CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT ("Agreement") is made and entered into as
of August 20, 1991, by and between Franklin International Trust, a Delaware
business trust (the "Trust"), and Bank of America National Trust and Savings
Association, a banking association organized under the laws of the United
States (the "Custodian").
RECITALS
A. The Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act")
that invests and reinvests, on behalf of its various series, in Domestic
Securities and Foreign Securities.
B. The Custodian is, and has represented to the Trust that the
Custodian is, a "bank" as that term is defined in Section 2(a)(5) of the
Investment Company Act of 1940, as amended and is eligible to receive and
maintain custody of investment company assets pursuant to Section 17(f) and
Rule 17f-2 thereunder.
C. The Trust and the Custodian desire to provide for the
retention of the Custodian as a custodian of the assets of the Trust's two
current series, Franklin International Equity Fund, Franklin Pacific Growth
Fund, and such subsequent series as the parties hereto may determine from
time-to-time, on the terms and subject to the provisions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. DEFINITIONS
For purposes of this Agreement, the following terms shall have
the respective meanings specified below:
"Agreement" shall mean this Custody Agreement.
"Board of Trustees" shall mean the Board of Trustees of the Trust.
"Business Day" with respect to any Domestic Security means any
day, other than a Saturday or Sunday, that is not a day on which banking
institutions are authorized or required by law to be closed in The City of
New York and, with respect to Foreign Securities, a London Business Day.
"London Business Day" shall mean any day on which dealings and deposits in
U.S. dollars are transacted in the London interbank market.
"Custodian" shall mean Bank of America National Trust and Savings
Association.
"Domestic Securities" shall have the meaning provided in
Subsection 2.1 hereof.
"Executive Committee" shall mean the executive committee of the
Board of Trustees.
"Foreign Custodian" shall have the meaning provided in Section
4.1 hereof.
"Foreign Securities" shall have the meaning provided in Section
2.1 hereof.
"Foreign Securities Depository" shall have the meaning provided
in Section 4.1 hereof.
"Trust" shall mean the Franklin International Trust and any
separate series of the Trust hereinafter organized.
"Guidelines" shall have the meaning provided in Subsection 3.5(a)
hereof.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended.
"Securities" shall have the meaning provided in Section 2.1
hereof.
"Securities System" shall have the meaning provided in Section
3.1 hereof.
"Securities System Account" shall have the meaning provided in
Subsection 3.8(a) hereof.
"Shares" shall mean shares of beneficial interest of the Trust.
"Subcustodian" shall have the meaning provided in Subsection 3.7
hereof, but shall not include any Foreign Custodian.
"Transfer Agent" shall mean the duly appointed and acting
transfer agent for the Trust.
"Writing" shall mean a communication in writing, a communication
by telex, the Custodian's Global Custody Instruction SystemTM, facsimile
transmission, bankwire or other teleprocess or electronic instruction system
acceptable to the Custodian.
Section 2. APPOINTMENT OF CUSTODIAN; DELIVERY OF ASSETS
2.1 Appointment of Custodian. The Trust hereby appoints and
designates the Custodian as a custodian of the assets of the Trust including
cash, securities the Trust desires to be held within the United States
("Domestic Securities") and securities it desires to be held outside the
United States ("Foreign Securities"). Domestic Securities and Foreign
Securities are sometimes referred to herein, collectively, as "Securities."
The Custodian hereby accepts such appointment and designation and agrees that
it shall maintain custody of the assets of the Trust delivered to it
hereunder in the manner provided for herein.
2.2 Delivery of Assets. The Trust agrees to deliver to the
Custodian Securities and cash owned by the Trust, payments of income,
principal or capital distributions received by the Trust with respect to
Securities owned by the Trust from time to time, and the consideration
received by it for such Shares or other securities of the Trust as may be
issued and sold from time to time. The Custodian shall have no
responsibility whatsoever for any property or assets of the Trust held or
received by the Trust and not delivered to the Custodian pursuant to and in
accordance with the terms hereof. All Securities accepted by the Custodian
on behalf of the Trust under the terms of this Agreement shall be in "street
name" or other good delivery form as determined by the Custodian.
2.3 Subcustodians. Upon receipt of Proper Instructions and a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee certified by the Secretary or an Assistant Secretary of the Trust,
the Custodian may from time to time appoint one or more Subcustodians or
Foreign Custodians to hold assets of the Trust in accordance with the
provisions of this Agreement.
2.4 No Duty to Manage. The Custodian, a Subcustodian or a
Foreign Custodian shall not have any duty or responsibility to manage or
recommend investments of the assets of the Trust held by them or to initiate
any purchase, sale or other investment transaction in the absence of Proper
Instructions or except as otherwise specifically provided herein.
Section 3. DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE TRUST HELD
BY THE CUSTODIAN
3.1 Holding Securities. The Custodian shall hold and physically
segregate from any property owned by the Custodian, for the account of the
Trust, all non-cash property delivered by the Trust to the Custodian
hereunder other than Securities which, pursuant to Subsection 3.8 hereof, are
held through a registered clearing agency, a registered securities
depository, the Federal Reserve's book-entry securities system (referred to
herein, individually, as a "Securities System"), or held by a Subcustodian,
Foreign Custodian or in a Foreign Securities Depository.
3.2 Delivery of Securities. Except as otherwise provided in
Subsection 3.5 hereof, the Custodian, upon receipt of Proper Instructions,
shall release and deliver Securities owned by the Trust and held by the
Custodian in the following cases or as otherwise directed in Proper
Instructions:
(a) except as otherwise provided herein, upon sale of such
Securities for the account of the Trust and receipt by the
Custodian, a Subcustodian or a Foreign Custodian of payment
therefor;
(b) upon the receipt of payment by the Custodian, a
Subcustodian or a Foreign Custodian in connection with any
repurchase agreement related to such Securities entered into by
the Trust;
(c) in the case of a sale effected through a Securities
System, in accordance with the provisions of Subsection 3.8
hereof;
(d) to a tender agent or other authorized agent in
connection with (i) a tender or other similar offer for
Securities owned by the Trust, or (ii) a tender offer or
repurchase by the Trust of its own Shares;
(e) to the issuer thereof or its agent when such
Securities 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, a Subcustodian
or a Foreign Custodian;
(f) to the issuer thereof, or its agent, for transfer into
the name or nominee name of the Trust, the name or nominee name
of the Custodian, the name or nominee name of any Subcustodian or
Foreign Custodian; or for exchange for a different number of
bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any
such case, the new Securities are to be delivered to the
Custodian, a Subcustodian or Foreign Custodian;
(g) to the broker selling the same for examination in
accordance with the "street delivery" custom;
(h) for exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, or reorganization of the
issuer of such Securities, or pursuant to a conversion of such
Securities; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian or a
Subcustodian;
(i) in the case of warrants, rights or similar securities,
the surrender thereof in connection with the exercise of such
warrants, rights or similar Securities or the surrender of
interim receipts or temporary Securities for definitive
Securities; provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian, a
subcustodian or a Foreign Custodian;
(j) for delivery in connection with any loans of
Securities made by the Trust, but only against receipt by the
Custodian, a Subcustodian or a Foreign Custodian of adequate
collateral as determined by the Trust (and identified in Proper
Instructions communicated to the Custodian), which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited
to the account of the Custodian, a Subcustodian or a Foreign
Custodian in the Federal Reserve's book-entry securities system,
the Custodian will not be held liable or responsible for the
delivery of Securities owned by the Trust prior to the receipt of
such collateral;
(k) for delivery as security in connection with any
borrowings by the Trust requiring a pledge of assets by the
Trust, but only against receipt by the Custodian, a Subcustodian
or a Foreign Custodian of amounts borrowed;
(l) for delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, a Subcustodian or a
Foreign Custodian and a broker-dealer relating to compliance with
the rules of registered clearing corporations and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Trust;
(m) for delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, a Subcustodian or a
Foreign Custodian and a futures commission merchant, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Trust;
(n) upon the receipt of instructions from the Transfer
Agent for delivery to the Transfer Agent or to the holders of
Shares in connection with distributions in kind in satisfaction
of requests by holders of Shares for repurchase or redemption; and
(o) for any other proper purpose, but only upon receipt of
Proper Instructions, and a certified copy of a resolution of the
Trustees or of the Executive Committee certified by the Secretary
or an Assistant Secretary of the Trust, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
3.3 Registration of Securities. Securities held by the
Custodian, a Subcustodian or a Foreign Custodian (other than bearer
Securities) shall be registered in the name or nominee name of the Trust, in
the name or nominee name of the Custodian or in the name or nominee name of
any Subcustodian or Foreign Custodian. The Trust agrees to hold the
Custodian, any such nominee, Subcustodian or Foreign Custodian harmless from
any liability as a holder of record of such Securities.
3.4 Bank Accounts. The Custodian shall open and maintain a
separate bank account or accounts for the Trust, 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 hereunder from or for the account of the Trust, other
than cash maintained by the Trust in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act. Funds held by
the Custodian for the Trust may be deposited by it to its credit as Custodian
in the banking departments of the Custodian, a Subcustodian or a Foreign
Custodian. It is understood and agreed by the Custodian and the Trust that
the rate of interest, if any, payable on such funds (including foreign
currency deposits) that are deposited with the Custodian may not be a market
rate of interest and that the rate of interest payable by the Custodian to
the Trust shall be agreed upon by the Custodian and the Trust from time to
time. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
3.5 Collection of Income; Trade Settlement; Crediting of
Accounts. The Custodian shall collect income payable with respect to
Securities owned by the Trust, settle Securities trades for the account of
the Trust and credit and debit the Trust's account with the Custodian in
connection therewith as follows:
(a) Upon receipt of Proper Instructions, the Custodian
shall effect the purchase of a Security by charging the account
of the Trust on the contractual settlement date; provided,
however, that in the case of Foreign Securities, Proper
Instructions are provided to the Custodian by the Trust prior to
the contractual settlement date in accordance with, and within
the time period specified in the "Global Custody Guidelines for
the Franklin International Trust" (the "Guidelines") which may be
adopted for the use of this Trust, as may be amended by the
Custodian from time to time in its sole discretion. The
Custodian shall have no liability of any kind to any person,
including the Trust, if the Custodian effects payment on behalf
of the Trust as provided for herein or in Proper Instructions,
and the seller or selling broker fails to deliver the Securities
purchased.
(b) Upon receipt of Proper Instructions, the Custodian
shall effect the sale of a Security by delivering a certificate
or other indicia of ownership, and shall credit the account of
the Trust with the proceeds of such sale on the contractual
settlement date; provided, however, that in the case of Foreign
Securities, Proper Instructions are provided to the Custodian by
the Trust prior to the contractual settlement date in accordance
with, and within the time period specified in, the Guidelines.
The Custodian shall have no liability of any kind to any person,
including the Trust, if the Custodian delivers such a
certificate(s) or other indicia of ownership as provided for
herein or in Proper Instructions, and the purchaser or
purchasing broker fails to effect payment to the Trust within a
reasonable time period, as determined by the Custodian in its
sole discretion. In such event, the Custodian shall be entitled
to reimbursement of the amount so credited to the account of the
Trust in connection with such sale.
(c) The Trust is responsible for ensuring that the
Custodian receives timely and accurate Proper Instructions to
enable the Custodian to effect settlement of any purchase or
sale. If the Custodian does not receive such instructions within
the required time period, the Custodian shall have no liability
of any kind to any person, including the Trust, for failing to
effect settlement on the contractual settlement date. However,
the Custodian shall use its best reasonable efforts to effect
settlement as soon as possible after receipt of Proper
Instructions.
(d) The Custodian shall credit the account of the Trust
with interest income payable on interest bearing Securities on
payable date. Interest income on cash balances will be credited
monthly to the account of the Trust on the first Business Day (on
which the Custodian is open for business) following the end of
each month. Dividends and other amounts payable with respect to
Domestic Securities and Foreign Securities shall be credited to
the account of the Trust when received by the Custodian. The
Custodian shall not be required to commence suit or collection
proceedings or resort to any extraordinary means to collect such
income and other amounts payable with respect to Securities owned
by the Trust. The collection of income due the Trust on Domestic
Securities loaned pursuant to the provisions of Subsection 3.2(j)
shall be the responsibility of the Trust. The Custodian will
have no duty or responsibility in connection therewith, other
than to provide the Trust with such information or data as may be
necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income to which the Trust is
entitled. The Custodian shall have no liability to any person,
including the Trust, if the Custodian credits the account of the
Trust with such income or other amounts payable with respect to
Securities owned by the Trust (other than Securities loaned by
the Trust pursuant to Subsection 3.2(j) hereof) and the Custodian
subsequently is unable to collect such income or other amounts
from the payors thereof within a reasonable time period, as
determined by the Custodian in its sole discretion. In such
event, the Custodian shall be entitled to reimbursement of the
amount so credited to the account of the Trust.
3.6 Payment of Trust Monies. Upon receipt of Proper
Instructions the Custodian shall pay out monies of the Trust in the following
cases or as otherwise directed in Proper Instructions:
(a) upon the purchase of Securities, futures contracts or
options on futures contracts for the account of the Trust but
only, except as otherwise provided herein, (i) against the
delivery of such securities, or evidence of title to futures
contracts or options on futures contracts, to the Custodian or a
Subcustodian registered pursuant to Subsection 3.3 hereof or in
proper form for transfer; (ii) in the case of a purchase effected
through a Securities System, in accordance with the conditions
set forth in Subsection 3.8 hereof; or (iii) in the case of
repurchase agreements entered into between the Trust and the
Custodian, another bank or a broker-dealer (A) against delivery
of the Securities either in certificated form to the Custodian or
a Subcustodian or through an entry crediting the Custodian's
account at the appropriate Federal Reserve Bank with such
Securities or (B) against delivery of the confirmation
evidencing purchase by the Trust of Securities owned by the
Custodian or such broker-dealer or other bank along with written
evidence of the agreement by the Custodian or such broker-dealer
or other bank to repurchase such Securities from the Trust;
(b) in connection with conversion, exchange or surrender
of Securities owned by the Trust as set forth in Subsection 3.2
hereof;
(c) for the redemption or repurchase of Shares issued by
the Trust;
(d) for the payment of any expense or liability incurred
by the Trust, including but not limited to the following payments
for the account of the Trust: custodian fees, interest, taxes,
management, accounting, transfer agent and legal fees and
operating expenses of the Trust whether or not such expenses are
to be in whole or part capitalized or treated as deferred
expenses; and
(e) for the payment of any dividends or distributions
declared by the Board of Trustees with respect to the Shares.
3.7 Appointment of Subcustodians. The Custodian may, upon
receipt of Proper Instructions, appoint another bank or trust company, which
is itself qualified under the Investment Company Act to act as a custodian (a
"Subcustodian"), as the agent of the Custodian to carry out such of the
duties of the Custodian hereunder as a Custodian may from time to time
direct; provided, however, that the appointment of any Subcustodian shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
3.8 Deposit of Securities in Securities Systems. The Custodian
may deposit and/or maintain Domestic Securities owned by the Trust in a
Securities System in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and subject
to the following provisions:
(a) the Custodian may hold Domestic Securities of the
Trust in the Depository Trust Company or the Federal Reserve's
book entry system or, upon receipt of Proper Instructions, in
another Securities System provided that such securities are held
in an account of the Custodian in the Securities System
("Securities System Account") which shall not include any assets
of the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
(b) the records of the Custodian with respect to Domestic
Securities of the Trust which are maintained in a Securities
System shall identify by book-entry those Domestic Securities
belonging to the Trust;
(c) the Custodian shall pay for Domestic Securities
purchased for the account of the Trust upon (i) receipt of
advice from the Securities System that such securities have been
transferred to the 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 Trust. The Custodian
shall transfer Domestic Securities sold for the account of the
Trust upon (A) receipt of advice from the Securities System that
payment for such securities has been transferred to the
Securities System Account, and (B) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of the Trust. Copies of all advices from the
Securities System of transfers of Domestic Securities for the
account of the Trust shall be maintained for the Trust by the
Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust confirmation of
each transfer to or from the account of the Trust in the form of
a written advice or notice; and
(d) upon request, the Custodian shall provide the Trust
with any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding domestic securities deposited in the
Securities System.
3.9 Segregated Account. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated account or accounts
for and on behalf of the Trust, into which account or accounts may be
transferred cash and/or Securities, including Securities maintained in an
account by the Custodian pursuant to Section 3.8 hereof, (i) in accordance
with the provisions of any agreement among the Trust, the Custodian and a
broker-dealer or futures commission merchant, relating to compliance with the
rules of registered clearing corporations and of any 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 Trust,
(ii) for purposes of segregating cash or securities in connection with
options purchased, sold or written by the Trust or commodity futures
contracts or options thereon purchased or sold by the Trust and (iii) for
other proper corporate purposes, but only, in the case of this clause (iii),
upon receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee certified
by the Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be proper
corporate purposes.
3.10 Ownership Certificates for Tax Purposes. 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 Trust held by it and in connection
with transfers of such securities.
3.11 Proxies. The Custodian shall, with respect to the
Securities held hereunder, promptly deliver to the Trust all proxies, all
proxy soliciting materials and all notices relating to such Securities. If
the Securities are registered otherwise than in the name of the Trust or a
nominee of the Trust, the Custodian shall use its best reasonable efforts,
consistent with applicable law, to cause all proxies to be promptly executed
by the registered holder of such Securities in accordance with Proper
Instructions.
3.12 Communications Relating to Trust Portfolio Securities. The
Custodian shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
Securities and expirations of rights in connection therewith and notices of
exercise of put and call options written by the Trust and the maturity of
futures contracts purchased or sold by the Trust) received by the Custodian
from issuers of Securities being held for the Trust. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Trust all
written information received by the Custodian from issuers of the Securities
whose tender or exchange is sought and from the party (or its agents) making
the tender or exchange offer. If the Trust desires to take action with
respect to any tender offer, exchange offer or any other similar transaction,
the Trust shall notify the Custodian at least three Business Days prior to
the date of which the Custodian is to take such action.
3.13 Reports by Custodian. The Custodian shall supply to the
Trust the daily, weekly and monthly reports described in the Guidelines as
well as any other reports which the Custodian and the Trust may agree upon
from time to time.
Section 4. CERTAIN DUTIES OF THE CUSTODIAN WITH RESPECT TO ASSETS OF THE
TRUST HELD OUTSIDE THE UNITED STATES
4.1 Custody outside the United States. The Trust authorizes the
Custodian to hold Foreign Securities and cash in custody accounts which have
been established by the Custodian with (i) its foreign branches, (ii) foreign
banking institutions, foreign branches of United States banks and
subsidiaries of United States banks or bank holding companies (each a
"Foreign Custodian") and (iii) Foreign Securities depositories or clearing
agencies (each a "Foreign Securities Depository"); provided, however, that
the Board of Trustees or the Executive Committee has approved in advance the
use of each such Foreign Custodian and Foreign Securities Depository and the
contract between the Custodian and each Foreign Custodian and that such
approval is set forth in Proper Instructions and a certified copy of a
resolution of the Board of Trustees or of the Executive Committee certified
by the Secretary or an Assistant Secretary of the Trust. Unless expressly
provided to the contrary in this Section 4, custody of Foreign Securities and
assets held outside the United States by the Custodian, a Foreign Custodian
or through a Foreign Securities Depository shall be governed by Section 3
hereof.
4.2 Assets to be Held. The Custodian shall limit the securities
and other assets maintained in the custody of its foreign branches, Foreign
Custodians and Foreign Securities Depositories to: (i) "foreign securities",
as defined in paragraph (c) (1) of Rule 17f-5 under the Investment Company
Act, and (ii) cash and cash equivalents in such amounts as the Custodian or
the Trust may determine to be reasonably necessary to effect the Trust's
Foreign Securities transactions.
4.3 Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Trust, assets of the Trust
shall be maintained in Foreign Securities Depositories only through
arrangements implemented by the Custodian or Foreign Custodians pursuant to
the terms hereof.
4.4 Segregation of Securities. The Custodian shall identify on
its books and records as belonging to the Trust, the Foreign Securities of
the Trust held by each Foreign Custodian.
4.5 Agreements with Foreign Custodians. Each agreement with a
Foreign Custodian shall provide generally that: (a) the Trust's assets will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of the Foreign Custodian or its creditors, except a claim of
payment for their safe custody or administration; (b) beneficial ownership
for the Trust's assets will be freely transferable without the payment of
money or value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Trust; (d) the
independent public accountants for the Trust, will be given access to the
records of the Foreign Custodian relating to the assets of the Trust or
confirmation of the contents of those records; (e) the disposition of assets
of the Trust held by the Foreign Custodian will be subject only to the
instructions of the Custodian or its agents; (f) the Foreign Custodian shall
indemnify and hold harmless the Custodian and the Trust from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Custodian's performance of its obligations under
such agreement; (g) to the extent practicable, the Trust's assets will be
adequately insured in the event of loss; and (h) the Custodian will receive
periodic reports with respect to the safekeeping of the Trust's assets,
including notification of any transfer to or from the Trust's account.
4.6 Access of Independent Accountants of the Trust. Upon
request of the Trust, the Custodian will use its best reasonable efforts to
arrange for the independent accountants of the Trust to be afforded access to
the books and records of any Foreign Custodian insofar as such books and
records relate to the custody by any such Foreign Custodian of assets of the
Trust.
4.7 Transactions in Foreign Custody Accounts. Upon receipt of
Proper Instructions, the Custodian shall instruct the appropriate Foreign
Custodian to transfer, exchange or deliver Foreign Securities owned by the
Trust, but, except to the extent explicitly provided herein, only in any of
the cases specified in Subsection 3.2. Upon receipt of Proper Instructions,
the Custodian shall pay out or instruct the appropriate Foreign Custodian to
pay out monies of the Trust in any of the cases specified in Subsection 3.6.
Notwithstanding anything herein to the contrary, settlement and payment for
Foreign Securities received for the account of the Trust and delivery of
Foreign Securities maintained for the account of the Trust may be effected in
accordance with the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market in which
the transaction occurs, including, without limitation, delivering securities
to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer. Foreign
Securities maintained in the custody of a Foreign Custodian may be maintained
in the name of such entity or its nominee name to the same extent as set
forth in Section 3.3 of this Agreement and the Trust agrees to hold any
Foreign Custodian and its nominee harmless from any liability as a holder of
record of such securities.
4.8 Liability of Foreign Custodian. Each agreement between the
Custodian and a Foreign Custodian shall require the Foreign Custodian to
exercise reasonable care in the performance of its duties and to indemnify
and hold harmless the Custodian and the Trust from and against any loss,
damage, cost, expense, liability or claim arising out of or in connection
with the Foreign Custodian's performance of such obligations. At the
election of the Trust, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a Foreign Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if
and to the extent that the Trust has not been made whole for any such loss,
damage, cost, expense, liability or claim.
4.9 Monitoring Responsibilities.
(a) The Custodian will promptly inform the Trust in the
event that the Custodian learns of a material adverse change in
the financial condition of a Foreign Custodian or is notified by
(i) a foreign banking institution employed as a Foreign Custodian
that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million or that its
shareholders' equity has declined below $200 million (in each
case computed in accordance with generally accepted United States
accounting principles) and denominated in U.S. dollars, or (ii) a
subsidiary of a United States bank or bank holding company acting
as a Foreign Custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $100
million or that its shareholders' equity has declined below $100
million (in each case computed in accordance with generally
accepted United States accounting principles) and denominated in
U.S. dollars.
(b) The custodian will furnish such information as may be
reasonably necessary to assist the Trust's Board of Trustees in
its annual review and approval of the continuance of all
contracts or arrangements with Foreign Subcustodians.
Section 5. PROPER INSTRUCTIONS
As used in this Agreement, the term "Proper Instructions" means
instructions of the Trust received by the Custodian via telephone or in
Writing which the Custodian believes in good faith to have been given by
Authorized Persons (as defined below) or which are transmitted with proper
testing or authentication pursuant to terms and conditions which the
Custodian may specify. Any Proper Instructions delivered to the Custodian by
telephone shall promptly thereafter be confirmed in Writing by an Authorized
Person, but the Trust will hold the Custodian harmless for its failure to
send such confirmation in writing, the failure of such confirmation to
conform to the telephone instructions received or the Custodian's failure to
produce such confirmation at any subsequent time. Unless otherwise expressly
provided, all Proper Instructions shall continue in full force and effect
until cancelled or superseded. If the Custodian requires test arrangements,
authentication methods or other security devices to be used with respect to
Proper Instructions, any Proper Instructions given by the Trust thereafter
shall be given and processed in accordance with such terms and conditions for
the use of such arrangements, methods or devices as the Custodian may put
into effect and modify from time to time. The Trust shall safeguard any
testkeys, identification codes or other security devices which the Custodian
shall make available to it. The Custodian may electronically record any
Proper Instructions given by telephone, and any other telephone discussions,
with respect to its activities hereunder. As used in this Agreement, the
term "Authorized Persons" means such officers or such agents of the Trust as
have been designated by a resolution of the Board of trustees or of the
Executive Committee, a certified copy of which has been provided to the
Custodian, to act on behalf of the Trust under this Agreement. Each of such
persons shall continue to be an Authorized Person until such time as the
Custodian receives Proper Instructions that any such officer or agent is no
longer an Authorized Person.
Section 6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority
from the Trust:
(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 Trust;
(b) endorse for collection, in the name of the Trust,
checks, drafts and other negotiable instruments; and
(c) 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 Trust except as otherwise provided in Proper Instructions.
Section 7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions
(conveyed by telephone or in Writing), notice, request, consent, certificate
or other instrument or paper believed by it to be genuine and to have been
properly given or executed by or on behalf of the Trust. The Custodian may
receive and accept a certified copy of a resolution of the Board of Trustees
or Executive Committee as conclusive evidence (a) of the authority of any
person to act in accordance with such resolution or (b) of any determination
or of any action by the Board of Trustees or Executive Committee 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 by an Authorized
Person to the contrary.
Section 8. DUTY OF CUSTODIAN TO SUPPLY INFORMATION
The Custodian shall cooperate with and supply necessary
information in its possession (to the extent permissible under applicable
law) to the entity or entities appointed by the Board of Trustees to keep the
books of account of the Trust and/or compute the net asset value per Share of
the outstanding Shares of the Trust.
Section 9. RECORDS
The Custodian shall create and maintain all records relating to
its activities under this Agreement which are required with respect to such
activities under Section 31 of the Investment Company Act and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of the Trust
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Trust's request, supply the Trust with a tabulation
of Securities owned by the Trust and held by the Custodian and shall, when
requested to do so by the Trust and for such compensation as shall be agreed
upon between the Trust and the Custodian, include certificate numbers in such
tabulations.
Section 10. 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 Trust and the Custodian.
Section 11. RESPONSIBILITY OF CUSTODIAN
The Custodian shall be responsible for the performance of only
such duties as are set forth herein or contained in Proper Instructions and
shall use reasonable care in carrying out such duties. The Custodian shall
be liable to the Trust for any loss which shall occur as the result of the
failure of a Foreign Custodian or a Foreign Securities Depository engaged by
such Foreign Custodian or the Custodian to exercise reasonable care with
respect to the safekeeping of securities and other assets of the Trust to the
same extent that the Custodian would be liable to the Trust if the Custodian
itself were holding such securities and other assets. In the event of any
loss to the Trust by reason of the failure of the Custodian, a Foreign
Custodian or a Foreign Securities Depository engaged by such Foreign
Custodian or the Custodian to utilize reasonable care, the Custodian shall be
liable to the Trust to the extent of the Trust's 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 and without reference to any special
conditions or circumstances. The Custodian shall be held to the exercise of
reasonable care in carrying out this Agreement. The Trust agrees to
indemnify and hold harmless the Custodian and its nominees from all taxes,
charges, expenses, assessments, claims and liabilities (including legal fees
and expenses) incurred by any of them in connection with the performance of
this Agreement, except such as may arise from any negligent action, negligent
failure to act or willful misconduct on the part of the indemnified entity or
any Foreign Custodian or Foreign Securities Depository. The Custodian shall
be entitled to rely, and may act, on advice of counsel (who may be counsel
for the Trust) on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. The Custodian need not
maintain any insurance for the benefit of the Trust.
All collections of funds or other property paid or distributed in
respect of Securities held by the Custodian, agent, Subcustodian or Foreign
Custodian hereunder shall be made at the risk of the Trust. The Custodian
shall have no liability for any loss occasioned by delay in the actual
receipt of notice by the Custodian, agent, Subcustodian or by a Foreign
Custodian of any payment, redemption or other transaction regarding
securities in respect of which the Custodian has agreed to take action as
provided in Section 3 hereof. The Custodian shall not be liable for any
action taken in good faith upon Proper Instructions or upon any certified
copy of any resolution of the Board of Trustees and may rely on the
genuineness of any such documents which it may in good faith believe to be
validly executed. The Custodian shall not be liable for any loss resulting
from, or caused by, the direction of the Trust to maintain custody of any
Securities or cash in a foreign country including, but not limited to, losses
resulting from nationalization, expropriation, currency restrictions, civil
disturbance, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation or other similar occurrences or events beyond
the control of the Custodian. Finally, the Custodian shall not be liable for
any taxes, including interest and penalties with respect thereto, that may be
levied or assessed upon or in respect of any assets of the Trust held by the
Custodian.
Section 12. LIMITED LIABILITY OF THE TRUST
The Custodian acknowledges that it has received notice of and
accepts the limitations of the Trust's liability as set forth in its
Agreement and Declaration of Trust. The Custodian agrees that the Trust's
obligation hereunder shall be limited to the assets of the Trust, and that
the Custodian shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trustee, officer, employee, or agent
of the Trust.
Section 13. EFFECTIVE PERIOD; TERMINATION
This Agreement shall become effective as of the date of its
execution and shall continue in full force and effect until terminated as
hereinafter provided. This Agreement may be terminated by the Trust or the
Custodian by 60 days notice in Writing to the other provided that any
termination by the Trust shall be authorized by a resolution of the Board of
Trustees, a certified copy of which shall accompany such notice of
termination, and provided further, that such resolution shall specify the
names of the persons to whom the Custodian shall deliver the assets of the
Trust held by it. If notice of termination is given by the Custodian, the
Trust shall, within 60 days following the giving of such notice, deliver to
the Custodian a certified copy of a resolution of the Board of Trustees
specifying the names of the persons to whom the Custodian shall deliver
assets of the Trust held by it. In either case the Custodian will deliver
such assets to the persons so specified, after deducting therefrom any
amounts which the Custodian determines to be owed to it hereunder (including
all costs and expenses of delivery or transfer of Trust assets to the persons
so specified). If within 60 days following the giving of a notice of
termination by the Custodian, the Custodian does not receive from the Trust a
certified copy of a resolution of the Board of Trustees specifying the names
of the persons to whom the Custodian shall deliver the assets of the Trust
held by it, the Custodian, at its election, may deliver such assets to a bank
or trust company doing business in the State of California to be held and
disposed of pursuant to the provisions of this Agreement or may continue to
hold such assets until a certified copy of one or more resolutions as
aforesaid is delivered to the Custodian. The obligations of the parties
hereto regarding the use of reasonable care, indemnities and payment of fees
and expenses shall survive the termination of this Agreement.
Section 14. MISCELLANEOUS
14.1 Relationship. Nothing contained in this Agreement shall (i)
create any fiduciary, joint venture or partnership relationship between the
Custodian and the Trust or (ii) be construed as or constitute a prohibition
against the provision by the Custodian or any of its affiliates to the Trust
of investment banking, securities dealing or brokerages services or any other
banking or financial services.
14.2 Further Assurances. Each party hereto shall furnish to the
other party hereto such instruments and other documents as such other party
may reasonably request for the purpose of carrying out or evidencing the
transactions contemplated by this Agreement.
14.3 Attorneys' Fees. If any lawsuit or other action or
proceeding relating to this Agreement is brought by a party hereto against
the other party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (including allocated
costs and disbursements of in-house counsel), in addition to any other relief
to which the prevailing party may be entitled.
14.4 Notices. Except as otherwise specified herein, each notice
or other communication hereunder shall be in Writing and shall be delivered
to the intended recipient at the following address (or at such other address
as the intended recipient shall have specified in a written notice given to
the other parties hereto):
if to the Trust :
Franklin International Trust
c/o Franklin Resources, Inc.
βββ ββββββββ ββββββ ββββ.
βββ βββββ, ββ βββββ
Attention: Trust Manager
if to the Custodian:
Bank of America NT&SA
International Securities Services
ββ ββββββ ββββββ
ββββββ ββββ ββ
βββββββ
Attention: Manager
14.5 Headings. The underlined headings contained herein are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the interpretation
hereof.
14.6 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and both of which,
when taken together, shall constitute one agreement.
14.7 Governing Law. This Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflict of laws).
14.8 Force Majeure. Subject to the provisions of Section 11
hereof regarding the Custodian's general standard of care, no failure, delay
or default in performance of any obligation hereunder shall constitute an
event of default or a breach of this agreement, or give rise to any liability
whatsoever on the part of one party hereto to the other, to the extent that
such failure to perform, delay or default arises out of a cause beyond the
control and without negligence of the party otherwise chargeable with
failure, delay or default; including, but not limited to: action or inaction
of governmental, civil or military authority; fire; strike; lockout or other
labor dispute; flood; war; riot; theft; earthquake; natural disaster;
breakdown of public or common carrier communications facilities; computer
malfunction; or act, negligence or default of the other party. This
paragraph shall in no way limit the right of either party to this Agreement
to make any claim against third parties for any damages suffered due to such
causes.
14.9 Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns, if any.
14.10 Waiver. No failure on the part of any person to exercise
any power, right, privilege or remedy hereunder, and no delay on the part of
any person in the exercise of any power, right, privilege or remedy
hereunder, shall operate as a waiver thereof; and no single or partial
exercise of any such power, right, privilege or remedy shall preclude any
other or further exercise thereof or of any other power, right, privilege or
remedy.
14.11 Amendments. This Agreement may not be amended, modified,
altered or supplemented other than by means of an agreement or instrument
executed on behalf of each of the parties hereto.
14.12 Severability. In the event that any provision of this
Agreement, or the application of any such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable,
shall not be impaired or otherwise affected and shall continue to be valid
and enforceable to the fullest extent permitted by law.
14.13 Parties in Interest. None of the provisions of this
Agreement is intended to provide any rights or remedies to any person other
than the Trust and the Custodian and their respective successors and assigns,
if any.
14.14 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings between the parties hereto relating to the subject matter
hereof.
14.15 Variations of Pronouns. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
"Custodian": BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
/s/ ββββ β. ββββββ
By: ββββ β. ββββββ
Its Vice President
"Trust" FRANKLIN INTERNATIONAL TRUST
/s/ βββββββ β. βββββββ
By: βββββββ β. βββββββ
Its President
