Custodian Agreement
This Agreement is effective as of June 29, 2001, and between each of the
investment companies and other pooled investment vehicles (which may be
organized as corporations, business or other trusts, limited liability
companies, partnerships or other entities) managed by Capital Research and
Management Company and listed on APPENDIX A hereto, as such Appendix may be
amended from time to time (each a "FUND"), and State Street Bank and Trust
Company, a Massachusetts trust company with its principal place of business at
000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "CUSTODIAN").
Whereas, each Fund is or may be organized with one or more series of shares,
each of which shall represent an interest in a separate investment portfolio of
cash, securities and other assets;
Whereas, each Fund desires to appoint, in accordance with the provisions of the
Investment Company Act of 1940, as amended (the "1940 ACT"), and the rules and
regulations thereunder, the Custodian as custodian on behalf of itself or those
of its existing or additional series of shares that are also listed on Appendix
A hereto (each such listed investment portfolio being referred to hereinafter
as a "PORTFOLIO"), and the Custodian has agreed to act as custodian under the
terms and conditions hereinafter set forth;
Whereas, for administrative purposes only, each Fund wishes to evidence its
individual agreement with the Custodian in a single instrument, notwithstanding
each Fund's intention to be separately bound;
Witnesseth: That in consideration of the mutual covenants and agreements
hereinafter contained, each Fund and Custodian agree as follows:
Section 1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian for each Portfolio, and
the Custodian hereby accepts such employment on the terms and conditions
hereinafter set forth. The Fund, on behalf of each Portfolio, agrees to
deliver to the Custodian (a) all Financial Assets (as defined in Section 2) and
cash (collectively, "ASSETS"), belonging to each Portfolio, (b) all payments of
income, principal and other cash and non-cash distributions received by such
Portfolio in respect of Assets held hereunder, and (c) cash consideration
received by such Portfolio for new or treasury shares of the Fund ("SHARES")
issued or sold from time to time. The Custodian shall not be responsible for
any Assets of the Fund held or received by the Fund and not delivered to the
Custodian.
Section 2. Definitions
(a) "AFFILIATE" shall mean an entity controlling, controlled by, or under
common control with, another entity.
(b) "AUTHORIZED PERSON" shall mean an employee or agent (including an
investment adviser) designated by prior written notice from the Fund or its
designated agent to act on behalf of the Fund hereunder. Such persons shall
continue to be Authorized Persons until such time as the Custodian receives
Instructions from the Fund or its designated agent that any such employee or
agent is no longer an Authorized Person.
(c) "BOARD" shall mean a Fund's Board of Directors or equivalent body.
(d) "CERTIFICATED SECURITY" shall mean a Security that is represented by a
certificate.
(e) "DIRECT PAPER" shall mean commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent.
(f) "DIRECT PAPER SYSTEM" shall mean the Direct Paper system of the
Custodian.
(g) "DIRECT PAPER SYSTEM ACCOUNT" shall mean an account of the Custodian in
the Direct Paper System, provided that such account shall not include any
assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers.
(h) "ELIGIBLE CONTRACT" shall mean a currently effective written contract
between the Custodian and a subcustodian satisfying the requirements of
paragraph (c)(2) of Rule 17f-5 (including any amendments thereto or successor
provisions).
(i) "ELIGIBLE FOREIGN CUSTODIAN" shall have the meaning assigned thereto in
Rule 17f-5 (and shall include any entity qualifying as such pursuant to an
exemption, rule or other appropriate action of the U.S. Securities and Exchange
Commission).
(j) "ELIGIBLE SECURITIES DEPOSITORY" shall have the meaning assigned thereto
in Rule 17f-7 (and shall include any entity qualifying as such pursuant to an
exemption, rule or other appropriate action of the U.S. Securities and Exchange
Commission).
(k) "ENTITLEMENT HOLDER" shall mean the person on the records of a Securities
Intermediary as the person having a Securities Entitlement against the
Securities Intermediary.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, including
any amendments thereto or successor provisions.
(m) "FINANCIAL ASSET" shall have the meaning assigned thereto in Article 8 of
the Uniform Commercial Code, which, as of the date hereof, generally means:
(i) a Security;
(ii) an obligation of a person or a share, participation or other interest in
a person or property or enterprise of a person, which is, or is of a type,
dealt in or traded on financial markets, or which is recognized in any area in
which it is issued or dealt in as a medium for investment; or
(iii) any property that is held by a Securities Intermediary for another
person in a Securities account if the Securities Intermediary has expressly
agreed with the other person that the property is to be treated as a financial
asset under Article 8 of the Uniform Commercial Code. As the context requires,
the term means either the interest itself or the means by which a person's
claim to it is evidenced, including a Certificated Security or an
Uncertificated Security, a Security certificate, or a Security Entitlement.
Financial Asset shall in no event mean cash.
(n) "FOREIGN ASSETS" shall have the meaning assigned thereto under Rule
17f-5, which, as of the date hereof, means any investments (including foreign
currencies) for which the primary market is outside the United States, and any
cash and cash equivalents that are reasonably necessary to effect the Fund's
transactions in those investments.
(o) "INSTRUCTIONS" shall mean instructions of any Authorized Person received
by the Custodian, via telephone, telex, facsimile transmission, bank wire or
other teleprocess or electronic instruction or trade information system (which
may include Internet-based systems involving appropriate testing and
authentication) acceptable to the Custodian which the Custodian believes in
good faith to have been given by, or under the direction of, Authorized
Persons. The term "Instructions" includes, without limitation: (i)
instructions to sell, assign, transfer, deliver, purchase or receive for the
account of the Fund, any and all stocks, bonds and other Financial Assets or to
transfer funds held on behalf of the Fund hereunder; and (ii) instructions
received by the Custodian pursuant to any procedural agreement to which the
Fund, the Custodian and a third party are parties and which requires a
segregated account in accordance with Section 3.6. Instructions may be
continuing instructions when deemed appropriate by the parties.
(p) "LOCAL PRACTICE" shall mean the customary securities trading or
securities processing practices and procedures generally accepted by
Institutional Investors in the jurisdiction or market in which the transaction
occurs, including, without limitation:
(i) delivering Financial Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such securities from such purchaser or dealer;
(ii) delivering cash to a seller or a dealer (or an agent for such seller or
dealer) against expectation of receiving later delivery of purchased Financial
Assets; or
(iii) in the case of a purchase or sale effected through a securities system,
in accordance with the rules governing the operation of such system.
(q) "INSTITUTIONAL INVESTOR" shall mean a major commercial bank, corporation,
insurance company, or substantially similar institution, which, as a
substantial part of its business operations, purchases and sells Financial
Assets and makes use of global custodial services.
(r) "NASD" shall mean The National Association of Securities Dealers, Inc.,
including any successor self-regulatory organizations.
(s) "RULE 17F-5" shall mean rule 17f-5 under the 1940 Act, including any
amendments thereto or successor rules.
(t) "RULE 17F-7" shall mean rule 17f-7 under the 1940 Act, including any
amendments thereto or successor rules.
(u) "SEC" shall mean the U.S. Securities and Exchange Commission.
(v) "SECTION 17A" shall mean Section 17A of the Exchange Act, including any
amendments thereto or successor provisions.
(w) "SECURITIES ENTITLEMENT" shall mean the rights and property interest of
an Entitlement Holder with respect to a Financial Asset as set forth in Part 5
of Article 8 of the Uniform Commercial Code.
(x) "SECURITIES INTERMEDIARY" shall have the meaning assigned thereto in
Article 8 of the Uniform Commercial Code, which, as of the date hereof, means
the Custodian, a Subcustodian, a securities depository, clearing corporation or
any other person, including a bank or broker, that in the ordinary course of
its business maintains securities accounts for others and is acting in that
capacity.
(y) "SECURITY" shall have the meaning assigned thereto in Article 8 of the
Uniform Commercial Code, which, as of the date hereof, generally means an
obligation of an issuer or a share, participation, or other interest in an
issuer or in property or an enterprise of an issuer:
(i) which is represented by a security certificate in bearer or registered
form, or the transfer of which may be registered upon books maintained for that
purpose by or on behalf of the issuer;
(ii) which is one of a class or series or by its terms is divisible into a
class or series of shares, participations, interests, or obligations; and
(iv) which:
(A) is, or is of a type, dealt in or traded on securities exchanges or
securities markets; or
(B) is a medium for investment and by its terms expressly provides that it is
a security governed by Article 8 of the Uniform Commercial Code.
(z) "SPECIAL INSTRUCTIONS" shall mean Instructions countersigned or confirmed
in writing by the Treasurer or any Assistant Treasurer of the Fund or any other
person designated by the Treasurer of the Fund in writing, which
countersignature or confirmation shall be (i) included on the instrument
containing the Instructions or on a separate instrument relating thereto, and
(ii) delivered by hand, facsimile transmission, mail or courier service or in
such other manner as the applicable Fund and the Custodian agree in writing.
(aa) "SUBCUSTODIANS" shall mean the foreign banking institutions with which
the Custodian has entered into Eligible Contracts and which are listed on
SCHEDULE A hereto.
(bb) "UNCERTIFICATED SECURITY" shall mean a Security that is not represented
by a certificate.
(cc) "UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code of The
Commonwealth of Massachusetts, as amended from time to time.
(dd) "U.S. SECURITIES SYSTEM" shall mean a U.S.-based clearing agency
registered with the SEC under Section 17A, which acts as a securities
depository, or a book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies.
(ee) "U.S. SECURITIES SYSTEM ACCOUNT" shall mean an account of the Custodian
in a U.S. Securities System, provided that such account shall not include any
assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers.
Section 3. Duties of the Custodian with Respect to Property of the Fund Held
Within the United States
Section 3.1 Bank Accounts; Cash Deposits. The Custodian shall open and
maintain a separate bank account or accounts in the United States in the name
of the Fund, subject only to draft or order by the Custodian acting pursuant to
the terms of this Agreement, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Fund, other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the 1940 Act. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other banks or
trust companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act and that each such bank or trust company
and the funds to be deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Directors. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be able to be
withdrawn by the Custodian only in that capacity.
Section 3.2 Financial Assets Held Directly. The Custodian shall hold and
physically segregate for the account of the Fund all Financial Assets to be
held by it, other than Financial Assets deposited with or maintained in (a) a
U.S. Securities System, (b) the Direct Paper System, (c) an Eligible Foreign
Custodian or (d) an Eligible Securities Depository.
Section 3.3 Deposit of Financial Assets in U.S. Securities Systems. The
Custodian may deposit and/or maintain Financial Assets owned by the Fund in a
U.S. Securities System in accordance with applicable Federal Reserve Board and
SEC rules and regulations, if any, and subject to the following provisions:
(a) The records of the Custodian with respect to Financial Assets of the Fund
which are maintained in the U.S. Securities System shall identify by book-entry
those securities belonging to the Fund;
(b) The Custodian shall pay for Financial Assets purchased for the account of
the Fund upon (i) receipt of advice from the U.S. Securities System that such
Financial Assets have been transferred to the U.S. Securities System Account,
and (ii) the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall transfer
Financial Assets sold for the account of the Fund upon (i) receipt of advice
from the U.S. Securities System that payment for such Financial Assets has been
transferred to the U.S. Securities System Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer and payment for
the account of the Fund. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Fund shall identify the Fund,
be maintained for the Fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund confirmation of
each transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities System for the
account of the Fund;
(c) The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited in the
U.S. Securities System;
(d) The Custodian shall have received from the Fund the initial or annual
certificate, as the case may be, required by Section 13 hereof;
(e) Anything to the contrary in this Agreement notwithstanding, the Custodian
shall be liable to the Fund for any loss or damage to the Fund resulting from
use of the U.S. Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or their
employees or from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S. Securities System; at
the election of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the U.S. Securities System
or any other person which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made whole for
any such loss or damage.
Section 3.4 Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain Financial Assets owned by the Fund in the
Direct Paper System of the Custodian subject to the following provisions:
(a) No transaction relating to Financial Assets in the Direct Paper System will
be effected in the absence of Instructions;
(b) The Custodian may keep Financial Assets of the Fund in the Direct Paper
System only if such Financial Assets are represented in the Direct Paper System
Account;
(c) The records of the Custodian with respect to Financial Assets of the Fund
that are maintained in the Direct Paper System shall identify by book-entry
those Financial Assets belonging to the Fund;
(d) The Custodian shall pay for Financial Assets purchased for the account of
the Fund upon the making of an entry on the records of the Custodian to reflect
such payment and transfer of Financial Assets to the account of the Fund. The
Custodian shall transfer Financial Assets sold for the account of the Fund upon
the making of an entry on the records of the Custodian to reflect such transfer
and receipt of payment for the account of the Fund;
(e) The Custodian shall furnish the Fund confirmation of each transfer to or
from the account of the Fund, in the form of a written advice or notice, of
Direct Paper on the next business day following such transfer and shall furnish
to the Fund copies of daily transaction sheets reflecting each day's
transaction in the Direct Paper System for the account of the Fund;
(f) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from time to
time.
Section 3.5 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under 1940 Act to act as a custodian, as its
agent to carry out such of the provisions of this Agreement as the Custodian
may from time to time direct; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities or liabilities
hereunder.
Section 3.6 Segregated Account. The Custodian shall upon receipt of
Instructions establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred cash
and/or other Assets, including Financial Assets maintained in the U.S.
Securities System Account, (i) in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the purposes of compliance by the Fund with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release or releases
of the SEC relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate or trust purposes, but
only, in the case of clause (iv), upon receipt of Special Instructions setting
forth the purpose or purposes of such segregated account and declaring such
purpose(s) to be a proper corporate or trust purpose.
Section 4. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
Section 4.1 Appointment as Foreign Custody Manager. The Fund hereby appoints
the Custodian as its Foreign Custody Manager for each Portfolio in accordance
with Rule 17f-5. The Custodian hereby accepts such appointment. The Custodian
and the Fund agree to act in conformity with Rule 17f-5 for so long as the
Custodian acts as the Fund's Foreign Custody Manager. The Custodian's
appointment as Foreign Custody Manager for a Portfolio (or for a particular
country or other political or geographical jurisdiction) may be terminated at
any time by the Fund or the Custodian, regardless of whether the Custodian
serves as custodian for such Portfolio hereunder. Any such termination as to
one or more Portfolios (or jurisdictions) shall be effected in a manner
consistent with the provisions for notice and termination set forth elsewhere
in this Agreement. The Custodian shall not be obligated to serve in this
capacity for a Portfolio if the Custodian no longer acts as the Fund's
custodian for such Portfolio.
4.1.1 Rule 17f-5. As of the date hereof, Rule 17f-5 provides that the Fund may
from time to time place or maintain in the care of an Eligible Foreign
Custodian any of the Fund's Foreign Assets, PROVIDED THAT:
(a) The Fund's Foreign Custody Manager determines that the Fund's assets will
be subject to reasonable care, based on the standards applicable to custodians
in the relevant market, if maintained with the Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections available for
certificated securities (if applicable), the method of keeping custodial
records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite financial
strength to provide reasonable care for Foreign Assets;
(iii) The Eligible Foreign Custodian's general reputation and standing; and
(iv) Whether the Fund will have jurisdiction over and be able to enforce
judgments against the Eligible Foreign Custodian, such as by virtue of the
existence of any offices of the custodian in the United States or the
custodian's consent to service of process in the United States.
(b) The arrangement with the Eligible Foreign Custodian is governed by a
written contract that the Custodian, as Foreign Custody Manager, has determined
will provide reasonable care for the Fund's assets based on the standards set
forth in paragraph (a) above.
(i) Such contract must provide:
(A) For indemnification or insurance arrangements (or any combination of the
foregoing) that will adequately protect the Fund against the risk of loss of
Foreign Assets held in accordance with such contract;
(B) That Foreign Assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Eligible Foreign Custodian
or its creditors, except a claim of payment for their safe custody or
administration or, in the case of cash deposits, liens or rights in favor of
creditors of the custodian arising under bankruptcy, insolvency, or similar
laws;
(C) That beneficial ownership of the Foreign Assets will be freely
transferable without the payment of money or value other than for safe custody
or administration;
(E) That adequate records will be maintained identifying the assets as
belonging to the Fund or as being held by a third party for the benefit of the
Fund;
(F) That the Fund's independent public accountants will be given access to
those records or confirmation of the contents of those records; and
(G) That the Fund will receive periodic reports with respect to the
safekeeping of the Fund's assets, including, but not limited to, notification
of any transfer to or from the Fund's account or a third party account
containing assets held for the benefit of the Fund.
(ii) Such contract may contain, in lieu of any or all of the provisions
specified in paragraph (b)(i) above, such other provisions that the Custodian,
as Foreign Custody Manager, determines will provide, in their entirety, the
same or a greater level of care and protection for the Foreign Assets as the
specified provisions, in their entirety.
(c) (i) The Custodian, as Foreign Custody Manager, has established a system
to monitor the appropriateness of maintaining the Fund's assets with a
particular custodian under paragraph (a) above, and to monitor performance of
the contract under paragraph (b) above.
(ii) If an arrangement no longer meets these requirements, the Fund must
withdraw its assets from the custodian as soon as reasonably practicable.
1 Written Reports. The Fund's Foreign Custody Manager will provide written
reports in a form reasonably acceptable to the Fund (or an Authorized Person)
notifying the Fund's Board of the placement of the Fund's Foreign Assets with a
particular custodian and of any material change in the Fund's non-U.S. custody
arrangements, with the reports to be provided to the Board at such times as the
Board deems reasonable and appropriate based on the circumstances of the Fund's
non-U.S. custody arrangements.
1 Withdrawal of Foreign Assets. The Fund hereby confirms that the Fund will
withdraw its Foreign Assets from any non-U.S. custodian as soon as reasonably
practicable upon written notification from the Fund's Foreign Custody Manager
that custody arrangements with such custodian no longer meet the requirements
of Rule 17f-5 (an "Adverse Notification"). The Fund also confirms that, if the
Custodian is acting as the Fund's Foreign Custody Manager and has delivered an
Adverse Notification to the Fund, the Custodian, as Foreign Custody Manager,
shall have no further responsibility under this Agreement in relation to the
Fund's Foreign Assets held under any custody arrangement covered by such
Adverse Notification. (However, the existence of an Adverse Notification shall
not affect the scope of responsibilities, or the standard of care, applicable
to the Custodian in relation to such Assets under other provisions of this
Agreement.)
Section 4.2 Subcustodians.
4.2.1. Approved Subcustodians. The Custodian may act under this Agreement
through the Subcustodians listed on SCHEDULE A hereto. The Custodian reserves
the right, exercising reasonable discretion, to amend Schedule A from time to
time. Any such amendment (and any related transfer accomplished physically, by
book-entry or otherwise, of the Fund's Foreign Assets) shall be effected with
due regard to the continuing reasonable care (as determined by the Fund's
Foreign Custody Manager) of such Foreign Assets.
4.2.2. Eligibility. The Custodian hereby represents to the Fund that each
Subcustodian is an Eligible Foreign Custodian. If Schedule A is amended, this
representation shall be effective as to the amended Schedule on the date of
such amendment. The Custodian shall promptly advise the Fund if any
Subcustodian ceases to be an Eligible Foreign Custodian.
4.2.3. Authorization. The Fund authorizes the Custodian to hold Foreign
Assets belonging to each Portfolio in accounts that the Custodian has
established with one or more of its branches or such Subcustodians, PROVIDED
THAT, in the case of an Eligible Foreign Custodian, the Fund's Foreign Custody
Manager has made the determinations required by Rule 17f-5 with respect to the
Portfolio's Foreign Assets to be held by such Subcustodian. If the Custodian
is not acting as Foreign Custody Manager for the relevant Portfolio at such
time, the Fund shall give the Custodian appropriate notice of such
determinations.
4.2.4 Bank Accounts. A bank account or bank accounts opened and maintained
outside the United States on behalf of the Fund with a Subcustodian shall be
subject only to draft or order by the Custodian or such Subcustodian acting
pursuant to the terms of this Agreement to hold cash received by or from or for
the account of the Fund.
4.2.5 Liability for Certain Losses Relating to Subcustodians. Anything to the
contrary in this Agreement notwithstanding, the Custodian shall be liable to
the Fund for any loss or damage to the Fund resulting from use of a
Subcustodian by reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce effectively such rights
as it may have against the Subcustodian; at the election of the Fund, it shall
be entitled to be subrogated to the rights of the Custodian with respect to any
claim against the Subcustodian or any other person which the Custodian may have
as a consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage.
Section 4.3 Securities Depositories.
4.3.1 Eligibility. The Custodian hereby represents to the Fund that each
securities depository listed on SCHEDULE B is an Eligible Securities
Depository. If Schedule B is amended, this representation shall be effective
as to the amended Schedule on the date of such amendment. The Custodian shall
promptly advise the Fund if any securities depository listed on Schedule B
ceases to be an Eligible Securities Depository.
4.3.2 Analyses of Custody Risks. The Custodian shall provide the Fund an
analysis of the custody risks (which analyses may be provided to the Fund
electronically) associated with maintaining the Fund's Foreign Assets with each
Eligible Securities Depository used by the Custodian as of a date to be agreed
upon between the parties, but which shall in no event be later than June 15,
2001, (or, in the case of an Eligible Securities Depository not used by the
Custodian as of the agreed upon date, prior to the initial placement of the
Fund's Foreign Assets at such Depository after such date) and at which any
Foreign Assets of the Fund are held or are expected to be held. The Custodian
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 investment adviser of any material
changes in such risks.
4.3.3. Additional Information. The Custodian shall, upon the Fund's
reasonable request from time to time, provide certain additional information
("Additional Information") to the Fund beyond the scope of information the
Custodian is otherwise obligated to provide to the Fund under this Agreement,
or any other agreement between the parties relating to the Fund's Foreign
Assets. For example, Additional Information may relate to a country's
financial infrastructure, prevailing custody and settlement practices, laws
applicable to the safekeeping and recovery of Foreign Assets held in custody,
and the likelihood of nationalization, currency controls and similar risks, but
shall not include information required to be provided under this Agreement or
any other agreement between the parties relating to the Fund's Foreign Assets.
4.3.4 Limitations. The Custodian's obligation to provide the Fund with
Additional Information shall be limited to the extent Additional Information is
(i) already in the possession of the Custodian, or (ii) available to the
Custodian using commercially reasonable means. The Fund hereby acknowledges
that: (i) Additional Information is designed solely to inform the Fund of
certain market conditions and procedures and is not intended as a
recommendation to invest or not invest in particular markets; and (ii) the
Custodian has gathered the information from sources it considers reliable, but
does not assume responsibility for inaccuracies or incomplete information
attributable to actions or omissions of third parties. (For this purpose,
"third parties" shall not include any of the Subcustodians listed on Schedule
A, except to the extent that, in a given case, a Subcustodian accurately
transmitted information it had itself received from a third party (such as from
a regulator or securities depository).)
4.3.5 Use of Securities Depositories. The Fund and the Custodian hereby
acknowledge and agree that the decision to place the Fund's Foreign Assets with
an Eligible Securities Depository shall be made by the Fund's investment
adviser (subject to the Board's oversight) or the Fund, after consideration of
the information provided by the Custodian and other information the Fund deems
relevant, and based on standards of care that are generally applicable to
investment advisers and the Board. Further, the parties understand that the
decision to place the Fund Foreign Assets with an Eligible Securities
Depository does not have to be made separately, but may be made in the overall
context of the decision to invest in a particular country.
4.3.6 Liability for Certain Losses Relating to Eligible Securities
Depositories. Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for any direct loss or damage to the Fund
resulting from use of an Eligible Securities Depository by reason of any
negligence, misfeasance or misconduct of the Custodian, any Subcustodian, or
any of their respective agents or employees or from failure of the Custodian,
Subcustodian, or any such agent to take reasonable steps to enforce effectively
such rights as it may have against the Eligible Securities Depository; at the
election of the Fund, and to the extent permitted by relevant law, it shall be
entitled to be subrogated to the rights of the Custodian or Subcustodian with
respect to any claim against the Eligible Securities Depository or any other
person which the Custodian or Subcustodian may have as a consequence of any
such loss or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
Section 4.4 Assets to be Held by Subcustodians and Eligible Securities
Depositories. The Custodian shall limit the Financial Assets and other Assets
maintained in the custody of the Eligible Foreign Custodians and Eligible
Securities Depositories to Foreign Assets.
Section 4.5 Manner of Holding Foreign Assets . The Custodian shall identify on
its books as belonging to the Fund the Foreign Assets of the Fund held by each
Subcustodian and Eligible Securities Depository. The Custodian may hold
Foreign Assets (other than cash) for all of its customers, including the Fund,
with a Subcustodian in an account that is identified as belonging to the
Custodian for the benefit of its customers; provided however, that (i) the
records of the Custodian with respect to such Foreign Assets of the Fund which
are maintained in such account shall identify those Foreign Assets (other than
cash) as belonging to the Fund and (ii) the Custodian shall require that
Foreign Assets (other than cash) so held by the Subcustodian be held separately
from any assets of the Subcustodian or of other customers of such Subcustodian.
Section 5. Transactions and Other Activities.
Section 5.1 Transactions with Financial Assets. Financial Assets held within
and outside of the United States shall be released, transferred, exchanged or
delivered by the Custodian, or any other party holding Financial Assets in
accordance with this Agreement, upon receipt of Instructions which include all
information required by the Custodian. Settlement and payment for Financial
Assets received for, and delivery of Financial Assets out of, the accounts
governed by this Agreement shall be made in accordance with Local Practice. In
connection with the foregoing, where the Custodian believes in good faith that
use of an alternative practice to Local Practice would be more protective of
Financial Assets than Local Practice, the Custodian shall advise the Fund of
such practice and if the Fund authorizes its use, such practice shall then be
deemed to be Local Practice.
In addition, and without limiting the generality of the foregoing, Financial
Assets may be released:
(a) Upon the sale of such Financial Assets for the Fund in accordance with
Local Practice;
(b) In connection with any repurchase agreement related to such Financial
Assets;
(c) To the depository agent in connection with tender or other similar offers
for such Financial Assets;
(d) To the issuer thereof, or its agent, when such Financial Assets are called,
redeemed, retired or otherwise become payable, provided that, in any such case,
the cash or other consideration is to be delivered to the Custodian or
Subcustodian (except to the extent that such delivery is not consistent with
Local Practice);
(e) To the issuer thereof, or its agent, for transfer into the name of the
Custodian (or the name of the respective Subcustodian or of any nominee of the
Custodian or such Subcustodian) or for exchange for a different number of
bonds, certificates or other evidence representing the same aggregate face
amount or number of units;
(f) To brokers, clearing banks or other clearing agents for examination or
trade execution in accordance with Local Practice; provided that the Custodian
or Subcustodian shall take reasonable steps in accordance with Local Practice
and this paragraph to ensure prompt collection of the payment for, or the
return of, such Financial Assets from the broker, clearing bank or clearing
agent;
(g) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the Financial Assets of the
issuer of such Financial Assets, or pursuant to provisions for conversion
contained in such Financial Assets, or pursuant to any deposit agreement;
provided that, in any such case, the new Financial Assets and cash, if any, are
to be delivered to the Custodian or Subcustodian (except to the extent that
such delivery is not consistent with Local Practice);
(h) In the case of warrants, rights or similar Financial Assets, the surrender
thereof in the exercise of such warrants, rights or similar Financial Assets or
the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new Financial Assets and cash,
if any, are to be delivered to the Custodian or Subcustodian (except to the
extent that such delivery is not consistent with Local Practice);
(i) For delivery as security in connection with any borrowing by the Fund
requiring a pledge of assets by the Fund;
(j) In connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(k) In connection with the lending of Financial Assets; and
(l) Upon receipt of instructions from the transfer agent for the Fund (the
"TRANSFER AGENT") for delivery to such Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be described from time
to time in the Fund's currently effective prospectus and statement of
additional information (the "PROSPECTUS"), in satisfaction of requests by
holders of Shares for repurchase or redemption; and
(m) For any other proper corporate or trust purpose, but only upon receipt of
Special Instructions specifying the Financial Assets to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper trust purpose, and naming the person or persons to whom delivery
of such securities shall be made.
Section 5.2 Payment of Fund Monies. Upon receipt of Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall cause to be paid out monies of the Fund in the following cases
only:
(a) upon the purchase of Financial Assets for the account of the Fund in
accordance with Local Practice;
(b) in connection with the conversion, exchange or surrender of Financial
Assets of the Fund as set forth in Section 5.1 hereof;
(c) for the payment of any expense or liability incurred by or on behalf of the
Fund, including but not limited to the following payments for the account of
the Fund: interest, taxes, legal fees, accounting fees, and other operating
expenses of the Fund;
(d) for the purchase or sale of foreign exchange or foreign exchange contracts
for the Fund, including transactions executed with or through the Custodian or
a Subcustodian;
(e) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(f) in connection with the borrowing or lending of Financial Assets; and
(g) for any other proper corporate or trust purpose, but only upon receipt of
Special Instructions specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose to be a
proper corporate or trust purpose, and naming the person or persons to whom
such payment is to be made.
Section 5.3 Collection of Income. The Custodian shall, or shall cause the
applicable Subcustodian to: (a) subject to the last sentence hereof, collect
amounts due and payable to the Fund with respect to Financial Assets and other
Assets held hereunder; (b) promptly credit to the account of the Fund all
income and other payments relating to Financial Assets or other Assets held by
the Custodian hereunder upon the Custodian's receipt (or the applicable
Subcustodian's receipt) of such income or payments or as otherwise agreed in
writing by the Fund and the Custodian; and (c) promptly endorse and deliver
instruments required to effect such collections. If the Custodian credits the
Fund's custodian account on a payable date, or at any time prior to actual
collection and reconciliation to such account, with interest, dividends,
redemptions or any other amount due, the Fund shall promptly return any such
amount upon oral or written notification: (x) that such amount has not been
received in the ordinary course of business or (y) that such amount was
incorrectly credited. If the Fund does not promptly return any amount upon
such notification, the Custodian shall be entitled, upon oral or written
notification to the Fund, to reverse such credit by debiting the Fund's
custodian account for the amount previously credited. The Custodian shall
furnish regular overdue income reports to the Fund in writing (or by any means
by which Instructions may be transmitted hereunder, other than by telephone) of
any amounts payable with respect to Financial Assets or other Assets of the
Fund if such amounts are not received by the Custodian (or the applicable
Subcustodian) when due (or otherwise in accordance with Local Practice). The
Custodian or its Subcustodian shall have no duty or obligation to institute
legal proceedings, file a claim or a proof of claim in any insolvency
proceeding or take any other action with respect to the collection of such
amount, but may act for the Fund upon Instructions after consultation with the
Fund.
Section 5.4 Registration of Financial Assets. Financial Assets that are
ordinarily held in registered form may be registered in a nominee name of the
Custodian, Subcustodian or Eligible Securities Depository, as the case may be.
The Custodian may without notice to the Fund cause any such Financial Assets to
cease to be registered in the name of such nominee and to be registered in the
name of the Fund. The Fund agrees to hold the Custodian, Subcustodians, and
their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Financial Assets held
hereunder. Financial Assets accepted by the Custodian on behalf of the Fund
under this Agreement shall be in a form and delivered in a manner consistent
with Local Practice.
Section 5.5 Corporate Actions. (a) The Custodian shall transmit promptly to
the Fund on behalf of each Portfolio summary notification of corporate action
information received on a timely basis by the Custodian (including, without
limitation, tendency of calls and maturities of Financial Assets and
expirations of rights in connection therewith and notices of exercise of call
and put options written by the Fund on behalf of a Portfolio and the maturity
of futures contracts (and options thereon) purchased or sold by the Fund on
behalf of a Portfolio) from issuers of the Financial Assets being held for a
Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund on behalf of each Portfolio notice of corporate
action information received on a timely basis by the Custodian from issuers of
the Financial Assets whose tender or exchange is sought and from the party (or
its 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 prior to the deadline
established by the Custodian in its reasonable discretion as will give the
Custodian (including any Subcustodian) sufficient time to take such action.
The Custodian shall inform the Fund of pertinent deadlines in each case.
(b) When a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend, stock split or similar corporate action is received
which bears an expiration date, the Custodian shall endeavor to obtain
Instructions from the Fund or its Authorized Person, but if Instructions are
not received in time for the Custodian to take timely action, or actual notice
of such Corporate Action was received too late to seek Instructions, the
Custodian shall take no action.
Section 5.6 Proxies. (a) The Custodian shall, with respect to Financial
Assets that are not Foreign Assets, cause to be promptly executed by the
registered holder of such Financial Assets, if the Financial Assets are
registered otherwise than in the name of the Fund on behalf of a Portfolio or a
nominee thereof, all proxies, without indication of the manner in which such
proxies are to be voted, and shall promptly deliver to the Fund such proxies,
all proxy soliciting materials and all notices relating to such Financial
Assets.
(b) The Custodian shall, with respect to Financial Assets that are Foreign
Assets, use commercially reasonable efforts to facilitate the exercise of
voting and other shareholder proxy rights; it being understood and agreed that
(i) proxy voting may not be available in all markets (it being understood that
the Custodian shall make proxy voting services available to the Fund in a given
market where the Custodian offers such services to any other custody client),
and (ii) apart from voting, the Custodian will, upon request and in its
discretion, assist customer in exercising other shareholder rights such as
attending shareholder meetings, nominating directors and proposing agenda
items. In particular, and without limiting the generality of the foregoing,
the Custodian may provide written summaries of proxy materials in lieu of
providing original materials (or copies thereof) and while the Custodian shall
attempt to provide accurate summaries, whether or not translated, the Custodian
shall not be liable for any losses or other consequences that may result from
reliance by the Fund upon the same where the Custodian prepared the same in
good faith and with reasonable efforts. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice, practical constraints and other facts, may have the effect of
severely limiting the ability of the Fund to exercise shareholder rights. In
addition, the Fund acknowledges that: (i) in certain countries the Custodian
may be unable to vote individual proxies but shall only be able to vote proxies
on a net basis (E.G., a net yes or no vote given the voting instructions
received from all customers); and (ii) proxy voting may be precluded or
restricted in a variety of circumstances, including, without limitation, where
the relevant Financial Assets are: (1) on loan; (2) at registrar for
registration or reregistration; (3) the subject of a conversion or other
corporate action; (4) not held in a name subject to the control of the
Custodian or its Subcustodian or are otherwise held in a manner which precludes
voting; (5) held in a margin or collateral account; and (6) American Depository
Receipts.
(c) The Fund and each Authorized Person shall respect the proprietary nature
of information developed exclusively through the efforts of the Custodian (or
Subcustodians or other parties acting under the Custodian's direction) in
relation to proxy voting services.
Section 5.7 Tax Matters. (a) The Fund confirms that the Custodian is
authorized to deduct from any cash received or credited to the Fund's custody
account any taxes or levies required to be deducted by any revenue or other
governmental authority for whatever reason in respect of the Fund's custody
account.
(b) The Fund shall provide the Custodian with all required tax-related
documentation and other information relating to Assets held hereunder ("Tax
Information"). Tax Information shall include, but shall not be limited to,
information necessary for submission to revenue or other governmental
authorities to establish taxable amounts or reduce tax burdens that would
otherwise be borne by a Portfolio. Upon receipt of Instructions and all
required Tax Information from the Fund, the Custodian shall (i) execute
ownership and other certificates and affidavits for all tax purposes (within
and outside of the United States) in connection with receipt of income and
other payments with respect to Assets held hereunder, or in connection with the
purchase, sale or transfer of such Assets, and (ii) where appropriate, file any
certificates or other affidavits for the refund or reclaim of non-U.S. taxes
paid with respect to such Assets. The Fund warrants that, when given, Tax
Information shall be true and correct in all material respects. The Fund shall
notify the Custodian promptly if any Tax Information requires updating or
amendment to correct misleading information.
(c) The Custodian shall have no responsibility or liability for any tax
obligations (including both taxes and any and all penalties, interest or
additions to tax) now or hereafter imposed on the Fund, its Portfolio, or the
Custodian as the Fund's custodian, by any revenue or governmental authority, or
penalties or other costs or expenses arising out of the delivery of, or failure
to deliver, Tax Information by the Fund.
(d) The Custodian shall perform tax reclaim services only with respect to
taxation levied by the revenue authorities of the countries notified to the
Fund from time to time and the Custodian may, by notification in writing, in
the Custodian's absolute discretion, supplement or amend the markets in which
tax reclaim services are offered; provided that, the Custodian shall make tax
reclaim services available to the Fund in a given country where the Custodian
offers such services to any other custody client having the same tax status.
Other than as expressly provided in this sub-clause, the Custodian shall have
no responsibility with regard to the Fund's tax position or status in any
jurisdiction.
(e) Tax reclaim services may be provided by the Custodian or, in whole or in
part, by one or more third parties appointed by the Custodian (which may be the
Custodian's affiliates); provided that the Custodian shall be liable for the
performance of any such third party to the same extent as the Custodian would
have been if the Custodian had performed such services.
(f) If the Custodian does not receive appropriate declarations, documentation
and information, then any applicable United States withholding tax shall be
deducted from income received from Financial Assets. The Custodian shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection with
transfers of securities.
Section 6. Payments for Sales or Repurchases or Redemptions of Shares
(a) The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the Fund's account such payments as are
received for Shares issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the Transfer Agent
of any receipt by it of payments for Shares of the Fund.
(b) From such funds as may be available for the purpose, the Custodian shall,
upon receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
Section 7. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the Fund:
(a) make payments to itself or others for minor expenses of handling securities
or other similar items relating to its duties under this Agreement, provided
that all such payments shall be accounted for to the Fund;
(b) surrender securities in temporary form for securities in definitive form;
(c) endorse for collection, in the name of the Fund, checks, drafts and other
negotiable instruments; and
(d) in general, attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Board.
Section 8. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept Special Instructions as conclusive evidence
(a) of the authority of any person to act in accordance with such instructions
or (b) of any determination or of any action by the Board pursuant to the
Fund's charter or other organizational documents as described in such
resolution, and such resolution may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
Section 9. Statements regarding Assets; Notifications; Books of Account and
Calculation of Net Asset Value and Net Income
(a) The Custodian shall issue statements to the Fund, at times mutually agreed
upon, identifying the Assets in the Fund's custody account. The Custodian
shall send the Fund an advice or notification of any transfer of Assets to or
from the Fund's custodian account. Such statements, advices or notifications
shall indicate the identity of the entity having custody of the Assets.
(b) The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board to keep the books of account of the
Fund and/or compute the net asset value per Share of the outstanding Shares or,
if directed in writing to do so by the Fund, shall itself keep such books of
account and/or compute such net asset value per Share. If so directed, the
Custodian shall also calculate daily the net income of the Fund as described in
the Prospectus and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per Share and the daily income of the Fund shall be made at the
time or times described from time to time in the Prospectus.
Section 10. Access to Records; Confidential Information
(a) The Custodian shall provide any assistance reasonably requested by the
Fund in the preparation of reports to the 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
Financial Assets and other Assets held for the account of the Fund as required
by the rules and regulations of the U.S. Securities and Exchange Commission
applicable to investment companies registered under the 0000 Xxx. All such
books and records maintained by the Custodian shall be made available to the
Fund upon request and shall, where required to be maintained by Rule 31a-1
under the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under
the 1940 Act. The Custodian shall allow the Fund's independent public
accountant reasonable access to the records of the Custodian relating to
Financial Assets as is required in connection with their examination of books
and records pertaining to the Fund's affairs. Subject to restrictions under
applicable law, the Custodian shall also obtain an undertaking to permit the
Fund's independent public accountants reasonable access to the records of any
Subcustodian which has physical possession of any Financial Assets as may be
required in connection with the examination of the Fund's books and records.
The Custodian shall not unreasonably refuse to furnish to the Fund such reports
(or portions thereof) of the Custodian's external auditors as they relate
directly to the Custodian's system of internal accounting controls applicable
to the Custodian's duties under this Agreement (commonly referred to as a "SAS
70 Report"). The Custodian shall endeavor to obtain and furnish the Fund with
such similar reports as the Fund may reasonably request with respect to each
Subcustodian holding Assets of the Fund. Except as respects the Custodian's
SAS 70 Report, as to which there shall be no charge, the Fund shall pay
expenses of the Custodian and any Subcustodians under this provision.
(b) The parties hereto agree that each shall treat confidentially all
confidential information provided by each party to the other regarding its
business and operations in accordance with this Agreement. All confidential
information provided by a party hereto shall be used by the 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 a third party without the prior written consent of such providing
party. Confidential information for purposes hereof shall include information
traditionally recognized as confidential, such as financial information,
strategies, security practices, product and business proposals, business plans,
and the like. 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, that is generally furnished to third
parties by the providing party without confidentiality restriction, 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. For this purpose, the
Fund and any Authorized Person shall be permitted to disclose any information
provided by the Custodian hereunder to the U.S. Securities and Exchange
Commission (or its staff) in connection with any inspection or examination or
other action or proceeding.
Section 11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services and
expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
Section 12. Responsibility of Custodian
(a) The Custodian shall exercise reasonable care and diligence in carrying out
all of its duties and obligations under this Agreement, and shall be liable to
the Fund for any and all claims, liabilities, losses, damages, fines,
penalties, and expenses, including out-of-pocket and incidental expenses and
reasonable attorneys' fees ("LOSSES") suffered or incurred by the Fund
resulting from failure of the Custodian to exercise such reasonable care and
diligence. The Custodian shall be liable to the Fund in respect of such Losses
only to the extent of the Fund's direct damages, to be determined based on the
market value of the property which is the subject of the Loss at the date of
discovery of such Loss by the Fund and without reference to any special
conditions or circumstances.
(b) The Custodian shall be liable to the Fund for all Losses resulting from
the action or inaction of any Subcustodian to the same extent that the
Custodian would be liable to the Fund if the Custodian were holding the
affected Assets, and such action or inaction were that of the Custodian.
(c) As long as and to the extent that it has exercised reasonable care and
acted in good faith, the Custodian shall not be responsible for:
(i) the title, validity or genuineness of any property or evidence of title
thereto received by it or delivered by it pursuant to this Agreement; it being
understood that the Custodian shall be deemed to have exercised reasonable care
in respect of this subparagraph (i) if Financial Assets are received by the
Custodian in accordance with Local Practice for the particular Financial Asset
in question;
(ii) any act, omission, default or for the solvency of any broker or agent
which it or a Subcustodian appoints; it being understood that the Custodian or
a Subcustodian shall be deemed to have exercised reasonable care in respect of
this subparagraph (ii) if it exercised reasonable care in the selection of any
such broker or agent; or
(iii) the insolvency of any Subcustodian which is not a branch or Affiliate of
the Custodian; it being understood that the Custodian shall be deemed to have
exercised reasonable care in respect of this subparagraph (iii) where the
Custodian used reasonable care in the monitoring of a Subcustodian's financial
condition as reflected in its most recently published financial statements and
other publicly available financial information.
(d) Neither the Custodian nor any Subcustodian shall be liable for the acts or
omissions of any Eligible Securities Depository (or, for purposes of clarity,
any domestic securities depository).
(e) In no event shall the Custodian incur liability hereunder if the Custodian
or any Subcustodian, or any nominee of the Custodian or any Subcustodian (each
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 any other country, or
political subdivision thereof or of any court of competent jurisdiction; or
(ii) events or circumstances beyond the reasonable control of the applicable
Person, including, without limitation, the interruption, suspension or
restriction of trading on or the closure of any securities market, power or
other mechanical or technological failures or interruptions, computer viruses
or communications disruptions, work stoppages, natural disasters, or other
similar events or acts, unless, in each case, such delay or nonperformance is
caused by (A) the negligence, misfeasance or misconduct of the applicable
Person, or (B) a malfunction or failure of equipment operated or utilized by
the applicable Person other than a malfunction or failure beyond such Person's
control and which could not be reasonably anticipated or prevented by such
Person (each such provision, event or circumstance being a "Force Majeure
Event").
(f) In no event shall the Fund incur liability to the Custodian if it 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 a Force Majeure Event.
(g) The Fund shall indemnify and hold the Custodian and its directors,
officers, agents and employees (collectively the "Indemnitees") harmless from
and against any and all Losses that may be imposed on, incurred by, or asserted
against, the Indemnitees or any of them for following any Instructions or other
directions upon which the Custodian is authorized to rely pursuant to the terms
of this Agreement, or for any action taken or omitted by it in good faith
without negligence.
(h) In performing its obligations hereunder, the Custodian may rely on the
genuineness of any document which it believes in good faith to have been
validly executed, and shall be entitled to rely on and may act upon advice of
counsel (which may be counsel for the Fund) on all matters, and shall be
without liability for action reasonably taken or omitted pursuant to such
advice.
(i) The Fund shall pay for and hold the Custodian harmless from any liability
or loss resulting from the imposition or assessment of any taxes or other
governmental charges, and any related expenses (including, without limitation,
penalties, interest or additions to tax due), with respect to income from or
Assets in the Accounts, provided that the Custodian has complied with the
standard of care set forth in Section 12(a) of this Agreement (it being
understood that while the Custodian's failure to comply with such standard of
care shall constitute a breach of this Agreement, the Custodian shall have no
liability for taxes or governmental charges and related expenses imposed or
assessed with respect to such Assets prior to such breach or that would have
been imposed or assessed even absent such breach).
(j) If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) 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 as may arise from its
or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
a security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of the
Fund's assets to the extent necessary to obtain reimbursement.
(k) The Custodian need not maintain any insurance for the benefit of the Fund.
(l) Without limiting the foregoing, the Custodian shall not be liable for any
Loss which results from (i) the general risk of investing, or (ii) investing or
holding Assets in a particular country including, but not limited to, losses
resulting from nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency restrictions,
devaluations or fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of Assets.
(m) Consistent with and without limiting the application of the foregoing
paragraphs of this Section 12, it is specifically acknowledged that the
Custodian shall have no duty or responsibility to:
(i) Question Instructions or make any suggestions to the Fund or an Authorized
Person regarding such Instructions;
(ii) Supervise or make recommendations with respect to investments or the
retention of Financial Assets;
(iii) Advise the Fund or an Authorized Person regarding any default in the
payment of principal or income of any security other than as provided in
Section 5.3 hereof;
(iv) Evaluate or report to the Fund or an Authorized Person regarding the
financial condition of any broker, agent or other party to which Financial
Assets are delivered or payments are made pursuant hereto;
(v) Review or reconcile trade confirmations received from brokers. The Fund
or its Authorized Persons issuing Instructions shall bear any responsibility to
review such confirmations against Instructions issued to and statements issued
by the Custodian;
(vi) Advise the Fund or an Authorized Person regarding information (i) held on
a confidential basis by an officer, director or employee of the Custodian (or
any Affiliate of the Custodian) and (ii) obtained by such person in connection
with the provision of services or other activities unrelated to global custody;
and
(vii) Advise the Fund or an Authorized Person promptly regarding corporate
action information obtained by an officer, director or employee of the
Custodian (or any Affiliate of the Custodian) who is not engaged directly in
the provision of global custody services.
(n) The Fund authorizes the Custodian to act hereunder notwithstanding that
the Custodian or any of its divisions or Affiliates may have a material
interest in a transaction, or circumstances are such that the Custodian may
have a potential conflict of duty or interest including the fact that the
Custodian or any of its Affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Financial Assets, act as a
lender to the issuer of Financial Assets, act in the same transaction as agent
for more than one customer, have a material interest in the issue of Financial
Assets, or earn profits from any of the activities listed herein.
(o) Upon the occurrence of any event which causes or may cause any Loss to the
other party, each of the Fund and the Custodian shall (and the Custodian shall
cause each applicable Subcustodian to) use all commercially reasonable efforts
and take all reasonable steps under the circumstances to mitigate the effects
of such event and to avoid continuing harm to the other party. For this
purpose, the obligations of the Fund and the Custodian to mitigate Losses (or
potential Losses) hereunder shall include (but shall not be limited to) the
periodic review and reconciliation by the Custodian and the Fund (or Authorized
Persons) of statements provided to the Fund under Section 9(a) of this
Agreement; provided, however, that the Custodian's obligations to the Fund with
respect to any transaction covered by a given statement shall be reduced to the
extent that the Custodian's ability to mitigate damages related to such
transaction has been compromised by the Fund's failure to object to such
statement within 180 days of the Fund's receipt thereof.
Section 13. Effective Period, Termination and Amendment
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid
to the other party, such termination to take effect not sooner than sixty (60)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not act under Section 3.3 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the
Board has approved the initial use of a particular Securities System, as
required by Rule 17f-4 under the 1940 Act, and that the Custodian shall not act
under Section 3.4 hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board has approved the initial
use of the Direct Paper System; provided further, however, that the Fund shall
not amend or terminate this Agreement in contravention of any applicable
federal or state regulations, or any provision of the Fund's charter or other
organizational documents, and further provided, that the Fund may at any time
by action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
Section 14. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and the Fund
may from time to time agree on such provisions interpretive of or in addition
to the provisions of this Agreement as may in their joint opinion be consistent
with the general tenor of this Agreement. Any such interpretive or additional
provisions shall be in a writing signed by both parties and shall be annexed
hereto, provided that no such interpretive or additional provisions shall
contravene any applicable federal or state regulations or any provision of the
Fund's charter or other organizational document. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Agreement.
Section 15. Successor Custodian
If a successor custodian for the Fund shall be appointed by the Board, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the securities held in a Securities System. If no
such successor custodian shall be appointed, the Custodian shall, in like
manner, upon receipt of Special Instructions, deliver at the office of the
Custodian and transfer such securities, funds and other properties in
accordance with such resolution. In the event that no written order
designating a successor custodian or Special Instructions shall have been
delivered to the Custodian on or before the date when such termination shall
become effective, then the Custodian shall have the right to deliver to a bank
or trust company qualified to act as a custodian under the 1940 Act, doing
business in Boston, Massachusetts, or New York, New York, of its own selection,
all securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property held
by it under this Agreement, and to transfer to an account of such successor
custodian all of the Fund's securities held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure Special Instructions to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Agreement
relating to the duties and obligations of the Custodian shall remain in full
force and effect.
Section 16. Governing Law; Successors and Assigns; Immunity; Captions
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF
and shall not be assigned by either party, but shall bind the successors in
interest of the Fund and the Custodian. To the extent that in any jurisdiction
the Fund or the Custodian may now or hereafter be entitled to claim, for itself
or its assets, immunity from suit, execution, attachment (before or after
judgment) or other legal process, the Fund or the Custodian, as the case may
be, irrevocably shall not claim, and it hereby waives, such immunity. The
captions given to the sections and subsections of this Agreement are for
convenience of reference only and are not to be used to interpret this
Agreement.
Section 17. Prior Agreements; Severability
This Agreement supersedes and terminates, as of the date hereof, all prior
Agreements between the Fund and the Custodian relating to the custody of the
Fund's assets. In the event that one or more provisions hereof are held
invalid, illegal or unenforceable in any respect on the basis of any particular
circumstances or in any jurisdiction, the validity, legality and enforceability
of such provision or provisions under other circumstances or in other
jurisdictions and of the remaining provisions shall not in any way be affected
or impaired.
Section 18. Representative Capacity; Non-recourse Obligations
A COPY OF THE DECLARATION OF TRUST OR OTHER ORGANIZATIONAL DOCUMENT OF EACH
FUND IS ON FILE WITH THE SECRETARY OF STATE OF THE STATE OF THE FUND'S
FORMATION, AND NOTICE IS HEREBY GIVEN THAT THIS AGREEMENT IS NOT EXECUTED ON
BEHALF OF THE TRUSTEES OF ANY FUND AS INDIVIDUALS, AND THE OBLIGATIONS OF THIS
AGREEMENT ARE NOT BINDING UPON ANY OF THE TRUSTEES, OFFICERS, SHAREHOLDERS OR
PARTNERS OF ANY FUND INDIVIDUALLY, BUT ARE BINDING ONLY UPON THE ASSETS AND
PROPERTY OF EACH FUND'S RESPECTIVE PORTFOLIOS. THE CUSTODIAN AGREES THAT NO
SHAREHOLDER, 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.
Section 19. Several Obligations of each Fund and Portfolio
With respect to any obligations of a FUND on behalf of any of its Portfolios
arising OUT OF THIS AGREEMENT, THE CUSTODIAN shall look for payment or
satisfaction of any such obligation solely to THE ASSETS AND PROPERTY OF THE
Portfolio TO WHICH SUCH obligation relates as though that FUND had separately
contracted with THE CUSTODIAN by separate written agreement with respect to
EACH OF ITS PORTFOLIOS. The rights and benefits to which a given Portfolio is
entitled hereunder shall be solely those of such Portfolio and no other
Portfolio hereunder shall receive such benefits.
Section 20. Notices.
Any notice, instruction or other instrument required to be given hereunder may
be delivered in person to the offices of the parties as set forth herein during
normal business hours or delivered prepaid registered mail or by telex, cable
or telecopy to the parties at the following addresses or such other addresses
as may be notified by any party from time to time.
To the Fund: [Name of Fund and Portfolio]
c/o Capital Research and Management Company
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Senior Vice President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to: Capital Research and Management Company
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To the Custodian: State Street Bank and Trust Company
Xxx Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof. Evidence that the
notice was properly addressed, stamped and put into the post shall be
conclusive evidence of posting.
Section 21. Reproduction of Documents
This Agreement and all schedules, exhibits, attachments and amendments hereto
may be reproduced by any photographic, photostatic, microfilm, micro-card,
miniature photographic or other similar process. The parties hereto all/each
agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not
the original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 22. Shareholder Communications Election
SEC Rule 14b-2 requires banks which 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 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 the
Fund to indicate whether it authorizes the Custodian to provide the Fund's
name, address, and share position to requesting companies whose securities the
Fund owns. If the 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. For the Fund's protection, the Rule prohibits the
requesting company from using the Fund's name and address for any purpose other
than corporate communications. Please indicate below whether the Fund consents
or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name, address, and
share positions.
NO [ ] The Custodian is not authorized to release the Fund's name, address,
and share positions.
IN WITNESS WHEREOF, each of the Funds and the Custodian have caused this
instrument to be executed in its name and behalf by its duly authorized
representative as of the date first written above. Execution of this Agreement
by more than one Fund shall not create a contractual or other obligation
between or among such Funds (or between or among their
respective Portfolios) and this Agreement shall constitute a separate agreement
between the Custodian and each Fund on behalf of itself or each of its
Portfolios.
Each of the Funds Listed on Appendix A
Attached Hereto, on behalf of Itself or
its Listed Portfolios
By: Capital Research and Management
Company* State Street Bank and Trust Company
By:____________________________ By:___________________________
Name: Xxxx Xxxxx, Xx. Name:_________________________
Title: Executive Vice President Title:__________________________
$ Pursuant to delegated authority.
APPENDIX A
FUNDS AND PORTFOLIOS
Dated as of June 29, 2001
The following is a list of Funds and their respective Portfolios for which the
Custodian shall serve under this Agreement.
FUND PORTFOLIO: EFFECTIVE AS OF:
Fundamental Investors, Inc. June 29, 0000
Xxx Xxxxxx Xxxx xx Xxxxxxx, Inc. June 29, 2001
The New Economy Fund June 29, 2001
SMALLCAP World Fund, Inc. June 29, 2001
American Funds Insurance Funds -
Blue Chip Income and Growth Fund June 29, 2001
Global Discovery Fund June 29, 2001
Global Growth Fund June 29, 2001
Global Small Capitalization Fund June 29, 2001
Growth Fund June 29, 2001
International Fund June 29, 2001
Growth-Income Fund June 29, 2001
Asset Allocation Fund June 29, 2001
Bond Fund June 29, 2001
High-Yield Bond Fund June 29, 2001
U.S. Government/AAA-Rated Securities Fund June 29, 2001
Cash Management Fund June 29, 2001
IN WITNESS WHEREOF, each of the Customers and Bank have executed this Appendix
A as of the date first-written above. Execution of this Appendix A by more
than one Customer shall not create a contractual or other obligation between or
among such Customers (or between or among their respective Portfolios) and this
Appendix shall constitute a separate agreement between Bank and each Customer
on behalf of itself or each of its Portfolios.
EACH OF THE CUSTOMERS LISTED ON
APPENDIX A ATTACHED HERETO, ON
BEHALF OF ITSELF OR ITS LISTED PORTFOLIOS
By: CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By:____________________________________
Name: Xxxx X. Xxxxx, Xx.
Title: Executive Vice President
STATE STREET BANK AND TRUST COMPANY
By:________________________________________
Name:
Title: Vice President
EXHIBIT A
TO
REMOTE ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
IN~SIGHT(SM)
System Product Description
In~Sight(SM) provides information delivery and on-line access to State
Street. In~Sight(SM) allows users a single point of entry into the many views
of data created by the diverse systems and applications. Reports and data from
systems such as Investment Policy Monitor(SM), Multicurrency Horizon(SM),
Securities Lending, Performance & Analytics can be accessed through
In~Sight(SM). This Internet-enabled application is designed to run from a Web
browser and perform across low-speed data line or corporate high-speed
backbones. In~Sight(SM) also offers users a flexible toolset, including an
ad-hoc query function, a custom graphics package, a report designer, and a
scheduling capability. Data and reports offered through In~Sight(SM) will
continue to increase in direct proportion with the customer roll out, as it is
viewed as the information delivery system will grow with State Street's
customers.
