AMENDMENT TO CUSTODY AGREEMENT
AMENDMENT, dated as of July 2, 2001, to the Custody Agreement dated
February 16, 1996 ("Agreement"), by and between UMB Bank, n. a. ("Custodian"),
having a place of business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx Xxxx,
Xxxxxxxx 00000 and each of the registered investment companies (on behalf of any
series thereof, if applicable) listed on Appendix B to the Agreement, together
with such additional companies as shall be made parties to the Agreement by the
execution of a revised Appendix B to the Agreement (such companies, and any
series thereof, are referred to individually as a "Fund" and, collectively, as
the "Funds").
WHEREAS, each Fund and the Custodian have previously entered into the
Agreement pursuant to which the Custodian provides custody and related services
to each Fund, including the use of foreign subcustodians and depositories,
subject to the terms and conditions set forth therein;
WHEREAS, the U.S. Securities and Exchange Commission ("SEC") adopted Rule
17f-7 under the Investment Company Act of 1940, as amended (the "1940 Act")
concerning arrangements for foreign securities depositories;
WHEREAS, pursuant to the provisions of Rule 17f-7(a)(1), the Custodian has
agreed to assume, subject to the terms and conditions set forth herein, certain
analysis and monitoring functions related to foreign securities depositories;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, each Fund and the Custodian agree as follows. Capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Agreement. All references hereunder to the 1940 Act and to the rules and
regulations thereunder shall be deemed to be a reference to such Act and its
rules and regulations as they may be amended from time to time.
1. The Agreement is amended by deleting the first paragraph under the heading
"Section 5. "SUBCUSTODIANS" and inserting the following amended paragraph in its
place:
From time to time, in accordance with the relevant provisions of this
Agreement, (i) the Custodian may appoint one or more Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians or Interim
Subcustodians (each as hereinafter defined) to act on behalf of any one or
more Funds; and (ii) the Custodian may be directed, pursuant to an
agreement between a Fund and the Custodian ("Delegation Agreement"), to
appoint a Domestic Subcustodian to perform the duties of the Foreign
Custody Manager (as such term is defined in Rule 17f-5 under the 1940 Act)
("Approved Foreign Custody Manager") for such Fund so long as such
Domestic Subcustodian is so eligible under the 1940 Act. Such Delegation
Agreement shall provide that the appointment of any Domestic Subcustodian
as the Approved Foreign Custody Manager must be governed by a written
agreement between the Custodian and the Domestic Subcustodian, which
provides for compliance with Rule 17f-5. The Approved Foreign Custody
Manager may appoint a Foreign Subcustodian or Interim Subcustodian in
accordance with this Section 5. For purposes of this Agreement, all
Domestic
Subcustodians, Special Subcustodians, Foreign Subcustodians and Interim
Subcustodians shall be referred to collectively as "Subcustodians."
2. The Agreement is further amended by deleting the last sentence of Subsection
5(a) in its entirety and inserting the following revised sentence in its place:
Each such duly approved Domestic Subcustodian and the countries where
Foreign Subcustodians through which they may hold securities and other
Assets of a Fund shall be as agreed upon by the parties hereto in writing,
from time to time, and shall be reflected on Appendix A hereto.
3. The Agreement is further amended by deleting the paragraph in Subsections
5(b) and 5(c) in their entirety and inserting the following amended Subsection
5(b) in their place:
(b) Foreign Subcustodians
(1) Foreign Subcustodians. The Approved Foreign Custody Manager may
appoint any entity meeting the requirements of an Eligible Foreign
Custodian, as such term is defined in Rule 17f-5(a)(1) under the 1940 Act,
and which term shall also include a bank that qualifies to serve as a
custodian of assets of investment companies under Section 17(f) of the
1940 Act or by SEC order is exempt therefrom (each a "Foreign
Subcustodian" in the context of either a subcustodian or a
sub-subcustodian), provided that the Approved Foreign Custody Manager's
appointments of such Foreign Subcustodians shall at all times be governed
by an agreement that complies with Rule 17f-5.
(2) Interim Subcustodians. Notwithstanding the foregoing, in the event
that a Fund shall invest in a security or other Asset to be held in a
country in which the Approved Foreign Custody Manager has not appointed a
Foreign Subcustodian or for which the Fund has otherwise directed that a
specific Foreign Subcustodian be used, the Custodian shall, or shall cause
the Approved Foreign Custody Manager to, promptly notify the Fund in
writing by facsimile transmission or in such other manner as the Fund and
Custodian shall agree in writing of the unavailability of an approved
Foreign Subcustodian in such country; and upon the receipt of Special
Instructions, the Custodian shall, or shall cause the Approved Foreign
Custody Manager to, appoint or approve any Person (as hereinafter defined)
designated by the Fund in such Special Instructions, to hold such security
or other Asset. The subcustodian agreement between the Custodian and the
Interim Subcustodian shall comply with the provisions of the 1940 Act and
the rules and regulations thereunder (including Rule 17f-5, if applicable)
and the terms and provisions of this Agreement. The Custodian shall comply
with Section 5(b)(1) hereof with respect to the appointment of an Interim
Subcustodian. (Any Person appointed or approved as either a subcustodian
or sub-subcustodian pursuant to this Section 5(b)(2) is herein referred to
as an "Interim Subcustodian.")
(3) In the event that the Approved Foreign Custody Manager or its delegate
reasonably determines that such Person will not provide delegation
services (i) in
a country in which a Fund has directed that the Fund shall invest in a
security or other Asset or (ii) with respect to a specific Foreign
Subcustodian which the Fund has directed be used, the Approved Foreign
Custody Manager or the Custodian (or the Domestic Subcustodian), as
applicable, shall be entitled to rely on any such instruction provided
pursuant to Section 5(b)(2) as a Special Instruction and shall have no
duties or liabilities under this Agreement with respect to such
arrangement save those that it may undertake specifically in writing with
respect to each particular instance; provided that the Delegation
Agreement and this Agreement shall not constitute the Approved Foreign
Custody Manager or the Custodian (or the Domestic Subcustodian), as the
exclusive delegate of the Fund for purposes of Rule 17f-5 and,
particularly where such Person does not agree to provide fully the
services under this Agreement and the Delegation Agreement to the Fund
with respect to a particular country or specific Foreign Subcustodian, the
Fund may delegate such services to another delegate pursuant to Rule
17f-5.
4. The Agreement is further amended by renumbering Subsections 5(d) and 5(e) as
5(c) and 5(d), respectively.
5. The Agreement is further amended by deleting the paragraph in Subsection
5(f), renumbering the Subsection as Subsection 5(e) and inserting the following
amended paragraph in its place:
(e) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver, or cause any Approved
Foreign Custody Manager to deliver, to the Fund a certificate stating: (i)
the identity of each Foreign Subcustodian then acting on behalf of the
Custodian; (ii) the countries in which the Eligible Securities
Depositories (as defined in Section 5(f)) through which each Foreign
Subcustodian is then holding cash, securities and other Assets of the
Fund; and (iii) such other information as may be requested by the Fund to
ensure compliance with rules and regulations under the 1940 Act.
5. The Agreement is further amended by inserting the following new Subsection
5(f) after the new renumbered Subsection 5(e):
(f) Securities Depositories.
(1) The Custodian (or the Domestic Subcustodian) may place and
maintain a Fund's Foreign Assets (as defined in Rule 17f-5 under the 0000
Xxx) with an Eligible Securities Depository (as defined in Rule 17f-7,
which term shall include any other securities depository for which the SEC
by exemptive order has permitted registered investment companies to
maintain their assets).
(2) The Custodian (or the Domestic Subcustodian) shall, for
evaluation by the Fund or its adviser, provide an analysis of the custody
risks associated with maintaining the Fund's Foreign Assets with each
Eligible Securities Depository utilized directly or indirectly by the
Custodian as of the date hereof (or, in the case of an Eligible Securities
Depository not so utilized as of the date hereof, prior to the initial
placement of the Fund's Foreign Assets at such
depository) and at which any Foreign Assets of the Fund are held or are
expected to be held. The Custodian (or the Domestic Subcustodian) shall
monitor the custody risks associated with maintaining the Fund's Foreign
Assets at each such Eligible Securities Depository on a continuing basis
and shall promptly notify the Fund or its adviser of any material changes
in such risks.
(3) Based on the information available to it in the exercise of
diligence, the Custodian (or the Domestic Subcustodian) shall determine
the eligibility under Rule 17f-7 of each foreign securities depository
before maintaining the Fund's Foreign Assets therewith and shall promptly
advise the Fund if any Eligible Securities Depository ceases to be so
eligible. A list of Eligible Securities Depositories used by the Custodian
directly or indirectly as of the date hereof, or as amended from time to
time, is attached as Appendix A. Notwithstanding Subsection 16(c) hereof,
Eligible Securities Depositories may, subject to Rule 17f-7, be added to
or deleted from such list from time to time.
(4) Withdrawal of Assets. If an arrangement with an Eligible
Securities Depository no longer meets the requirements of Rule 17f-7, the
Custodian (or the Domestic Subcustodian) will withdraw the Fund's Foreign
Assets from such depository as soon as reasonably practicable.
(5) Standard of Care. In fulfilling its responsibilities under this
Section 5(f), the Custodian will exercise reasonable care, prudence and
diligence.
6. The Agreement is further amended by inserting the following new Subsection
5(g) after the new Section 5(f):
(h) Limitations on Placement of Foreign Assets.
A Fund shall not place or maintain any of the Fund's Foreign Assets in any
country, and shall as promptly as practicable withdraw the Fund's Foreign
Assets from any country, that is identified in the Global Custody Network
Listing provided by the Custodian (or the Domestic Subcustodian) as a
country where the liability or responsibility of the Approved Foreign
Custody Manager or the Custodian (or the Domestic Subcustodian) is
conditioned or predicated on the ability of the Approved Foreign Custody
Manager or the Custodian (or the Domestic Subcustodian) to recover damages
from the Foreign Subcustodian in such country.
7. The Agreement is further amended by deleting Subsection 6(b) in its entirety
and inserting the following amended Subsection 6(b) in its place:
(b) Actions Prohibited by Applicable Law, Etc.
In no event shall the Custodian incur liability hereunder if the Custodian
or any Subcustodian or Securities System, or any Subcustodian, Eligible
Securities Depository utilized by any such Subcustodian, or any nominee of
the Custodian or any Subcustodian (individually, a "Person") is prevented,
forbidden or delayed
from performing, or omits to perform, any act or thing which 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 (and the Custodian nor any other Person shall not
be obligated to take any action contrary thereto); or (ii) any "Force
Majeure," which for purposes of this Agreement, shall mean any
circumstance or event which is beyond the reasonable control of the
Custodian, a Subcustodian or any agent of the Custodian or a Subcustodian
and which adversely affects the performance by the Custodian of its
obligations hereunder, by the Subcustodian of its obligations under its
subcustody agreement or by any other agent of the Custodian or the
Subcustodian, unless in each case, such delay or nonperformance is caused
by the negligence, misfeasance or misconduct of the Custodian. Such Force
Majeure events may include any event caused by, arising out of or
involving (a) an act of God, (b) accident, fire, water damage or
explosion, (c) any computer, system or other equipment failure or
malfunction caused by any computer virus or the malfunction or failure of
any communications medium, (d) any interruption of the power supply or
other utility service, (e) any strike or other work stoppage, whether
partial or total, (f) any delay or disruption resulting from or reflecting
the occurrence of any Sovereign Risk (as defined below), (g) any
disruption of, or suspension of trading in, the securities, commodities or
foreign exchange markets, whether or not resulting from or reflecting the
occurrence of any Sovereign Risk, (h) any encumbrance on the
transferability of a currency or a currency position on the actual
settlement date of a foreign exchange transaction, whether or not
resulting from or reflecting the occurrence of any Sovereign Risk, or (i)
any other cause similarly beyond the reasonable control of the Custodian.
Subject to the Custodian's general standard of care set forth in
Subsection 6(a) hereof and the requirements of Section 17(f) of the 1940
Act and Rules 17f-5 and 17f-7 thereunder, the Custodian shall not incur
liability hereunder if any Person is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement
provides shall be performed or omitted to be performed by reason of any
(i) "Sovereign Risk," which for the purpose of this Agreement shall mean,
in respect of any jurisdiction, including the United States of America,
where investments are acquired or held under this Agreement, (a) any act
of war, terrorism, riot, insurrection or civil commotion, (b) the
imposition of any investment, repatriation or exchange control
restrictions by any governmental authority, (c) the confiscation,
expropriation or nationalization of any investments by any governmental
authority, whether de facto or de jure, (d) any devaluation or revaluation
of the currency, (e) the imposition of taxes, levies or other charges
affecting investments, (f) any change in the applicable law, or (g) any
other economic or political risk incurred or experienced that is not
directly related to the economic or financial conditions of the Eligible
Foreign Custodian, except as otherwise provided in this Agreement or the
Delegation Agreement, or (ii) "Country Risk," which for the purpose of
this Agreement shall mean, with respect to the acquisition, ownership,
settlement or custody of investments in a
jurisdiction, all risks relating to, or arising in consequence of,
systemic and markets factors affecting the acquisition, payment for or
ownership of investments, including (a) the prevalence of crime and
corruption except for crime or corruption by the Eligible Foreign
Custodian, or its employees, directors or officers for which the liability
of the Custodian (or the Domestic Subcustodian) or the Approved Foreign
Custody Manager is not predicated upon recovery of such damages from the
Subcustodian as set forth in the Global Custody Network Listing, (b) the
inaccuracy or unreliability of business and financial information
(unrelated to the Approved Foreign Custody Manager's duties imposed by
Rule 17f-5(c) under the 1940 Act or to the duties imposed on the Custodian
by Rule 17f-7 under the 1940 Act), (c) the instability or volatility of
banking and financial systems, or the absence or inadequacy of an
infrastructure to support such systems, (d) custody and settlement
infrastructure of the market in which such investments are transacted and
held, (e) the acts, omissions and operation of any Eligible Securities
Depository, it being understood that this provision shall not excuse the
Custodian's performance under the express terms of this Agreement and its
liability therefor, (f) the risk of the bankruptcy or insolvency of
banking agents, counterparties to cash and securities transactions,
registrars or transfer agents, (g) the existence of market conditions
which prevent the orderly execution or settlement of transactions or which
affect the value of assets, and (h) the laws relating to the safekeeping
and recovery of a Fund's Foreign Assets held in custody pursuant to the
terms of this Agreement; provided, however, that, in compliance with Rule
17f-5, neither Sovereign Risk nor Country Risk shall include the custody
risk of a particular Eligible Foreign Custodian of a Fund's Foreign
Assets.
8. The Agreement is further amended by deleting Subsection 16(i) in its entirety
and inserting the following amended Subsection 16(i) in its place:
(i) Entire Agreement. This Agreement and the Delegation Agreement, as
amended from time to time, constitute the entire understanding and
agreement of the parties thereto with respect to the subject matter
therein and accordingly, supersedes as of the effective date of this
Agreement any custodian agreement heretofore in effect between the Funds
and the Custodian.
9. All references throughout the Agreement to "Securities Depository or Clearing
Agency" are hereby changed to "Eligible Securities Depository." In Subsection
16(g) relating to defined terms, the reference to Section 5(b) for the
definition of "Securities Depository or Clearing Agency" (which has been changed
to "Eligible Securities Depository" is changed to Section 5(f). In addition, the
list of defined terms is amended to include "Approved Foreign Custody Manager"
with a reference to Section 5, "Force Majeure" with a reference to Section 6(b),
"Country Risk" with a reference to Section 6(b), and "Foreign Assets" with a
reference to Section 5(f).
10. Except as modified hereby, the Agreement is confirmed in all respects.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
Wasatch Funds, Inc. UMB Bank, n. a.
By By /s/Xxxxx X. Xxxxxxx
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Name: Name: Xxxxx X. Xxxxxxx
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Title: Title: Senior Vice President
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