Exhibit 99.G
CUSTODY AGREEMENT
THIS AGREEMENT is made as of the 21st day of May, 1999 by and
between The Bank of New York, a New York corporation authorized to do a banking
business ("Custodian"), and Nations Master Investment Trust, a Delaware business
trust (the "Trust").
W I T N E S S E T H
WHEREAS, the Trust is a registered open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust desires to retain Custodian to serve as
custodian for the Trust, on behalf of its portfolios listed on Schedule I
(individually a "Master Portfolio" and collectively the "Master Portfolios") and
to provide the services described herein, and Custodian is willing to serve and
to provide such services; and
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the Trust and Custodian hereby agree as follows:
1. Appointment. The Trust hereby appoints Custodian to act as custodian
of its portfolio securities, cash and other property on the terms set forth in
this Agreement. Custodian accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 23 hereof. Custodian agrees to comply with all relevant provisions of
the 1940 Act and applicable rules and regulations thereunder.
The Trust may from time to time issue separate series or classes, and
classify and reclassify shares of any such series or class. The Trust shall
promptly specify to Custodian in writing such series or classes, or any
reclassification and thereafter Custodian shall identify to each such series or
class Property, as hereinafter defined, belonging to such series or class, and
such reports, confirmations and notices to the Trust as are called for under
this Agreement shall identify the series or class to which such report,
confirmation or notice pertains.
2. Delivery of Documents. The Trust has furnished Custodian with copies
properly certified or authenticated of each of the following:
(a) votes of the Trust's Board of Trustees authorizing the
appointment of Custodian as custodian of portfolio securities, cash and other
property of the Trust, respectively, and approving and consenting to this
Agreement;
(b) schedules identifying and containing the signatures of all
of the Trust's officers and any other persons authorized to issue Oral
Instructions and to sign Written Instructions, as hereinafter defined, on behalf
of the Master Portfolios of the Trust;
(c) the Trust's current Registration Statement on Form N-1A
under the 1940 Act, as filed with the Securities and Exchange Commission (the
"SEC"), relating to shares of beneficial interest of the Trust, without par
value (the "Shares");
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(d) the current prospectuses and statement of additional
information of each of the Master Portfolios, including all amendments and
supplements thereto (the "Prospectuses"); and
(e) a copy of the opinion of counsel for the Trust, filed with
the SEC as part of the Trust's current registration statement.
The Trust will furnish Custodian from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to any of the foregoing, if any.
3. Definitions.
(a) "Authorized Person". As used in this Agreement, the term
"Authorized Person" means any of the Trust's officers, and any other person,
whether or not any such person is an officer or employee of the Trust, duly
authorized by the Board of Trustees of the Trust to give Oral and Written
Instructions to Custodian on behalf of the Trust and listed on a schedule
provided to Custodian pursuant to Section 2 of this Agreement. Authorized
Persons duly authorized by the Board of Trustees of the Trust to buy and sell
foreign currency on a spot and forward basis and options to buy and sell foreign
currency are denoted by an asterisk thereon.
(b) "Book-Entry System". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees and any book-entry system maintained by a clearing agency
registered with the SEC under Section 17A of the Securities Exchange Act of 1934
(the "1934 Act").
(c) "Composite Currency Unit". Shall mean the European
Currency Unit or any other composite unit consisting of the aggregate of
specified amounts of specified Currencies as such unit may be constituted from
time to time.
(d) "Currency". Shall mean money denominated in a lawful
currency of any country or the European Currency Unit.
(e) "FX Transaction". Shall mean any transaction for the
purchase by one party of an agreed amount in one Currency against the sale by it
to the other party of an agreed amount in another Currency.
(f) "Instructions". Shall mean instruction communications
transmitted by appropriately safeguarded (whether by password protection or
other means) electronic or telecommunications media including but not limited to
S.W.I.F.T., LASER, computer-to-computer interface, dedicated transmission line
and tested telex.
(g) "Oral Instructions". As used in this Agreement, the term
"Oral Instructions" means oral instructions actually received by Custodian from
an Authorized Person or from a person reasonably believed by Custodian to be an
Authorized Person.
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(h) "Officer's Certificate". The term "Officer's Certificate"
as used in this Agreement means instructions delivered by hand, mail, tested
telegram, cable, telex, or facsimile sending device, and actually received by
Custodian signed or reasonably believed by Custodian to be signed by two
officers of the Trust listed on a schedule provided to Custodian pursuant to
Section 2 of this Agreement.
(i) "Property". The term "Property", as used in this
Agreement, means:
(i) any and all securities and other property of the Trust
which the Trust may from time to time deliver to Custodian, as applicable, or
which Custodian may from time to time hold for the Trust;
(ii) all income in respect of any securities or other
property described in immediately preceding clause (i);
(iii) all proceeds of sales of any of such securities or
other property described in preceding clause (i) actually received by Custodian;
and
(iv) proceeds of the sale of Shares received by Custodian
from time to time from or on behalf of the Trust.
(j) "Securities Depository". As used in this Agreement, the
term "Securities Depository" shall mean The Depository Trust Company, a clearing
agency registered with the SEC or its successor or successors and its nominee or
nominees; and shall also mean any other registered clearing agency, its
successor or successors specifically identified in a certified copy of a
resolution of the Trust's Board of Trustees approving deposits by Custodian
therein.
(k) "Written Instructions". As used in this Agreement,
"Written Instructions" means instructions delivered by hand, mail, tested
telegram, cable, telex, or facsimile sending device, and actually received by
Custodian, signed or reasonably believed by Custodian to be signed by an
appropriate number of Authorized Person(s), and the term Written Instructions
shall also include Instructions, except that Instructions need not be signed or
reasonably believed to be signed by any Authorized Person(s) where such
Instructions are transmitted by Software pursuant to Paragraph 26A. A fax
receipt or comparable confirmation of transmission of any Written Instructions
shall be deemed evidence of actual receipt by Custodian.
4. Delivery and Registration of the Property. The Trust shall deliver
or cause to be delivered to Custodian all securities and all monies owned by the
Master Portfolios, including cash received for the issuance of Shares, at any
time during the period of this Agreement, except for securities and monies to be
delivered to any sub-custodian appointed, with approval of the Trust, by
Custodian pursuant to Paragraphs 7, 27, or 28(g) hereof. Custodian will not be
responsible for such securities and such monies until actually received by it.
All securities delivered to Custodian or any such sub-custodian (other than in
bearer form) shall be registered in the name of the Master Portfolio or in the
name of a nominee of a Master Portfolio or in the name of Custodian or any
nominee of Custodian (with or without indication of fiduciary status) or in the
name of any sub-custodian or any nominee of such sub-custodian appointed, with
approval of the Trust, pursuant to Paragraphs 7, 27, or 28(g) hereof or shall be
properly endorsed and in form for transfer satisfactory to Custodian.
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5. Voting and Other Rights. With respect to all securities, however
registered, it is understood that the voting and other rights and powers shall
be exercised by the Trust. Custodian's only duty with respect to such rights
shall be to mail to the Trust within two (2) business days following receipt by
Custodian any documents received by Custodian as custodian, including notices of
corporate action, proxies, proxy soliciting materials and offering circulars,
with any elections or proxies for securities registered in a nominee name
executed by such nominee. In addition, Custodian shall provide notice of
Custodian's receipt of such documents by electronic means (e.g., posting notice
on LASER), as agreed between the parties. Where warrants, options, tenders or
other securities have fixed expiration dates, the Trust understands that in
order for Custodian to act, Custodian must receive the Trust's instructions at
its offices in New York, addressed as Custodian may from time to time request,
by no later than noon (New York City time) at least one (1) business day prior
to the last scheduled date to act with respect thereto (or such earlier date or
time as Custodian may reasonably notify the Trust). Absent Custodian's timely
receipt of such instructions, such instructions will expire without liability to
Custodian. Custodian shall have no duty to forward to the Trust any annual,
quarterly or special reports issued by companies whose securities are held by
Custodian hereunder.
6. Receipt and Disbursement of Money.
(a) Custodian shall open and maintain a custody account for
each Master Portfolio of the Trust, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement, and, subject to Paragraphs 7,
27, or 28(g) hereof, shall hold in such account, subject to the provisions
hereof, all cash received by it from or for the Master Portfolios. Custodian
shall make payments of cash to, or for the account of, each Master Portfolio
from such cash only: (i) for the purchase of securities for the Master
Portfolios as provided in Paragraph 14 hereof; (ii) upon receipt of an Officer's
Certificate for the payment of dividends or other distributions on or with
respect to Shares, or for the payment of interest, taxes, administration,
distribution or advisory fees or expenses which are to be borne by the Master
Portfolios under the terms of this Agreement and, with respect to each Master
Portfolio, and under the terms of any investment advisory agreements,
administration agreements or distribution agreements; (iii) upon receipt of
Written Instructions for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Master Portfolios and held
by or to be delivered to Custodian; (iv) to a sub-custodian pursuant to
Paragraphs 7, 27, or 28(g) hereof; (v) for the redemption of Shares; or (vi)
upon receipt of an Officer's Certificate for other corporate purposes.
(b) Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as Custodian
for the Master Portfolios.
7. Receipt of Securities.
(a) Except as provided by Paragraphs 7(c), 8, 27, or 28(g)
hereof, and except as otherwise directed by Oral or Written Instructions
described in Paragraph 11 hereof, Custodian shall hold and physically segregate
in a separate account with respect to each Master Portfolio, identifiable from
those of any other person, all securities and non-cash property received by it
for the Master Portfolios. All such securities and non-cash property are to be
held or disposed of by Custodian for each Master Portfolio pursuant to the terms
of this Agreement. In the absence of
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Written Instructions accompanied by a certified resolution authorizing the
specific transaction by the Trust's Board of Trustees, and subject to Paragraph
25 hereof, Custodian shall have no power or authority to withdraw, deliver,
assign, hypothecate, pledge or otherwise dispose of any such securities and
investments, except in accordance with the express terms provided for in this
Agreement. In no case may any trustee, officer, employee or agent of the Trust
withdraw any securities. In connection with its duties under this Paragraph
7(a), Custodian may enter into sub-custodian agreements with other banks or
trust companies for the receipt of certain securities and cash to be held by
Custodian for the account of a Master Portfolio pursuant to this Agreement,
provided Custodian obtains the prior written approval of the Trust to any such
sub-custody arrangement. Custodian will provide the Trust with a copy of each
sub-custodian agreement it executes pursuant to this Paragraph 7(a). Custodian
shall be liable for acts or omissions of any such sub-custodian selected by it
pursuant to this Paragraph 7(a), under the standards of care provided for
herein, except for any such sub-custodian engaged at the specific direction of
the Master Portfolios. Notwithstanding anything herein to the contrary, this
Paragraph 7(a) shall not apply to Custodian's engagement of foreign
sub-custodians, which shall instead be governed by Paragraph 27 hereof.
(b) Promptly after the close of business on each day,
Custodian shall furnish the Trust with confirmations and a summary of all
transfers to or from the account of each Master Portfolio during said day. Where
securities are transferred to the account of any Master Portfolio established at
a Securities Depository or the Book Entry System pursuant to Paragraph 8 herein,
Custodian shall also, by book-entry or otherwise, identify as belonging to such
Master Portfolio the quantity of securities in a fungible bulk of securities
registered in the name of Custodian (or its nominee) or shown in Custodian's
account on the books of a Securities Depository or the Book-Entry System. At
least monthly and from time to time, Custodian shall furnish the Trust with a
detailed statement of the Property held for each Master Portfolio under this
Agreement.
(c) Notwithstanding any provision elsewhere contained herein,
Custodian shall not be required to obtain possession of any instrument or
certificate representing any futures contract, any option, or any futures
contract option until after it shall have determined, or shall have received an
Officer's Certificate from the Trust stating that any such instruments or
certificates are available. The Trust shall deliver to Custodian such an
Officer's Certificate no later than the business day preceding the availability
of any such instrument or certificate. Prior to such availability, Custodian
shall comply with the 1940 Act in connection with the purchase, sale,
settlement, closing out or writing of futures contracts, options, or futures
contract options by making payments or deliveries specified in such Officer's
Certificates or Written Instructions received by Custodian in connection with
any such purchase, sale, writing, settlement or closing out upon its receipt
from a broker, dealer, or futures commission merchant of a statement or
confirmation reasonably believed by Custodian to be in the form customarily used
by brokers, dealers, or future commission merchants with respect to such futures
contracts, options, or futures contract options, as the case may be, confirming
that the same is held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of Custodian (or any nominee of
Custodian) as Custodian for the Master Portfolio, provided, however, that
notwithstanding the foregoing, and subject to Paragraph 13(b) hereof, payments
to or deliveries from any margin account, and payments with respect to future
contracts, options, or future contract options to which a margin account
relates, shall be made in accordance with the
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terms and conditions of the Trust's relevant margin account agreement. Whenever
any such instruments or certificates are available, Custodian shall,
notwithstanding any provision in this Agreement to the contrary, make payment
for any futures contract, option, or futures contract option for which such
instruments or such certificates are available against the delivery to Custodian
of such instrument or such certificate, and deliver any futures contract, option
or futures contract option for which such instruments or such certificates are
available only against receipt by Custodian of payment therefor. Any such
instrument or certificate delivered to Custodian shall be held by Custodian
hereunder in accordance with, and subject to, the provisions of this Agreement.
8. Use of Securities Depository or the Book-Entry System. The Trust
shall deliver to Custodian a certified vote of the Board of Trustees of the
Trust approving, authorizing and instructing Custodian on a continuous and
ongoing basis until instructed to the contrary by Written Instructions: (i) to
deposit in a Securities Depository or the Book-Entry System all securities of
the Master Portfolios held hereunder eligible for deposit therein, and (ii) to
utilize a Securities Depository or the Book-Entry System to the extent possible
in connection with the performance of its duties hereunder, including without
limitation, settlements of purchases and sales of securities by the Master
Portfolios, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with borrowings.
Without limiting the generality of such use, the following provisions shall
apply thereto:
(a) Securities and any cash of the Master Portfolios deposited
by Custodian in a Securities Depository or the Book-Entry System will at all
times be segregated from any assets and cash controlled by Custodian in other
than a fiduciary or custodian capacity. Subject to Paragraph 28(m) hereof,
Custodian and its sub-custodians, if any, will pay out money only upon receipt
of securities and will deliver securities only upon receipt of money, absent
Written Instructions to the contrary.
(b) All books and records maintained by Custodian that relate
to the Master Portfolios' participation in a Securities Depository or the
Book-Entry System will at all times during Custodian's regular business hours be
open to inspection by the Trust's duly authorized employees or agents and the
Trust's independent auditors in accordance with applicable regulations, it being
understood, however, that such records may be kept in an off-site Custodian
storage location and the Trust will be furnished with all information in respect
of the services rendered to it as it may require.
(c) Custodian will provide the Trust with copies of any report
obtained by Custodian on the system of internal accounting control of the
Securities Depository or Book-Entry System promptly after receipt of such a
report by Custodian. Custodian will also provide the Trust with such reports on
its own system of internal control as the Trust may reasonably request from time
to time.
9. Instructions Consistent With the Charter, Etc. Unless otherwise
provided in this Agreement, Custodian shall act only upon Officer's
Certificates, Oral Instructions and/or Written Instructions. Custodian may
assume that any Officer's Certificate, Oral Instructions or Written Instructions
received hereunder are not in any way inconsistent with any provision of the
Declaration of Trust or By-Laws or any vote of the Trust's Board of Trustees, or
any committee
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thereof. Custodian shall be entitled to rely upon any Oral Instructions or
Written Instructions actually received by Custodian pursuant to this Agreement,
and upon any certificate, oral instructions, or written instructions reasonably
believed by Custodian to be an Officer's Certificate, Oral Instructions or
Written Instructions. The Trust agrees to forward to Custodian, Written
Instructions confirming Oral Instructions in such manner that the Written
Instructions are received by Custodian at the close of business of the same day
that such Oral Instructions are given to Custodian. The Trust agrees that the
fact that such confirming Written Instructions are not received by Custodian
shall in no way affect the validity of any of the transactions authorized by the
Trust by giving Oral Instructions, and that Custodian's records with respect to
the content of Oral Instructions shall be controlling.
10. Transactions Not Requiring Instructions. Custodian is authorized to
take the following action without Oral Instructions, Written Instructions, or an
Officer's Certificate:
(a) Collection of Income and Other Payments. Custodian
shall subject to Paragraph 28(f) hereof:
(i) Collect and receive for the account of any Master
Portfolio, all income and other payments and distributions, including (without
limitation) stock dividends, rights, warrants and similar items, included or to
be included in the Property of any Master Portfolio, and promptly advise the
Trust of such receipt and shall credit such income, as collected, to such Master
Portfolio of the Trust. From time to time, Custodian may elect, but shall not be
so obligated, to credit the account with interest, dividends or principal
payments on the payable or contractual settlement date, in anticipation of
receiving same from a payor, central depository, Securities Depository, broker
or other agent employed by the Trust or Custodian. Any such crediting and
posting shall be at the Trust's sole risk, and Custodian shall be authorized to
reverse (A) any such advance posting in the event it does not receive good funds
from any such payor, central depository, Securities Depository, broker or agent,
and (B) any other payment or crediting, including, without limitation, payments
made by check or draft, in the event it does not receive good funds or final
payment;
(ii) With respect to securities of foreign issue, and
subject to Paragraph 27 hereof, effect collection of dividends, interest and
other income, and to promptly transmit to the Trust all reports, written
information or notices actually received by Custodian as Custodian, including
notices of any call for redemption, offer of exchange, right of subscription,
reorganization, or other proceedings affecting such securities, or any default
in payments due thereon. It is understood, however, that Custodian shall be
under no responsibility for any failure or delay in effecting such collections
or giving such notice with respect to securities of foreign issue, regardless of
whether or not the relevant information is published in any financial service
available to it unless such failure or delay is due to Custodian's own
negligence. Collections of income in foreign currency are, to the extent
possible, to be converted into United States dollars unless otherwise instructed
in writing, and in effecting such conversion Custodian may use such methods or
agencies as it may see fit, including the facilities of its own foreign division
at customary rates. All risk and expenses incident to such collection and
conversion are for the account of the Master Portfolios and Custodian shall have
no responsibility for fluctuations in exchange rates affecting any such
conversions;
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(iii) Endorse and deposit for collection in the name
of the Trust and each of its Master Portfolios, checks, drafts, or other orders
for the payment of money on the same day as received;
(iv) Receive and hold for the account of each of the
Master Portfolio's securities received by the Master Portfolios as a result of a
stock dividend, share split-up or reorganization, recapitalization, readjustment
or other rearrangement or distribution of rights or similar securities issued
with respect to any portfolio securities of the Master Portfolios held by
Custodian hereunder;
(v) Present for payment and collect the amount
payable upon all securities which may mature or be called, redeemed or retired,
or otherwise become payable on the date such securities become payable, but,
with respect to calls, early redemptions, or early retirements, only if
Custodian either: (i) receives a written notice of the same, or (ii) notice of
the same appears in one or more of the publications then listed in Appendix A
hereto, which Appendix may be amended to add other publications at any time by
Custodian without prior notice to or consent from the Trust and which may be
amended to delete a publication with the prior notice and consent from the
Trust;
(vi) Subject to Paragraphs 28(e) and (f) hereof, take
any action which may be necessary and proper in connection with the collection
and receipt of such income and other payments and the endorsement for collection
of checks, drafts and other negotiable instructions; and
(vii) With respect to domestic securities, to
exchange securities in temporary form for securities in definitive form, to
effect an exchange of the shares where the par value of stock is changed, and to
surrender securities at maturity or when advised by the Trust or the investment
adviser to the Trust of an earlier call for redemption, against payment therefor
in accordance with accepted industry practice. When fractional shares of stock
of a declaring corporation are received as a stock distribution, Custodian is
authorized to sell the fraction received and credit the Trust's account. Unless
specifically instructed to the contrary in writing, Custodian is authorized to
exchange securities in bearer form for securities in registered form. If any
Property registered in the name of a nominee of Custodian is called for partial
redemption by the issuer of such Property, Custodian is authorized to allot the
called portion to the respective beneficial holders of the Property in such
manner deemed to be fair and equitable by Custodian in its reasonable
discretion.
(b) Miscellaneous Transactions. Custodian is authorized to
deliver or cause to be delivered Property against payment or other consideration
or written receipt therefor in the following cases:
(i) for examination by a broker selling for the
account of the Trust in accordance with street delivery custom;
(ii) for the exchange for interim receipts or
temporary securities for definitive securities;
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(iii) for transfer of securities into the name of the
Master Portfolios or Custodian or a nominee of either, or for exchange of
securities for a different number of bonds, certificates, or other evidence,
representing the same aggregate face amount or number of units bearing the same
interest rate, maturity date and call provisions, if any; provided that, in any
such case, the new securities are to be delivered to Custodian.
11. Transactions Requiring Instructions. Upon receipt of Oral or
Written Instructions, and not otherwise, Custodian, directly or through the use
of a Securities Depository or the Book-Entry System, shall:
(a) execute and deliver to such persons as may be designated
in such Oral or Written Instructions, proxies, consents, authorizations, and any
other instruments whereby the authority of the Master Portfolios as owners of
any securities may be exercised;
(b) deliver any securities held for any Master Portfolio
against receipt of other securities or cash issued or paid in connection with
the liquidation, reorganization, refinancing, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) deliver any securities held for any Master Portfolio to
any protective committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation, recapitalization or
sale of assets of any corporation, against receipt of such certificates or
deposit, interim receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) make such transfers or exchanges of the assets of any
Master Portfolio and take such other steps as shall be stated in said
instructions to be for the purposes of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recapitalization of the
Master Portfolios;
(e) subject to Paragraph 25(b) hereof, release securities
belonging to any Master Portfolio to any bank or trust company for the purpose
of pledge or hypothecation to secure any loan incurred by such Master Portfolio;
provided, however, that securities shall be released only upon payment to
Custodian of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to proper
prior authorization, further securities may be released for that purpose; and
pay such loan upon redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the loan;
(f) deliver any securities held for any Master Portfolio upon
the exercise of a covered call option written by such Master Portfolio on such
securities;
(g) release and deliver securities owned by a Master Portfolio
in connection with any repurchase agreement entered into on behalf of such
Master Portfolio, but subject to Paragraph 28(m) hereof, only on receipt of
payment therefor; and pay out monies of such Master Portfolio in connection with
such repurchase agreements, but only upon the delivery of the securities;
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(h) otherwise transfer, exchange or deliver securities in
accordance with Oral or Written Instructions specifying the purpose of such
transfer, including without limitation, loans of securities, short sales, or
reverse repurchase agreements, and subject to Paragraph 7(a) hereof.
12. Segregated Accounts. Custodian shall upon receipt of Written or
Oral Instructions establish and maintain a segregated account or accounts on its
records for and on behalf of any Master Portfolio, into which account or
accounts shall be credited, but only pursuant to an Officer's Certificate or
Written Instructions specifying the particular securities and/or amount of cash,
cash and/or securities, including securities in the Book-Entry System: (i) for
the purposes of compliance by the Master Portfolios and the Trust with the
procedures required by a securities or option exchange, (ii) for the purpose of
compliance by the Master Portfolios and the Trust with the 1940 Act and Release
No. 10666 or any subsequent release or releases of the SEC relating to the
maintenance of segregated accounts by registered investment companies, and (iii)
for other proper corporate purposes.
13. Dividends and Distributions.
(a) The Trust shall furnish Custodian with appropriate
evidence of action by the Trust's Board of Trustees declaring and authorizing
the payment of any dividends and distributions. Upon receipt by Custodian of an
Officer's Certificate with respect to dividends and distributions declared by
the Trust's Board of Trustees and payable to interestholders of any Master
Portfolio who are entitled to receive cash for fractional shares and those who
have elected in the proper manner to receive their distributions on dividends in
cash, and in conformance with procedures mutually agreed upon by Custodian and
the Trust, and the Trust's administrator or transfer agent, Custodian shall pay
to the Master Portfolio's transfer agent, as agent for the interestholders, an
amount equal to the amount indicated in said Officer's Certificate as payable by
the Master Portfolio to such interestholders for distribution in cash by the
transfer agent to such interestholders.
(b) Custodian may enter into separate custodial agreements
with various futures commission merchants ("FCMs") that the Trust uses (each an
"FCM Agreement"), pursuant to which the Master Portfolios' margin deposits in
any transactions involving futures contracts and options on futures contracts
will be held by Custodian in accounts (each an "FCM Account") subject to the
disposition by the FCM involved in such contracts in accordance with the
customer contract between the FCM and the Trust ("FCM Contract"), SEC rules
governing such segregated accounts, Commodity Futures Trading Commission
("CFTC") rules and the rules of the applicable commodities exchange. Such FCM
Agreements shall only be entered into by Custodian upon receipt by Custodian of
Written Instructions from the Trust which state that: (i) an FCM Contract has
been entered into; (ii) the Trust is in compliance with all the rules and
regulations of the CFTC; and (iii) the FCM Agreement is acceptable to the Trust.
Transfers of initial margin shall be made into an FCM Account only upon Written
Instructions; transfers of premium and variation margin may be made into an FCM
Account pursuant to Oral Instructions. Transfers of funds from an FCM Account to
the FCM for which Custodian holds such an account may only occur in accordance
with the terms of the FCM Agreement.
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14. Purchase of Securities. Promptly after each purchase of securities
by the Trust on behalf of any Master Portfolio, the Trust shall deliver to
Custodian Oral or Written Instructions specifying with respect to each such
purchase: (a) the name of the issuer and the title of the securities; (b) the
number of shares of the principal amount purchased and accrued interest, if any;
(c) the dates of purchase and settlement; (d) the purchase price per unit; (e)
the total amount payable upon such purchase; (f) the name of the person from
whom or the broker through whom the purchase was made; and (g) the Master
Portfolio for which the purchase was made. Custodian shall upon receipt of
securities purchased by or for the Trust pay out of the monies held for the
account of the Trust the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Oral or Written Instructions.
15. Sales of Securities. Promptly after each sale of securities by the
Master Portfolios or the Trust shall deliver to Custodian Oral or Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the security; (b) the number of shares or principal
amount sold, and accrued interest, if any; (c) the dates of sale; (d) the sale
price per unit; (e) the total amount payable to the Trust upon such sale; (f)
the name of the broker through whom or the person to whom the sale was made; and
(g) the Master Portfolio for which the sale was made. Custodian shall, subject
to Paragraph 28(m) hereof, deliver the securities against payment of the total
amount payable to the Trust upon such sale, provided that the same conforms to
the total amount payable as set forth in such Oral and Written Instructions.
16. Records. The books and records pertaining to the Master Portfolios
and the Trust which are in the possession of Custodian shall be the property of
the Trust. Such books and records shall be prepared and maintained as required
by the 1940 Act and other applicable securities laws, rules and regulations. The
SEC, the Trust, or the Trust's authorized representatives, shall have access to
such books and records at all times during Custodian's normal business hours.
Upon the reasonable request of the Trust, copies of any such books and records
shall be provided by Custodian to the Trust or the Trust's authorized
representative, and the Trust shall reimburse Custodian reasonable expenses for
providing such copies. Upon reasonable request of the Trust, Custodian shall
provide in hard copy, tape or on micro-film, or such other medium as agreed to
among the Trust and Custodian, and any books and records maintained by
Custodian.
17. Reports.
(a) Custodian shall furnish the Trust the following reports:
(i) such periodic and special reports as the Trust
may reasonably request from time to time;
(ii) a monthly statement summarizing all transactions
and entries for the account of each Master Portfolio;
(iii) a monthly report of portfolio securities
belonging to each Master Portfolio showing the adjusted average cost of
each issue and market value at the end of such month;
11
(iv) a monthly report of the cash account of each
Master Portfolio showing disbursements;
(v) the reports to be furnished to the Trust pursuant
to Rule 17f-4 under the 1940 Act; and
(vi) such other information as may be agreed upon
from time to time between the Trust and Custodian.
(b) Subject to Paragraphs 5 and 27(g) hereof, Custodian shall
transmit promptly to the Trust any proxy statement, proxy materials, notice of a
call or conversion or similar communications actually received by Custodian as
custodian of the Property.
(c) Custodian shall report as the market value at the end of
each month the last closing bid, offer or sale price to the extent, and as the
same, is furnished to Custodian by a pricing or similar service utilized or
subscribed to by Custodian. Custodian shall not be responsible for, have any
liability with respect to, or be under any duty to inquire into, nor deemed to
make any assurances with respect to, the accuracy or completeness of such
information, even if The Bank of New York in performing services for others,
including services similar to those performed hereunder, receives different
valuations of the same or different securities of the same issuer.
18. Cooperation with Accountants. Custodian shall cooperate with the
Trust's independent certified public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement, to assure
that the necessary information is made available to such accountants.
19. Confidentiality. Custodian agrees on behalf of itself and its
employees to treat all record and other information relative to the Trust, its
prior, present or potential interestholders, its service providers and its
prior, present or potential customers, as confidential information, and to
protect and safeguard the same to the extent required by applicable law,
provided, however, that Custodian may make such disclosure as required by
applicable law, regulation, court order, decrees or legal process and upon
receipt of any of the foregoing requiring such disclosure, Custodian's only
obligation shall be to notify the Trust thereof. Custodian further agrees not to
otherwise use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Trust.
20. Equipment Failures. In the event of equipment failures beyond
Custodian's control, Custodian shall take reasonable steps to minimize service
interruptions but shall not have any further liability with respect thereto.
Notwithstanding the foregoing, Custodian shall maintain sufficient back up
electronic data processing equipment to enable Custodian to fulfill its
obligations under this Agreement consistent with standard industry practices.
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21. Right to Receive Advice.
(a) Advice of Master Portfolio. If Custodian shall be in doubt
as to any action to be taken or omitted by it, either may request, and shall
receive, from the Trust clarification or advice, including Oral or Written
Instructions.
(b) Advice of Counsel. If Custodian shall be in doubt as to
any question of law involved in any action to be taken or omitted by Custodian,
it may request at its option advice from its own counsel, at its own expense, or
advice from the Trust's counsel.
(c) Conflicting Advice. In case of conflict between
directions, advice or Oral or Written Instructions received by Custodian
pursuant to subparagraph (a) of this paragraph and advice received by Custodian
pursuant to subparagraph (b) of this paragraph, Custodian shall be entitled to
rely on and follow the advice received pursuant to subparagraph (b) alone.
(d) Protection of Custodian. Custodian shall be protected in
any action or inaction which it takes or omits to take in reliance on any
directions, advice or Oral or Written Instructions received pursuant to
subparagraphs (a) or (b) of this section which it, after receipt of any such
directions, advice or Oral or Written Instructions, in good faith reasonably
believes to be consistent with such directions, advice or Oral or Written
Instructions, as the case may be. Nothing in this Paragraph 21 shall be
construed as imposing upon Custodian any obligation: (i) to seek such
directions, advice or Oral or Written Instructions, or (ii) to act in accordance
with such directions, advice or Oral or Written Instructions when received,
unless, under the terms or another provision of this Agreement, the same is a
condition to Custodian's properly taking or omitting to take such action.
Nothing in this Paragraph 21(d) shall excuse Custodian when an action or
omission on the part of Custodian constitutes willful misfeasance or bad faith,
or negligence or reckless disregard by Custodian of its duties under this
Agreement.
22. Compliance with Governmental Rules and Regulations. Custodian
undertakes to comply with the laws, rules and regulations of governmental
authorities having jurisdiction over Custodian and its express duties hereunder.
23. Compensation. As compensation for the services rendered by
Custodian during the term of this Agreement, the Trust shall pay to Custodian,
in addition to reimbursement of its out-of-pocket expenses, such compensation as
may be agreed upon from time to time in writing by the Trust and Custodian as
set forth in Schedule III.
24. Indemnification. The Trust agrees to indemnify Custodian against,
and hold harmless from all taxes, charges, expenses (including reasonable fees
and expenses of counsel), assessments, claims, losses, demands and liabilities
whatsoever (including, without limitation, liabilities arising under the 1933
Act, the 1934 Act and the 1940 Act, and any state and foreign securities laws,
all as currently in effect or as may be amended from time to time) and expenses,
including without limitation, reasonable attorney's fees and disbursements,
howsoever arising or incurred because of or in connection with this Agreement,
except for such liability, claim, loss, demand, charge, expense, tax or
assessment arising out of Custodian's, or such nominees', willful misconduct or
negligence or reckless disregard of its duties under this Agreement. For the
purposes of this Agreement, including, without limitation, for purposes of
Paragraphs 24 and
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28, neither Custodian's acceptance of Instructions in accordance with Paragraph
26A nor Custodian's use of Foreign Sub-Custodians pursuant to agreements that do
not permit actual examination by independent public accountants, nor the denial
of examination by any Foreign Sub-Custodian, as defined in Paragraph 27, shall,
in and of itself, constitute, or be deemed to constitute, a breach by Custodian
of this Agreement or negligence, willful misconduct, or reckless disregard of
its duties by Custodian, provided the relevant agreement between Custodian and a
Foreign Sub-Custodian satisfies the requirements of Rule 17f-5.
25. Overdrafts or Indebtedness.
(a) Custodian shall advance funds under this Agreement with
respect to any Master Portfolio which results in an overdraft because the moneys
held by Custodian in the separate account for such Master Portfolio shall be
insufficient to pay the total amount payable upon a purchase of securities by
such Master Portfolio, as set forth in an Officer's Certificate or Oral or
Written Instructions, or which results in an overdraft in the separate account
of such Master Portfolio for some other reason, or if the Trust is for any other
reason indebted to Custodian, including any indebtedness to The Bank of New York
under the Trust's Cash Management and Related Services Agreement, (except a
borrowing for investment or for temporary or emergency purposes using securities
as collateral pursuant to a separate agreement and subject to the provisions of
Paragraph 25(b) hereof), such overdraft or indebtedness shall be deemed to be a
loan made by Custodian to the Trust for such Master Portfolio payable on demand
and shall bear interest from the date incurred at a rate per annum (based on a
360-day year for the actual number of days involved) equal to the overdraft rate
specified in Schedule III to this Agreement. In addition, the Trust hereby
agrees that Custodian shall have a continuing lien, security entitlement and
security interest in and to any property at any time held by it for the benefit
of such Master Portfolio or in which the Master Portfolio may have an interest
which is then in Custodian's possession or control or in possession or control
of any third party acting on Custodian's behalf. The Trust authorizes Custodian,
in its sole discretion, at any time to charge any such overdraft or indebtedness
together with interest due thereon against any balance of account standing to
such Master Portfolio's credit on Custodian's books. In addition, the Trust
hereby covenants that on each Business Day on which either it intends to enter a
Reverse Repurchase Agreement and/or otherwise borrow from a third party, or
which next succeeds a Business Day on which at the close of business the Trust
had outstanding a Reverse Repurchase Agreement or such a borrowing, it shall
prior to 1:00 p.m., New York City time, advise Custodian, in writing, of each
such borrowing, shall specify the Master Portfolio to which the same relates,
and shall not incur any indebtedness not so specified other than from Custodian.
(b) The Trust will cause to be delivered to Custodian by any
bank (including, if the borrowing is pursuant to a separate agreement,
Custodian) from which it borrows money for investment or for temporary or
emergency purposes using securities held by Custodian hereunder as collateral
for such borrowings, a notice or undertaking in the form currently employed by
such bank setting forth the amount which such bank will loan to the Trust
against delivery of a stated amount of collateral. The Trust shall promptly
deliver to Custodian Written Instructions specifying with respect to each such
borrowing: (a) the Master Portfolio to which such borrowing relates; (b) the
name of the bank; (c) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly endorsed
by the Master Portfolio, or other loan agreement; (d) the time and date, if
known, on which the
14
loan is to be entered into; (e) the date on which the loan becomes due and
payable; (f) the total amount payable to the Master Portfolio on the borrowing
date; (g) the market value of securities to be delivered as collateral for such
loan, including the name of the issuer, the title and the number of shares or
the principal amount of any particular securities and (h) a statement specifying
whether such loan is for investment purposes or for temporary or emergency
purposes and that such loan is in conformance with the 1940 Act and the Master
Portfolio's prospectus. Custodian shall deliver on the borrowing date specified
in Written Instructions the specified collateral and the executed promissory
note, if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amount payable as set
forth in such Written Instructions. Custodian may, at the option of the lending
bank, keep such collateral in its possession, but such collateral shall be
subject to all rights therein given the lending bank by virtue of any promissory
note or loan agreement. Custodian shall deliver such securities as additional
collateral as may be specified in Written Instructions to collateralize further
any transaction described in this Paragraph 25(b). The Trust shall cause all
securities released from collateral status to be returned directly to Custodian,
and Custodian shall receive from time to time such return of collateral as may
be tendered to it. In the event that the Trust fails to specify in Written
Instructions the Master Portfolio, the name of the issuer, the title and number
of shares or the principal amount of any particular securities to be delivered
as collateral by Custodian, Custodian shall not be under any obligation to
deliver any securities.
26A. Instructions.
(a) It is understood and agreed that Custodian may, from time
to time, provide software to the Trust for purposes of enabling a Master
Portfolio to transmit Instructions to Custodian (the "Software"). Such Software
has been designed to include password protection or other features to restrict
the use of the Software to Authorized Persons; provided, however, that the
Custodian makes no warranty or representations of any kind with respect to such
protections or features, express or implied, including, but not limited to, any
implied warranties of merchantability or fitness for a particular purpose. The
Trust and the Custodian shall use commercially reasonable efforts to develop
other mechanisms (i) to enable the Trust to restrict the use of the Software to
Authorized Persons, (ii) to identify transmissions from a terminal other than an
authorized terminal, and (iii) for the prompt and accurate transmission of
Instructions by Authorized Persons to Custodian. It is further understood and
agreed that Custodian may provide specialized hardware or other equipment to
enable the Trust and the Master Portfolios to utilize the Software. With respect
to any such Software, Custodian grants to the Trust and its service providers a
personal, nontransferable and nonexclusive license to use the Software solely
for the purpose of transmitting Instructions to, and receiving communications
from, Custodian in connection with its account(s). The Trust and its service
providers agree not to sell, reproduce, lease or otherwise provide, directly or
indirectly, the Software or any portion thereof to any third party without the
prior written consent of Custodian. At no time shall the Trust be obligated to
use the Software to transmit Instructions to Custodian.
(b) The Trust shall obtain and maintain at its own cost and
expense all equipment and services, including but not limited to communications
services, necessary for it to utilize the Software and transmit Instructions to
Custodian; provided, however, that the parties acknowledge and agree that if any
specialized equipment is necessary to enable the Trust to utilize the Software,
Custodian shall, at its own expense, provide and maintain such equipment.
15
(c) The Trust acknowledges that the Software, all databases
made available to the Trust by utilizing the Software (other than databases
relating solely to the assets of the Master Portfolios and transactions with
respect thereto), and any proprietary data, processes, information and
documentation (other than those which are or become part of the public domain or
are legally required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of Custodian. The
Trust shall keep the Information confidential by using the same care and
discretion that the Trust uses with respect to its own confidential property and
trade secrets and shall neither make nor permit any disclosure without the prior
written consent of Custodian. Upon termination of this Agreement or the Software
license granted hereunder for any reason, the Trust shall return to Custodian
all copies of the Information which are in its possession or under its control
or which the Trust distributed to third parties.
(d) Custodian reserves the right to modify the Software from
time to time upon reasonable prior notice and the Trust shall, if it desires in
its sole discretion to continue to use the Software, install new releases of the
Software as Custodian may direct. The Trust agrees not to modify or attempt to
modify the Software without Custodian's prior written consent. The Trust
acknowledges that any modifications to the Software, whether by the Trust or
Custodian and whether with or without Custodian's consent, shall become the
property of Custodian.
(e) Where the method for transmitting Instructions by the
Trust involves an automatic systems acknowledgment to the Trust by Custodian of
its receipt of such Instructions, including any transmission of Instructions
using the Software, then (i) if an acknowledgment is not actually received by
the Trust, Custodian shall not be deemed to have received any such Instructions,
and (ii) if an acknowledgment is actually received by the Trust, the Custodian
shall be deemed to have received such Instructions and shall be responsible for
any error, omission, interruption or delay in connection with the transmission
of such Instructions; provided, however, that the Trust shall promptly review
all acknowledgments actually received and notify the Custodian in the event of
any apparent discrepancy.
(f) (i) The Trust agrees that where it delivers to Custodian
Instructions hereunder using the Software, it shall be the Trust's sole
responsibility to ensure that only persons duly authorized by the Trust and the
correct number of such persons transmit such Instructions to Custodian and the
Trust will cause all such persons to treat applicable use and authorization
codes, passwords and authentication keys with extreme care, and authorizes
Custodian to act in accordance with and rely upon Instructions received by it
pursuant hereto using the Software. (ii) The Trust hereby represents,
acknowledges and agrees that it is fully informed of the protections and risks
associated with the various methods of transmitting Instructions to Custodian
and that there may be more secure methods of transmitting Instructions to
Custodian than the method(s) selected by the Trust. (iii) With respect to all
Oral Instructions and all Written Instructions other than Instructions delivered
to Custodian using the Software provided by Custodian, Custodian shall exercise
all commercially reasonable efforts to form a reasonable belief that each such
instruction has been given by an Authorized Person and, where required, signed
by an appropriate number of Authorized Person(s).
(g) The Trust shall notify Custodian of any errors, omissions
or interruptions in, or delay or unavailability of, its ability to send
Instructions using the Software provided by Custodian as promptly as
practicable, and in any event within 24 hours after the earliest of (i)
16
discovery thereof, (ii) the business day on which discovery should have occurred
through the exercise of reasonable care and (iii) in the case of any error, the
date of actual receipt of the earliest notice which reflects such error, it
being agreed that discovery and receipt of notice may only occur on a business
day. Custodian shall, as promptly as practicable, and in any event within 24
hours after the earliest of (i) discovery thereof, (ii) the business day on
which discovery should have occurred through the exercise of reasonable care and
(iii) in the case of any error, the date of actual receipt of the earliest
notice which reflects such error, it being agreed that discovery and receipt of
notice may only occur on a business day, advise the Trust whenever Custodian
learns or reasonably should have learned, of any errors, omissions or
interruption in, or delay or unavailability of, the Trust's ability to send
Instructions using the Software provided by Custodian.
26B. FX Transactions
(a) Whenever a Master Portfolio shall enter into an FX
Transaction, the Master Portfolio shall promptly deliver to Custodian a
Certificate or Oral Instructions specifying with respect to such FX Transaction:
(i) the Series to which such FX Transaction is specifically allocated; (ii) the
type and amount of Currency to be purchased by the Master Portfolio; (iii) the
type and amount of Currency to be sold by the Master Portfolio; (iv) the date on
which the Currency to be purchased is to be delivered; (v) the date on which the
Currency to be sold is to be delivered; and (vi) the name of the person from
whom or through whom such Currencies are to be purchased and sold. Unless
otherwise instructed by a Certificate or Oral Instructions, Custodian shall
deliver, or shall instruct a Foreign Sub-Custodian to deliver, the Currency to
be sold on the date on which such delivery is to be made, as set forth in the
Certificate, and shall receive, or instruct a Foreign Sub-Custodian to receive,
the Currency to be purchased on the date as set forth in the Certificate.
(b) Where the Currency to be sold is to be delivered on the
same day as the Currency to be purchased, as specified in the Certificate or
Oral Instructions, Custodian or a Foreign Sub-Custodian may arrange for such
deliveries and receipts to be made in accordance with the customs prevailing
from time to time among brokers or dealers in Currencies, and such receipt and
delivery may not be completed simultaneously. The Master Portfolio assumes all
responsibility and liability for all credit risks involved in connection with
such receipts and deliveries, which responsibility and liability shall continue
until the Currency to be received by the Master Portfolio has been received in
full.
(c) Any foreign exchange transaction effected by Custodian in
connection with this Agreement may be entered with Custodian, any office, branch
or subsidiary of The Bank of New York, or any Foreign Sub-Custodian (as defined
below) acting as principal or otherwise through customary banking channels. The
Master Portfolio may issue a standing Certificate with respect to foreign
exchange transactions but Custodian may establish rules or limitations
concerning any foreign exchange facility made available to the Master Portfolio.
The Master Portfolio shall bear all risks of investing in securities or holding
Currency. Without limiting the foregoing, the Master Portfolio shall bear the
risks that rules or procedures imposed by a Foreign Sub-Custodian or foreign
depositories, exchange controls, asset freezes or other laws, rules, regulations
or orders shall prohibit or impose burdens or costs on the transfer to, by or
for the account of the Master Portfolio of securities or any cash held outside
the Master
17
Portfolio's jurisdiction or denominated in Currency other than its home
jurisdiction or the conversion of cash from one Currency into another Currency.
Custodian shall not be obligated to substitute another Currency for a Currency
(including a Currency that is a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been affected by such law,
regulation, rule or procedure. Neither Custodian nor any Foreign Sub-Custodian
shall be liable to the Master Portfolio for any loss resulting from any of the
foregoing events.
27. Duties of Custodian with Respect to Property of any Master
Portfolio Held Outside of the United States.
(a) Custodian is authorized and instructed to employ, as
sub-custodian for each Master Portfolio's foreign securities and other assets,
the foreign banking institutions and foreign securities depositories and
clearing agencies selected from time to time by Custodian as the Foreign Custody
Manager appointed by the Trust's Board of Trustees ("Foreign Sub-Custodians") to
carry out their respective responsibilities in accordance with the terms of the
sub-custodian agreement between each such Foreign Sub-Custodian and Custodian
(each such agreement, a "Foreign Sub-Custodian Agreement"). Upon receipt of an
Officer's Certificate, the Trust may designate any additional foreign
sub-custodian with which Custodian has an agreement for such entity to act as
Custodian's agent, as its sub-custodian and any such additional foreign
sub-custodian shall be deemed a Foreign Sub-Custodian hereunder. Upon receipt of
an Officer's Certificate, Custodian shall cease using any one or more Foreign
Sub-Custodians for the Master Portfolio's assets.
(b) Each Foreign Sub-Custodian Agreement shall be
substantially in the form delivered to the Trust herewith and will not be
amended in a way that materially or adversely affects the Trust without the
Trust's prior written consent.
(c) Custodian shall identify on its books as belonging to each
Master Portfolio the Foreign Securities of such Master Portfolio held by each
Foreign Sub-Custodian. At the election of the Trust, it shall be entitled to be
subrogated to any claims by the Trust or any Master Portfolio against a Foreign
Sub-Custodian as a consequence of any loss, damage, cost, expense, liability or
claim sustained or incurred by the Trust or any Master Portfolio if and to the
extent that the Trust or such Master Portfolio has been made whole by Custodian
for any such loss, damage, cost, expense, liability or claim.
(d) Upon request of the Trust, Custodian will, consistent with
the terms of the applicable Foreign Sub-Custodian Agreement, use reasonable
efforts to arrange for the independent accountants of the Trust to be afforded
access to the books and records of any Foreign Sub-Custodian insofar as such
books and records relate to the performance of such Foreign Sub-Custodian under
its agreement with Custodian on behalf of the Trust.
(e) Custodian will supply to the Trust from time to time, as
mutually agreed upon, statements in respect of the securities and other assets
of each Master Portfolio held by Foreign Sub-Custodians, including but not
limited to, an identification of entities having possession of each Master
Portfolio's Foreign Securities and other assets, and advices or notifications of
any transfers of Foreign Securities to or from each custodial account maintained
by a Foreign Sub-Custodian for Custodian on behalf of the Master Portfolio.
18
(f) Custodian agrees that it will use reasonable care in
monitoring compliance by each Foreign Sub-Custodian with the terms of the
relevant Foreign Sub-Custodian Agreement and that if it learns of any breach of
such Foreign Sub-Custodian Agreement believed by Custodian to have a material
adverse effect on the Trust or any Master Portfolio it will promptly notify the
Trust in writing of such breach. Custodian also agrees to use reasonable and
diligent efforts to enforce its rights under the relevant Foreign Sub-Custodian
Agreement.
(g) Custodian shall transmit promptly to the Trust all
notices, reports or other written information received pertaining to the Master
Portfolios' Foreign Securities, including without limitation, notices of
corporate action, proxies and proxy solicitation materials.
(h) Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for securities received for the account of the
Trust or any Master Portfolio and delivery of securities maintained for the
account of the Trust or any Master Portfolio 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, delivery of 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.
(i) With respect to any losses or damages arising out of or
relating to any actions or omissions of any Foreign Sub-Custodian, the sole
responsibility and liability of Custodian shall be to take all appropriate and
reasonable action at the Trust's expense to recover such loss or damage from the
Foreign Sub-Custodian. It is expressly understood and agreed that Custodian's
sole responsibility and liability shall be limited to amounts so recovered from
the Foreign Sub-Custodian.
28. Concerning Custodian.
(a) (i) Custodian shall exercise care and diligence and act in
good faith and use all commercially reasonable efforts in the performance of its
duties hereunder. Custodian shall be responsible to the Trust for its own
failure or the failure of any sub-custodian that it shall appoint (other than a
foreign sub-custodian referred to in Paragraph 27 or a sub-custodian appointed
by Custodian at the specific direction of the Trust) or that of its employees or
agents, to perform its duties, obligations or responsibilities in accordance
with this Agreement, but only to the extent that such failure results from acts
or omissions that constitute willful misfeasance, bad faith or negligence on the
part of Custodian, or on the part of its employees or agents, or reckless
disregard of such duties, obligations and responsibilities.
(ii) Without limiting the generality of the foregoing or
any other provision of this Agreement, in no event shall Custodian be liable to
the Master Portfolio or any third party nor, except as otherwise provided in
this subparagraph for special, indirect or consequential damages or lost profits
or loss of business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action. Custodian may, with respect to questions of law arising under
any FCM Agreement, apply for and obtain the advice and opinion of counsel to the
Trust at the expense of the Trust, or of its own counsel at its own expense, and
shall be fully protected with respect to
19
anything done or omitted by it in good faith in conformity with such advice or
opinion. Custodian shall be liable to the Trust for any loss or damage resulting
from the use of the Book-Entry System or any Securities Depository arising by
reason of any negligence or willful misconduct on the part of Custodian or any
of its employees or agents.
(iii) Custodian's liability pursuant to the last sentence
of subparagraph (a)(i) shall include, but not be limited to, reimbursing the
Trust for court-ordered damage awards, fines, penalties, and judicially-approved
settlements (and attorney's fees and disbursements relating thereto) arising out
of or in connection with the conduct giving rise to such liability.
(iv) If the Trust receives notice of the commencement of
any action, suit, or proceeding (an "Action"), or notice that any Action may be
commenced, for which Custodian may be liable to the Trust pursuant to this
Paragraph 28, the Trust shall give notice to Custodian of the commencement of
the Action or of the possibility that an Action will be commenced. Any omission
to notify Custodian will not relieve Custodian from any liability which it may
have under this Paragraph, except to the extent the failure to notify Custodian
prejudices the rights of Custodian. Custodian will be entitled at its sole
expense and liability, to exercise full control of the defense, compromise or
settlement of any such Action, provided that Custodian: (1) notifies the Trust
in writing of Custodian's intention to assume such defense; and (2) retains
legal counsel reasonably satisfactory to the Trust to conduct the defense of
such Action. If Custodian advises the Trust that it does not wish to exercise
full control of any defense, compromise or settlement of any Action, Custodian
shall be responsible for the fees and expenses of counsel selected by the Trust,
in addition to any other amounts for which Custodian may be liable pursuant to
this Paragraph 28. The other person will cooperate with the person assuming the
defense, compromise or settlement of any Action in accordance with this
Paragraph in any manner that such person reasonably may request. If Custodian so
assumes the defense of any such Action, the Trust will have the right to employ
a separate counsel and to participate in (but not control) the defense,
compromise or settlement of the Action, but the fees and expenses of such
counsel will be at the expense of the Trust unless: (a) Custodian has agreed to
pay such fees and expenses, (b) any relief other than the payment of money
damages is sought against the Trust, or (c) the Trust has been advised by its
counsel that there may be one or more defenses available to it which are
different from or additional to those available to Custodian and that a conflict
of interest therefore exists, and in any such case that portion of the fees and
expenses of such separate counsel that are reasonably related to matters for
which Custodian is liable pursuant to this Paragraph will be paid by Custodian.
The Trust will not settle or compromise any such Action for which Custodian is
liable pursuant to this Paragraph without the prior written consent of
Custodian, unless Custodian has failed, after reasonable notice, to undertake
control of such Action in the manner provided in this Paragraph. Custodian will
not settle or compromise any such Action in which any relief other than the
payment of money damages is sought against the Trust without the consent of the
Trust, such consent not to be unreasonably withheld. In the event that Custodian
intends to settle or compromise any Action in which solely money damages are
sought, Custodian shall give the Trust fifteen (15) business days prior written
notice.
(b) Without limiting the generality of the foregoing,
Custodian shall be under no obligation to inquire into, and shall not be liable
for:
20
(i) the validity of the issue of any securities purchased,
sold, or written by or for the Trust or any Master Portfolio, the legality of
the purchase, sale or writing thereof, or the propriety of the amount paid or
received therefor;
(ii) the legality of the sale or redemption of any Shares,
or the propriety of the amount to be received or paid therefor;
(iii) the legality of the declaration or payment of any
dividend by the Trust;
(iv) the legality of any borrowing by the Trust using
securities as collateral;
(v) the legality of any loan of portfolio securities, or
under any duty or obligation to see to it that any cash collateral delivered to
it by a broker, dealer, or financial institution or held by it at any time as a
result of such loan of portfolio securities is adequate collateral for or
against any loss Custodian, the Trust or any Master Portfolio might sustain as a
result of such loan. Custodian specifically, but not by way of limitation, shall
not be under any duty or obligation periodically to check or notify the Trust or
any Master Portfolio that the amount of such cash collateral held by Custodian
for the Trust is sufficient collateral for the Trust, but such duty or
obligation shall be the sole responsibility of the Trust. In addition, Custodian
shall be under no duty or obligation to see that any broker, dealer or financial
institution to which portfolio securities are lent makes payment to it of any
dividends or interest which are payable to or for the account of the Trust
during the period of such loan or at the termination of such loan, provided,
however, that Custodian shall promptly notify the Trust in the event that such
dividends or interest are not paid and received when due; or
(vi) the sufficiency or value of any amounts of money
and/or securities held in any segregated account described in Paragraph 12(a)
hereof in connection with transactions by the Master Portfolios, or whether such
segregated account provides the compliance intended to be achieved. In addition,
Custodian shall not be under any duty or obligation to see that any broker,
dealer, FCM or Clearing Member makes payment to the Master Portfolio of any
variation margin payment or similar payment which the Master Portfolio may be
entitled to receive from such broker, dealer, FCM or Clearing Member, to see
that any payment received by Custodian from any broker, dealer, FCM or Clearing
Member is the amount the Trust is entitled to receive, or to notify the Trust or
a Master Portfolio of Custodian's receipt or non-receipt of any such payment.
(c) Custodian shall not be liable for, or considered to be
sub-custodian or custodian of, any money, whether or not represented by any
check, draft, or other instrument for the payment of money, received by
Custodian on behalf of the Trust until Custodian actually receives and collects
such money directly or by the final crediting of the account representing the
Master Portfolio's interest at the Book-Entry System or a Securities Depository.
(d) Custodian shall not have any responsibility or be liable
for ascertaining or acting upon any calls, conversions, exchange offers,
tenders, interest rate changes or similar matters relating to securities held in
a Securities Depository, unless Custodian shall have actually
21
received timely notice from such Securities Depository. In no event shall
Custodian have any responsibility or liability for the failure of any Securities
Depository to collect, or for the late collection or late crediting by a
Securities Depository of any amount payable upon securities deposited in a
Securities Depository which may mature or be redeemed, retired, called or
otherwise become payable. Upon receipt of Written Instructions from the Trust of
an overdue amount on securities held in a Securities Depository, Custodian shall
make a claim against a Securities Depository on behalf of the Trust, except that
Custodian shall not be under any obligation to appear in, prosecute or defend
any action suit or proceeding in respect to any securities held by a Securities
Depository which in its opinion may involve it in expense or liability, unless
indemnity satisfactory to it against all expense and liability be furnished as
often as may be required.
(e) Custodian shall not be under any duty or obligation to
take action to effect collection of any amount due to the Trust from a transfer
agent of the Trust nor to take any action to effect payment or distribution by
the transfer agent of the Trust of any amount paid by Custodian to the transfer
agent of the Trust in accordance with this Agreement.
(f) Custodian shall not be under any duty or obligation to
take action to effect collection of any amount, if the securities upon which
such amount is payable are in default, or if payment is refused after due demand
or presentation, unless and until: (i) it shall be directed to take such action
by Written Instructions, and (ii) it shall be assured to its reasonable
satisfaction of reimbursement of its costs and expenses in connection with any
such action.
(g) Custodian may in addition to the employment of Foreign
Sub-Custodians pursuant to Paragraphs 7 and 27, hereof appoint one or more
banking institutions as Depository or Depositories, as a sub-custodian or as
sub-custodians, or as a co-custodian or as co-custodians, including, but not
limited to, banking institutions located in foreign countries, of securities and
moneys at any time owned by the Master Portfolios, upon such terms and
conditions as may be approved in an Officer's Certificate or contained in an
agreement executed by Custodian and the Trust and the appointed institution.
(h) Custodian shall not be under any duty or obligation: (i)
to ascertain whether any securities at any time delivered to, or held by it or
by any Foreign Sub-Custodian, for the account of the Trust and specifically
allocated to a Master Portfolio are such as properly may be held by the Trust or
such Master Portfolio under the provisions of its Prospectus, or (ii) to
ascertain whether any transactions by the Master Portfolio, whether or not
involving Custodian, are such transactions as may properly be engaged in by the
Master Portfolio.
(i) Custodian shall charge its compensation and any expenses
with respect to the Master Portfolios of the Trust incurred by Custodian in the
performance of its duties under this Agreement only against the money of the
Master Portfolio or Master Portfolios of the Trust from which such compensation
or expenses is actually due and payable, and under no circumstances shall any
compensation or expenses due to Custodian be considered to be a joint, or joint
and several, obligation of the Master Portfolios of the Trust. To the extent
that Custodian is entitled to recover from the Trust any loss, damage, liability
or expense (including counsel fees) under this Agreement, Custodian shall charge
the amount due in respect of such loss, damage, liability or expense (including
counsel fees) only against the money held by it for the
22
Master Portfolio or Master Portfolios of the Trust that is/are identified by the
Trust in an Officer's Certificate, unless and until the Trust instructs
Custodian by an Officer's Certificate to charge against money held by it for the
account of a Master Portfolio such Master Portfolio's pro rata share (based on
such Master Portfolio's net asset value at the time of the charge in proportion
to the aggregate net asset value of all Master Portfolios at that time) of the
amount of such loss, damage, liability or expense (including counsel fees).
(j) Custodian shall be entitled to rely upon any Officer's
Certificate, Written Instructions, notice or other instrument in writing
received by Custodian and reasonably believed by Custodian, to be an Officer's
Certificate or Written Instructions. Custodian shall be entitled to rely upon
any Oral Instructions actually received by Custodian. The Trust agrees to
forward to Custodian Written Instructions confirming such Oral Instructions in
such manner so that such Written Instructions are received by Custodian, whether
by hand delivery, telecopier or other similar device, or otherwise, by the close
of business of the same day that such Oral Instructions are received by
Custodian. The Trust agrees that the fact that such confirming instructions are
not received, or that contrary instructions are received, by Custodian shall in
no way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. The Trust agrees that Custodian
shall not incur any liability to the Trust in acting upon Oral Instructions
given to Custodian hereunder concerning such transactions provided such
instructions reasonably appear to have been received from an Authorized Person.
(k) Custodian shall be entitled to rely upon any instrument,
instruction or notice received by it and reasonably believed by it to be given
in accordance with the terms and conditions of any FCM Agreement. Without
limiting the generality of the foregoing, Custodian shall not be under any duty
to inquire into, and Custodian shall not be liable for, the accuracy of any
statements or representations contained in any such instrument or other notice
including, without limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or clearing member.
(l) Custodian shall provide the Trust with any report obtained
by Custodian on the system of internal accounting control of the Book-Entry
System, any Securities Depository utilized hereunder the Depository or the
Options Clearing Corporation, and with such reports on its own systems of
internal accounting control as the Trust may reasonably request from time to
time.
(m) Subject to the foregoing provisions of this Agreement,
including, without limitation, those contained in Paragraph 27 hereof, Custodian
may deliver and receive securities, and receipts with respect to such
securities, and arrange for payments to be made and received by Custodian in
accordance with the customs prevailing from time to time among brokers or
dealers in such securities. When Custodian is instructed to deliver securities
against payment, delivery of such securities and receipt of payment therefor may
not be completed simultaneously. The Master Portfolio assumes all responsibility
and liability for all credit risks involved in connection with Custodian's
delivery of securities pursuant to proper instructions of the Master Portfolio,
which responsibility and liability shall continue until final payment in full
has been received by Custodian.
23
(n) Custodian shall not have any duties or responsibilities
whatsoever except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against Custodian.
29. Termination. Any of the parties hereto may terminate this Agreement
by giving to the other parties a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of
giving of such notice. Upon the date set forth in such notice this Agreement
shall terminate, and Custodian shall on that date deliver directly to the Trust
or a successor custodian designated by the Trust all securities and moneys then
owned by the Trust and held by Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall then be
entitled; provided, however, that transaction fees and expenses payable by the
Trust in connection with a deconversion to a successor custodian shall be
limited to Custodian's actual direct cost.
30. Notices. All notices and other communications (collectively
referred to as "Notice" or "Notices" in this paragraph) hereunder shall be in
writing or by confirm in telegram, cable, telex, or facsimile sending device.
Notices shall be addressed: (a) if to Custodian, at Custodian's address, 00
Xxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Ajosa;
(b) if to the Trust, at the address of the Trust, 000 Xxxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, Xx., Secretary; or (c) if to
none of the foregoing, at such other address as shall have been notified to the
sender of any such Notice or other communication. Notice shall be deemed to have
been given when actually received by the other party. All postage, cable,
telegram, telex and facsimile sending device charges arising from the sending of
a Notice hereunder shall be paid by the sender.
31. Further Actions. Each party agrees to perform such further acts and
execute such further documents as it deems necessary to effectuate the purposes
hereof.
32. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
33. Miscellaneous.
(a) The Trust agrees that Custodian may be a counterparty in
any purchase or sale of foreign currency by or for the Trust on a spot or
forward basis, and on any option to buy or sell foreign currency.
(b) This Agreement embodies the entire Agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors.
24
34. Release. The names "Nations Master Investment Trust" and "Trustees
of Nations Master Investment Trust" refer respectively to the Trust created and
the Trustees, as trustees but not individually or personally, acting from time
to time under a Declaration of Trust and Certificate of Trust dated January 14,
1999, which is hereby referred to and a copy of which is on file at the
principal office of the Trust. The obligations of "Nations Master Investment
Trust" entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Interestholders, or representatives of
the Trust personally, but bind only the Trust Property (as defined in the
Declaration of Trust), and all persons dealing with any class of Shares of the
Trust Property, and all persons dealing with any class of Shares of the Trust
must look solely to the Trust Property belonging to such class for the
enforcement of any claims against the Trust.
35. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
NATIONS MASTER INVESTMENT TRUST
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------------
Xxxxx X. Xxxxx, Xx.
Assistant Secretary
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Grunston
-----------------------------
Xxxxxxx X. Grunston
Vice President
26
SCHEDULE I
----------
The Custody Agreement between Nations Master Investment Trust, and
Sub-Custodian applies to the following Master Portfolios of the Trust:
Nations Intermediate Bond Master Portfolio
Nations Blue Chip Master Portfolio
Nations International Equity Master Portfolio
Nations Xxxxxxx Focused Equities Master Portfolio
Nations Xxxxxxx Growth & Income Master Portfolio
Nations International Value Master Portfolio
Last Amended: October 15, 1999
IN WITNESS WHEREOF, the parties hereto have caused this
amended Schedule I to be executed by their duly authorized officers designated
below as of the 15th day of October, 1999.
NATIONS MASTER INVESTMENT TRUST
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------------
Xxxxx X. Xxxxx, Xx.
Assistant Secretary
THE BANK OF NEW YORK
By: /s/ Xxxxxxx X. Grunston
-----------------------------
Xxxxxxx X. Grunston
Vice President
27
SCHEDULE II
------------
I, Xxx Xxxxxx, a Vice President with THE BANK OF NEW YORK do hereby designate
the following publications:
The Bond Buyer
Depository Trust Company Services
Financial Daily Card Service
XX Xxxxxx Municipal Bond Service
London Financial Times
Standard & Poor's Called Bond Record
Wall Street Journal
28
SCHEDULE III
------------
DOMESTIC CUSTODIAN FEE SCHEDULE
FOR
NATIONS MASTER INVESTMENT TRUST
SAFEKEEPING/INCOME COLLECTION/REPORTING DTC-ID AFFIRMATION
ALL SYSTEMS DEVELOPMENT AND USAGE CHARGES
------------------------------------------
3/4ths of one basis point per annum on the aggregate net assets of
all Nations' Non-Money Market Funds up to $10 billion.
1/2 of a basis point on the excess.
SECURITY TRANSACTION CHARGES/PAYDOWNS
-------------------------------------
$ 5 Paydowns
$ 7 DTC/FRB/PTC
$15 Physicals, options and futures
$40 Euro C/D's
OTHER CHARGES
--------------
$ 5 Bank official checks
$ 2 Money transfers in/out of the Fund's custodian account not
related to securities transactions.
EARNINGS CREDITS ON BALANCES/INTEREST ON OVERDRAFTS
---------------------------------------------------
Earnings credits are provided to each Fund on 80% of the daily balance in the
domestic custodian account computed at the 90-day T-xxxx rate on the day of the
balance.
Overdrafts, excluding bank errors, will cause a reduction of earnings credits
daily, computed at 1% above the average Federal Funds rate on the day of the
overdraft.
Credits and debits will be accumulated daily and offset monthly against the
Bank's domestic custodian fees. To the extent a net debit is accumulated, each
Fund will be billed for the expense. To the extent a net earnings credit is
generated, such excess earnings credit can be carried forward to the next
succeeding month. However, no earnings credit will be carried forward after
year-end.
OUT-OF-POCKET EXPENSES
----------------------
29
None.
BILLING CYCLE
--------------
The above fees are billed monthly.
30
SCHEDULE IV
OVERDRAFT RATE
31
