising out of
litigation against an Indemnitee under this Section 6.03 if such Indemnitee
shall have failed promptly to notify such Fund in writing of the commencement of
any litigation or proceeding brought against such Indemnitee in respect of which
indemnity may be sought under this Section 6.03 to the extent that such failure
to notify shall have had a material adverse effect on such Fund or Series. With
respect to claims in such litigation or proceedings for which indemnity by a
Fund may be sought and subject to applicable law and the ruling of any court of
competent jurisdiction, such Fund shall be entitled to participate in any such
litigation or proceeding and, after written notice from such Fund to any
Indemnitee, such Fund may assume the defense of such litigation or proceeding
with counsel of its choice at its own expense in respect of that portion of the
litigation for which such Fund may be subject to an indemnification obligation;
provided, however, an Indemnitee shall be entitled to participate in (but not
control) at its own cost and expense, the defense of any such litigation or
proceeding if such Fund has not acknowledged in writing its obligation to
indemnify the Indemnitee with respect to such litigation or proceeding. If such
Fund is not permitted to participate in or control such litigation or proceeding
under applicable law or by a ruling of a court of competent jurisdiction, such
Indemnitee shall reasonably prosecute such litigation or proceeding. An
Indemnitee shall not consent to the entry of any judgment or enter into any
settlement in any such litigation or proceeding without providing each
applicable Fund with adequate notice of any such settlement or judgment, and
without each such Fund's prior written consent, which consent shall not be
unreasonably withheld. All Indemnitees shall submit written evidence to each
applicable Fund with respect to any cost or expense for which they are seeking
38
indemnification in such form and detail as such Fund may reasonably request.
With respect to the Custodian, if a Fund has acknowledged in writing its
obligation to indemnify the Custodian, the Fund shall not settle for other than
monetary damages a claim that materially affects the Custodian without the
Custodian's prior written consent.
(c) Commencement of Litigation. The Custodian may not commence any
litigation on behalf of a Fund or Series except pursuant to Proper Instructions
or with the applicable Fund's prior written consent. Except where the Custodian
is a necessary party to the litigation, a Fund or Series shall not instruct the
Custodian to commence litigation without the Custodian's prior consent, which
consent shall not be unreasonably withheld.
Section 6.04. Fund's Right to Proceed. Notwithstanding anything to the
contrary contained herein, each Fund shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the Custodian's rights against any
Subcustodian, Securities System, Eligible Securities Depository or other Person
for loss, damage or expense caused such Fund by such Subcustodian, Securities
System, Eligible Securities Depository or other Person, and shall be entitled to
enforce the rights of the Custodian with respect to any claim against such
Subcustodian, Securities System, Eligible Securities Depository or other Person,
which the Custodian may have as a consequence of any such loss, damage or
expense, if and to the extent that such Fund has not been made whole for any
such loss or damage. If the Custodian makes such Fund whole for any such loss or
damage, the Custodian shall retain the ability to enforce its rights directly
against such Subcustodian, Securities System or other Person and the Fund shall
provide the Custodian with reasonable cooperation in respect of such
enforcement. Upon such Fund's election to enforce any rights of the Custodian
under this Section 6.04, such Fund shall reasonably prosecute all actions and
proceedings directly relating to the rights of the Custodian in respect of the
loss,
39
damage or expense incurred by such Fund; provided that, so long as such Fund has
acknowledged in writing its obligation to indemnify the Custodian under Section
6.03 hereof with respect to such claim, such Fund shall retain the right to
settle, compromise and/or terminate any action or proceeding in respect of the
loss, damage or expense incurred by such Fund without the Custodian's consent
and, provided further, that if such Fund has not made an acknowledgement of its
obligation to indemnify, such Fund shall not settle, compromise or terminate any
such action or proceeding without the written consent of the Custodian, which
consent shall not be unreasonably withheld or delayed. The Custodian agrees to
cooperate with each Fund and take all actions reasonably requested by such Fund
in connection with such Fund's enforcement of any rights of the Custodian. Each
Fund agrees to reimburse the Custodian for all reasonable out-of-pocket expenses
incurred by the Custodian on behalf of such Fund in connection with the
fulfillment of its obligations under this Section 6.04; provided, however, that
such reimbursement shall not apply to expenses occasioned by or resulting from
the negligence, fraud, willful default or willful misconduct of the Custodian.
Each Fund agrees that it shall not settle for other than monetary damages a
claim that materially affects the Custodian without the Custodian's prior
written consent.
ARTICLE VII.
COMPENSATION
Each Fund shall compensate the Custodian in an amount, and at such times,
as may be agreed upon in writing, from time to time, by the Custodian and such
Fund.
40
ARTICLE VIII.
TERMINATION
Section 8.01. Termination of Agreement as to One or More Funds. With
respect to each Fund, this Agreement shall continue in full force and effect
until the first to occur of: (i) termination by the Custodian by an instrument
in writing delivered or mailed to such Fund, such termination to take effect not
sooner than sixty (60) days after the date of such delivery; (ii) termination by
such Fund by an instrument in writing delivered or mailed to the Custodian, such
termination to take effect not sooner than sixty (60) days after the date of
such delivery; or (iii) termination by such Fund by written notice delivered to
the Custodian, based upon such Fund's determination that there is a reasonable
basis to conclude that the Custodian is insolvent or that the financial
condition of the Custodian is deteriorating in any material respect, in which
case termination shall take effect upon the Custodian's receipt of such notice
or at such later time as such Fund shall designate. In the event of termination
pursuant to this Section 8.01 by any Fund, each Terminating Fund shall make
payment of all accrued fees and unreimbursed expenses with respect to such
Terminating Fund within a reasonable time following termination and delivery of
a statement to the Terminating Fund setting forth such fees and expenses. In the
event of a termination by a Fund or the Custodian, each Fund shall identify in
any notice of termination or in a subsequent writing, a successor custodian or
custodians to which the Property of the Terminating Fund shall, upon termination
of this Agreement with respect to such Terminating Fund, be delivered. In the
event that securities and other assets of such Terminating Fund remain in the
possession of the Custodian after the date of termination hereof with respect to
such Terminating Fund owing to failure of the Terminating Fund to appoint a
successor custodian (i) the Custodian shall be entitled to compensation for its
services in accordance with the fee schedule most recently in effect, for such
period as the Custodian retains possession of such
41
securities and other assets, and the provisions of this Agreement relating to
the duties and obligations of the Custodian and the Terminating Fund shall
remain in full force and effect and (ii) the Custodian may (but shall be under
no obligation to), upon 30 day's written notice to the Terminating Fund appoint
a successor custodian provided that such successor custodian is eligible to hold
the Terminating Fund's assets and the Terminating Fund shall not have objected
to such appointment. In the event of the appointment of a successor custodian,
it is agreed that the Property owned by a Terminating Fund and held by the
Custodian, any Subcustodian or nominee shall be delivered to the successor
custodian; and the Custodian agrees to cooperate with such Terminating Fund in
the execution of documents and performance of other actions necessary or
desirable in order to substitute the successor custodian for the Custodian under
this Agreement. Upon the transfer of the assets of a Terminating Fund to a
successor custodian, the Custodian may deduct from such assets prior to the
transfer an amount equal to the sum of any unpaid fees or expenses to which the
Custodian is entitled by reason of its services as Custodian.
Section 8.02. Termination as to One or More Series. This Agreement may be
terminated as to one or more Series of a Fund (but less than all Series) by
delivery of an amended Schedule A deleting such Series pursuant to Section 9.06
hereof, in which case termination as to such deleted Series shall take effect
thirty (30) days after the date of such delivery. The execution and delivery of
an amended Schedule A which deletes one or more Series shall constitute a
termination of this Agreement only with respect to such deleted Series, shall be
governed by the preceding provisions of Section 8.01 as to the identification of
a successor custodian and the delivery of Property of the Series so deleted, and
shall not affect the obligations of the Custodian and any Fund hereunder with
respect to the other Series set forth in Schedule A, as amended from time to
time.
42
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Execution of Documents, Etc.
(a) Actions by each Fund. Upon request, each Fund shall execute and
deliver to the Custodian such proxies, powers of attorney or other instruments
as may be reasonable and necessary or desirable in connection with the
performance by the Custodian or any Subcustodian of their respective obligations
to such Fund under this Agreement or any applicable subcustodian agreement with
respect to such Fund, provided that the exercise by the Custodian or any
Subcustodian of any such rights shall in all events be in compliance with the
terms of this Agreement.
(b) Actions by Custodian. Upon receipt of Proper Instructions, the
Custodian shall execute and deliver to each applicable Fund or to such other
parties as such Fund(s) may designate in such Proper Instructions, all such
documents, instruments or agreements as may be reasonable and necessary or
desirable in order to effectuate any of the transactions contemplated hereby.
Section 9.02. Representative Capacity; Nonrecourse Obligations. A copy of
the articles of incorporation, declaration of trust or other organizational
document of each Fund is on file with the secretary of the state of the Fund's
formation, and notice is hereby given that this Agreement is not executed on
behalf of the directors or trustees of any Fund as individuals, and the
obligations of this Agreement are not binding upon any of the directors,
trustees, officers, shareholders or partners of any Fund individually, but are
binding only upon the Property of each Fund or Series. The Custodian agrees that
no shareholder, director, trustee, officer or partner of any Fund may be held
personally liable or responsible for any obligations of any Fund arising out of
this Agreement.
43
Section 9.03. Several Obligations of the Funds and the Series. With
respect to any obligations of a Fund on its own behalf or on behalf of any of
its Series arising out of this Agreement, including, without limitation, the
obligations arising under Sections 3.28, 6.03, 6.04 and Article VII hereof, the
Custodian shall look for payment or satisfaction of any obligation solely to the
assets and property of the applicable Fund or Series to which such obligation
relates as though each Fund had separately contracted with the Custodian by
separate written instrument on its own behalf and with respect to each of its
Series.
Section 9.04. Representations and Warranties.
(a) Representations and Warranties of Each Fund. Each Fund hereby
severally and not jointly represents and warrants that each of the following
shall be true, correct and complete with respect to each Fund at all times
during the term of this Agreement: (i) the Fund is duly organized under the laws
of its jurisdiction of organization and is registered as an open-end management
investment company or closed-end management investment company, as the case may
be, under the Investment Company Act, and (ii) the execution, delivery and
performance by the Fund of this Agreement are (1) within its power, (2) have
been duly authorized by all necessary action, and (3) will not (a) contribute to
or result in a breach of or default under or conflict with any existing law,
order, regulation or ruling of any governmental or regulatory agency or
authority, or (b) violate any provision of the Fund's articles of incorporation,
declaration of trust or other organizational document, or bylaws, or any
amendment thereof or any provision of its most recent Prospectus or, if any,
Statement of Additional Information.
(b) Representations and Warranties of the Custodian. The Custodian
hereby represents and warrants to each Fund that each of the following shall be
true, correct and complete at all times during the term of this Agreement: (i)
the Custodian is duly organized
44
under the laws of its jurisdiction of organization and qualifies to act as a
custodian and foreign custody manager to open-end management investment
companies or closed-end investment companies, as the case may be, under the
provisions of the Investment Company Act; and (ii) the execution, delivery and
performance by the Custodian of this Agreement are (1) within its power, (2)
have been duly authorized by all necessary action, and (3) will not (a)
contribute to or result in a breach of or default under or conflict with any
existing law, order, regulation or ruling of any governmental or regulatory
agency or authority, or (b) violate any provision of the Custodian's corporate
charter, or other organizational document, or bylaws, or any amendment thereof.
Section 9.05. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of each Fund, on the one hand, and the Custodian, on
the other, with respect to the subject matter hereof and, accordingly,
supersedes as of the effective date of this Agreement any custodian agreement
heretofore in effect between each Fund and the Custodian.
Section 9.06. Waivers and Amendments. No provision of this Agreement may
be waived, amended or terminated except by a statement in writing signed by the
party against which enforcement of such waiver, amendment or termination is
sought; provided, however: (i) Schedule A listing each Fund and each Series for
which the Custodian serves as custodian may be amended from time to time to add
one or more Funds or one or more Series of one or more Funds, by each applicable
Fund's execution and delivery to the Custodian of an amended Schedule A, and the
execution of such amended Schedule A by the Custodian, in which case such
amendment shall take effect immediately upon execution by the Custodian.
Schedule A may also be amended from time to time to delete one or more Funds or
one or more Series (but less than all of the Series) of one or more Funds, by
each applicable Fund's execution and delivery to the Custodian of an amended
Schedule A, in which case such amendment shall take
45
effect thirty (30) days after such delivery, unless otherwise agreed by the
Custodian and each applicable Fund in writing; (ii) Schedule B setting forth the
17f-5/17f-7 Procedures and Guidelines may be amended only by an instrument in
writing executed by each applicable Fund and the Custodian; (iii) Schedule C
setting forth the Custodian's duties and obligations with respect to tax
services may be amended only by an instrument in writing executed by each
applicable Fund and the Custodian; (iv) Schedule D setting forth the Custodian's
duties and obligations with respect to proxy services may be amended only by an
instrument in writing executed by each applicable Fund and the Custodian; (v)
Schedule E relating to claims may be amended only by an instrument in writing
executed by each applicable Fund and the Custodian; and (vi) Schedule F setting
forth the foreign subcustodian bank network used by each Fund or Series may be
amended by the Custodian at any time upon prompt written notice to each
applicable Fund.
Section 9.07. Interpretation. In connection with the operation of this
Agreement, the Custodian and any Fund may agree from time to time on such
provisions interpretative of or in addition to the provisions of this Agreement
with respect to such Fund as may in their joint opinion be consistent with the
general tenor of this Agreement. Any such interpretative or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretative or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
articles of incorporation or analogous governing document of the Fund. No
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement or affect any
other Fund.
46
Section 9.08. Captions. Headings contained in this Agreement, which are
included as convenient references only, shall have no bearing upon the
interpretation of the terms of the Agreement or the obligations of the parties
hereto.
Section 9.09. Governing Law. Insofar as any question or dispute may arise
in connection with this Agreement, the provisions of this Agreement shall be
construed in accordance with and be governed by the laws of the State of New
York without reference to the conflict of laws provisions of the State of New
York.
Section 9.10. Notices. Except in the case of Proper Instructions, notices
and other writings contemplated by this Agreement shall be delivered by hand or
by facsimile transmission (provided that in the case of delivery by facsimile
transmission, notice shall also be mailed postage prepaid) to the parties at the
following addresses:
1. If to any Fund:
c/x Xxxxxxx Xxxxx Investment Managers, L.P.
000 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: ______________
Telephone: (000) 000-0000
Telefax: (000) 000-0000
2. If to the Custodian:
[ ]
[ ]
[ ]
Attn: ______________
Telephone: (___) ___-____
Telefax: (___) ___-____
or to such other address as a Fund or the Custodian may have designated in
writing to the other.
Section 9.11. Assignment. This Agreement shall be binding on and shall
inure to the benefit of each Fund severally and the Custodian and their
respective successors and assigns, provided that, subject to the provisions of
Section 8.01 hereof, neither the Custodian nor any
47
Fund may assign this Agreement or any of its rights or obligations hereunder
without the prior written consent of the other party.
Section 9.12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original. With respect to each
Fund, this Agreement shall become effective when an amended Schedule A including
the Fund has been signed and delivered by such Fund to the Custodian.
Section 9.13. Confidentiality; Survival of Obligations. The parties hereto
agree that each shall treat confidentially the terms and conditions of this
Agreement and all information provided by each party to the other regarding its
business and operations. All confidential information provided by a party
hereto, including non-public personal information within the meaning of
Securities and Exchange Commission Regulation S-P, shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required to be disclosed by any
bank examiner of the Custodian or any Subcustodian, any auditor of the parties
hereto, by judicial or administrative process or otherwise by applicable law or
regulation. The provisions of this Section 9.13 and Sections 9.01, 9.02, 9.03,
9.09, 3.27, 4.01(a), 4.04, 8.01, Article VI and Article VII hereof, and any
other rights or obligations incurred or accrued by any party hereto prior to
termination of this Agreement shall survive any termination of this Agreement.
Section 9.14. Shareholder Communications. Rule 14b-2 under the Securities
Exchange Act of 1934, as amended, requires banks that hold securities for the
account of customers to respond to requests by issuers of securities for the
names, addresses and holdings of beneficial owners of
48
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs each Fund to indicate whether the Fund authorizes
the Custodian to provide the Fund's name, address, and share position to
requesting companies whose stock the Fund owns. If a Fund tells the Custodian
"no," the Custodian will not provide this information to requesting companies.
If the Fund tells the Custodian "yes" or does not check either "yes" or "no"
below, the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any funds
or accounts established by the Fund. Please indicate below whether the Funds
consent or object by checking one of the alternatives below
YES[ ] The Custodian is authorized to release each Fund's name, address,
and share positions.
NO[ ] The Custodian is not authorized to release each Fund's name,
address, and share positions.
- SIGNATURES FOLLOW -
49
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed in its name and on its behalf on the day and year first above written.
Each of the Investment Companies Listed on [Name of Custodian]
Schedule A Attached Hereto
By: _____________________ By:________________________
Name:_____________________ Name:______________________
Title:____________________ Title:_____________________
50
SCHEDULE A
[List of investment companies]
SCHEDULE B
Rule 17f-5/17f-7 Procedures and Guidelines
The Custodian will serve as the Foreign Custody Manager in the countries listed
in Schedule F hereto for the Funds listed on Schedule A to this Agreement
pursuant to the terms and provisions of the Agreement and Part I of these
procedures and guidelines. As Foreign Custody Manager, the Custodian shall be
responsible for managing each Fund's foreign custody arrangements pursuant to
the requirements of Rule 17f-5 under the Investment Company Act. The Custodian
also shall serve as each Fund's Primary Custodian as defined in and pursuant to
the requirements of Rule 17f-7 under the Investment Company Act. As Primary
Custodian, the Custodian shall perform the duties and obligations set forth in
Rule 17f-7 and in Part II of these guidelines and procedures.
I. Rule 17f-5: Foreign Custody Manager
1 In selecting an Eligible Foreign Custodian, the Foreign Custody Manager
shall determine that each Fund's Foreign Assets (as defined in Rule
17f-5(a)(2)) shall be subject to reasonable care by the Eligible Foreign
Custodian considering all factors relevant to the safekeeping of such
Foreign Assets with reference to standards of international banks and
trust companies holding assets for institutional clients in the relevant
market and if there are no such international banks with reference to the
principal custodians in the relevant market that act as subcustodians or
custodians for U.S. mutual funds.
2. Each agreement between the Foreign Custody Manager and each Foreign
Subcustodian shall meet the requirements of Rule 17f-5(c)(2) under the
Investment Company Act.
3. The Foreign Custody Manager shall establish a system for monitoring the
appropriateness of maintaining a Fund's Foreign Assets with a particular
Eligible Foreign Custodian and to monitor the performance of the agreement
between the Foreign Custody Manager and each Eligible Foreign Custodian.
4. The Foreign Custody Manager shall notify the Fund's investment adviser in
writing as soon as reasonably possible of any material changes in the
Fund's foreign custody arrangements.
5. The Foreign Custody Manager shall provide the Board with written quarterly
reports regarding a Fund's foreign custody arrangements for use at its
quarterly Board meetings which reports shall, among other things:
(i) notify the Board of the placement of a Fund's Foreign Assets with a
particular Eligible Foreign Custodian; and
(ii) summarize for the Board the material changes in the Fund's foreign
custody arrangements that occurred during the prior quarter.
6. The Foreign Custody Manager shall, upon request of the Board, make itself
available to report to a Fund's Board in person at its quarterly Board
meetings, or at such other times as the Board may from time to time
require.
7. The Foreign Custody Manager shall agree to and shall provide the Fund's
investment adviser on a regular basis with the country materials it
provides to clients. Each Fund acknowledges that the information contained
in these materials is for informational purposes only and does not
constitute investment advice.
8. In performing its delegated duties and obligations to the Fund, the
Foreign Custody Manager shall agree to exercise the reasonable care,
prudence and diligence of a New York bank subject to a New York standard
of care having responsibility for the safekeeping of Foreign Assets.
II. Rule 17f-7: Primary Custodian
1. The Custodian shall provide each Fund with an initial analysis of the
custody risks associated with maintaining Foreign Assets in each Eligible
Securities Depository that may be used to hold a Fund's Foreign Assets in
each country in the Custodian's foreign custody network. Each such
analysis shall include the information necessary to allow a Fund or its
adviser to determine that each depository qualifies as an Eligible
Securities Depository.
2. The Custodian shall promptly provide each Fund with an initial analysis of
the custody risks associated with maintaining Foreign Assets in each
Eligible Securities Depository in each new country added to the
Custodian's foreign custody network.
3. The Custodian shall monitor on a continuing basis the custody risks
associated with maintaining a Fund's Foreign Assets with each Eligible
Securities Depository used by each Fund and promptly notify such Fund or
its investment adviser of any material change to those custody risks.
4. The Custodian shall exercise reasonable care, diligence and prudence in
performing its duties as each Fund's Primary Custodian.
5. The Custodian shall annually review the condition of each Eligible
Securities Depository used by a Fund and provide each Fund's adviser with
written confirmation that there have been no material changes in the
custody risks associated with using each such Eligible Securities
Depository.
2
SCHEDULE C
Taxes
1. (a) Custodian shall apply for a reduction of withholding tax and any
refund of any tax paid or credits that apply in each applicable market in
which a Fund invests in respect of income payments on Property for the
Fund's benefit that Custodian believes may be available to a Fund. The
Custodian shall promptly file any certificates or other affidavits for the
refund or reclaim of foreign taxes paid, and otherwise use all lawful
available measures customarily used to minimize the imposition of foreign
taxes at the source. To the extent that the Custodian becomes aware of any
changes to law, interpretative rulings or procedures regarding tax
reclaims or of alternate means of minimizing foreign taxes, Custodian will
promptly notify each applicable Fund or Series of such developments.
(b) The provision of tax reclaim services by the Custodian is contingent
upon the Custodian receiving from a Fund (i) a declaration of the Fund's
identity and place of residence and (ii) such other documentation or
information as may be required by the jurisdiction in which the services
are being provided. Each Fund acknowledges that if the Custodian does not
receive such declarations, documentation, and information from a Fund, the
Custodian will not be able to provide tax reclaim services to such Fund.
(c) The Custodian shall perform tax reclaim services with respect to
taxation levied by the revenue authorities of the countries in which the
Custodian provides global custody services. Except as expressly provided
herein, the Custodian shall have no responsibility with respect to any
Fund's tax position or status in any jurisdiction.
(d) Each Fund confirms that the Custodian is authorized to disclose to any
lawful revenue authority or governmental body any information requested by
such entity in relation to a Fund or the Property held by a Fund.
(e) Tax reclaim services may be provided by the Custodian or, in whole or
in part, by any third party appointed by the Custodian (which may be an
affiliate of the Custodian); provided that the Custodian shall be liable
for the performance of any such third party to the same extent as if the
Custodian had itself performed the services.
2. (a) The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including
responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting.
(b) Each Fund confirms that the Custodian is authorized to deduct from any
cash received or credited to an Account any taxes or levies required by
any lawful revenue or governmental authority with respect to such Account.
Each Fund certifies that it is a resident of the United States and shall
notify the Custodian of any changes in residency. The Custodian may rely
upon this certification or the certification of such other facts as may be
required to administer the Custodian's obligations under this Agreement.
Each Fund shall provide Custodian with such other documentation and
information as Custodian may reasonably request in connection with its
provision of services under this Schedule C. Each Fund, severally and not
jointly, shall indemnify the Custodian against all losses, liability,
claims or demands arising from such certifications or from Custodian's
reliance on other documentation and information provided by the Fund.
(c) Each Fund shall be responsible for the payment of all taxes, including
interest and penalties, relating to Property in an Account except as
specifically limited by section 2(d). The Custodian shall not be liable to
a Fund or any third party for any taxes, fines, or penalties payable by
the Custodian or a Fund that result from (i) the inaccurate completion of
documents by a Fund or any third party; (ii) provision to the Custodian or
a third party of inaccurate or misleading information by a Fund or any
third party; (iii) the withholding of material information by a Fund or
any third party; or (iv) as a result of any delay by any revenue authority
or any other cause beyond the Custodian's control.
(d) Each Fund agrees to pay, and to indemnify and hold the Custodian
harmless from and against, all liabilities, penalties, interest or
additions to tax with respect to or resulting from any delay in or failure
by the Custodian (i) to pay, withhold or report any U.S. federal, state,
or local taxes, or foreign taxes imposed on or (ii) to report interest,
dividend, or other income paid or credited to an Account, where such delay
or failure by the Custodian to pay, withhold, or report tax or income is
the result of a Fund's failure to comply with the terms of this Agreement,
including this Schedule C, or the result of any third party's inaccurate
completion of documents on behalf of a Fund. No Fund shall be liable to
the Custodian for any penalty or additions to tax due as a result of the
Custodian's delay or failure to pay or withhold tax or to report interest,
dividend or other income paid or credited to an Account solely as a result
of the Custodian's negligent acts or omissions.
2
SCHEDULE D
Proxy Services
The Custodian shall provide proxy services in accordance with the terms set
forth below. Proxy services may be provided by the Custodian or, in whole or in
part, by a Subcustodian or nominee appointed by the Custodian.
1. Proxy services include, but are not limited to notices by the Custodian to
a Fund or Series of the dates of pending shareholder meetings, resolutions
to be voted upon, and the required return dates as may be received by the
Custodian or provided to the Custodian by its Subcustodian or by third
parties.
2. The Custodian shall promptly deliver or mail to Proxy Monitor, or such
other proxy vendor as may be appointed from time to time by a Fund, all
forms of proxies and all notices of meetings and any other notices or
announcements or related proxy materials affecting or relating to
securities owned by such Fund that are actually received by the Custodian.
For purposes of this Schedule D, related proxy materials shall include,
but not be limited to, annual reports, explanatory material concerning
resolutions, management recommendations, or other relevant materials.
3. Neither the Custodian nor any Subcustodian or nominee shall vote upon any
of such securities or execute any proxy to vote thereon or give any
consent or take any other action with respect thereto.
4. In providing proxy services hereunder, the Custodian shall be acting
solely as the agent of a Fund and shall not exercise any discretion with
regard to such proxy services.
5. Each Fund or Series will promptly notify the Custodian of any change in or
addition to the proxy vendor[s] used by such Fund or Series. Such notice
shall provide Custodian with such information as may be required to allow
the Custodian to carry out its duties under paragraph 2 above.
SCHEDULE E
Subjects covered under Section 3.30:
Third party foreign exchange
Late/incomplete trade/corporate action instructions
Counterparty errors
Threshold:
The Fund and the Custodian will jointly pursue claims exceeding $500.
Note:
Claims must be made within 90 business days of the event, or within such other
period as may be mutually agreed upon from time to time by the Custodian and the
Fund. Claims not covered shall be made within such period as may be mutually
agreed upon from time to time by the Custodian and the Fund.
SCHEDULE F
[List of Foreign Subcustodians]
SCHEDULE G
[List of Eligible Securities Depositories]
