Exhibit (j)
CUSTODIAN AGREEMENT
Dated as of
______________, 2004
Between
XXXXXXX GLOBAL COMMODITIES STOCK FUND, INC.
and
XXXXX BROTHERS XXXXXXXX & CO.
TABLE OF CONTENTS
ARTICLE I
APPOINTMENT OF CUSTODIAN
ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
2.1. Safekeeping......................................................... 6
2.2. Manner of Holding Securities........................................ 6
2.3. Registered Name; Nominee............................................ 6
2.4. Purchases by the Fund............................................... 7
2.5. Exchanges of Securities............................................. 8
2.6. Sales of Securities................................................. 8
2.7. Depositary Receipts................................................. 9
2.8. Exercise of Rights; Tender Offers................................... 9
2.9. Stock Dividends, Rights, Etc........................................ 9
2.10. Options and Swaps................................................... 9
2.11. Futures and Forward Contracts....................................... 10
2.12. Borrowings.......................................................... 11
2.13. Bank Accounts....................................................... 11
2.14. Interest-Bearing Deposits........................................... 12
2.15. Foreign Exchange Transactions....................................... 12
2.16. Securities Loans.................................................... 13
2.17. Collections......................................................... 13
2.18. Dividends, Distributions and
Redemptions...................................................... 14
2.19. Proxies; Communications Relating to
Portfolio Securities............................................. 14
2.20. Bills............................................................... 15
2.21. Nondiscretionary Details............................................ 15
2.22. Deposit of Fund Assets in Securities
Systems.......................................................... 15
2.23. Other Transfers..................................................... 16
2.24. Establishment of Segregated Accounts................................ 17
2.25. Custodian Advances.................................................. 17
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TABLE OF CONTENTS
ARTICLE III
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
AND RELATED MATTERS
3.1. Proper Instructions and Special
Instructions..................................................... 18
3.2. Authorized Persons.................................................. 19
3.3 Persons Having Access to Assets of the Fund 19
3.4. Actions of Custodian Based on Proper
Instructions and Special Instructions............................ 19
ARTICLE IV
SUBCUSTODIANS
4.1. Domestic Subcustodians.............................................. 20
4.2. Foreign Subcustodians and Interim
Subcustodians.................................................... 20
4.3. Termination of a Subcustodian....................................... 22
4.4. Agents.............................................................. 22
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
5.1. Standard of Care.................................................... 23
5.2. Liability of Custodian for Actions of
Other Persons.................................................... 24
5.3. Indemnification..................................................... 25
5.4. Investment Limitations.............................................. 26
5.5. Fund's Right to Proceed............................................. 26
ARTICLE VI
RECORDS
6.1. Preparation of Reports.............................................. 27
6.2. Custodian's Books and Records....................................... 27
6.3. Opinion of Fund's Independent Certified
Public Accountants............................................... 28
6.4. Reports of Custodian's Independent
Certified Public Accountants..................................... 28
6.5. Information Regarding Foreign Subcustodians
and Foreign Depositories......................................... 28
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TABLE OF CONTENTS
ARTICLE VII
CUSTODIAN FEES
ARTICLE VIII
TERMINATION
ARTICLE IX
MISCELLANEOUS
9.1. Execution of Documents.............................................. 33
9.2. Entire Agreement.................................................... 33
9.3. Waivers and Amendments.............................................. 33
9.4. Captions............................................................ 33
9.5. Governing Law....................................................... 33
9.6. Notices............................................................. 33
9.7. Successors and Assigns.............................................. 34
9.8. Counterparts........................................................ 34
9.9. Representative Capacity; Nonrecourse
Obligations...................................................... 34
Appendix A Procedures Relating to Custodian's Security Interest
Appendix B Subcustodians, Foreign Countries, and Foreign Depositories
Appendix C Sources of Price Quotations
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FORM OF CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT dated as of ___________, 2004, between Xxxxxxx Global
Commodities Stock Fund, Inc. (the "Fund"), a Maryland corporation, and Xxxxx
Brothers Xxxxxxxx & Co. (the "Custodian"), a New York limited partnership. The
Fund is entering into this Agreement on behalf of each of its series existing as
of the date hereof. The Custodian shall treat the assets of each series as a
separate Fund hereunder, and any reference to "Fund" shall refer to a series of
the Fund as the context shall require. In the event the Fund establishes one or
more additional series after the date hereof, with respect to which the Fund
desires to have the Custodian render services as Custodian hereunder, the Fund
shall so notify the Custodian in writing, and if the Custodian agrees in writing
to provide such services, such series shall become a Fund or Funds hereunder.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
APPOINTMENT OF CUSTODIAN
The Fund hereby employs and appoints the Custodian as a custodian
for the term of and subject to the provisions of this Agreement. The Fund agrees
to deliver to the Custodian all securities, cash and other assets owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time to
time, and the cash consideration received by it for such new or treasury shares
of capital stock of the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require
the Fund to deliver to it any securities, cash or other assets owned by the Fund
and shall have no responsibility or liability for or on account of securities,
cash or other assets not so delivered. The Fund will deposit with the Custodian
copies of the Articles of Incorporation and By-Laws (or comparable documents) of
the Fund and all amendments thereto, and copies of such votes and other
proceedings of the Fund as may be necessary for or convenient to the Custodian
in the performance of its duties.
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ARTICLE II
POWERS AND DUTIES OF CUSTODIAN
The Custodian shall have and perform, or cause to be performed in
accordance with this Agreement, the powers and duties set forth in this Article
II. Pursuant to and in accordance with Article IV, the Custodian may appoint one
or more Subcustodians (as that term is defined in Article IV) to exercise the
powers and perform the duties of the Custodian set forth in this Article II and,
except as the context shall otherwise require, references to the Custodian in
this Article II shall include any Subcustodian so appointed.
2.1. SAFEKEEPING. The Custodian shall keep safely the cash,
securities and other assets of the Fund that have been delivered to the
Custodian and from time to time shall accept delivery of cash, securities and
other assets for safekeeping.
2.2. MANNER OF HOLDING SECURITIES. (a) The Custodian shall hold
securities of the Fund (i) by physical possession of the share certificates or
other instruments representing such securities in registered or bearer form, or
the broker's receipts or confirmations for forward contracts, futures contracts,
options and similar contracts and securities, or (ii) in book-entry form by a
Securities System (as that term is defined in section 2.22) or (iii) by a
Foreign Depository (as that term is defined in section 4.2(a)).
(b) The Custodian shall identify securities and other assets held by
it hereunder as being held for the account of the Fund and shall require each
Subcustodian to identify securities and other assets held by such Subcustodian
as being held for the account of the Custodian for the Fund (or, if authorized
by Special Instructions, for customers of the Custodian) or for the account of
another Subcustodian for the Fund (or, if authorized by Special Instructions,
for customers of such Subcustodian); provided that if assets are held for the
account of the Custodian or a Subcustodian for customers of the Custodian or
such Subcustodian, the records of the Custodian shall at all times indicate the
Fund and other customers of the Custodian for which such assets are held in such
account and their respective interests therein.
2.3. REGISTERED NAME; NOMINEE. (a) The Custodian shall hold
registered securities and other assets of the Fund (i) in the name of the
Custodian (including any Subcustodian), the Fund, a Securities System, a Foreign
Depository or any nominee of any such person or (ii) in street certificate form,
so-called, and in any case
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with or without any indication of fiduciary capacity, provided that such
securities and other assets of the Fund are held in an account of the Custodian
containing only assets of the Fund or only assets held as fiduciary or custodian
for customers.
(b) Except with respect to securities or other assets which under
local custom and practice generally accepted by Institutional Clients are held
in the investor's name, the Custodian shall not hold registered securities or
other assets in the name of the Fund, and shall require each Subcustodian not to
hold registered securities or other assets in the name of the Fund, unless the
Custodian or such Subcustodian promptly notifies the Fund that such registered
securities are being held in the Fund's name and causes the Securities System,
Foreign Depository, issuer or other relevant person to direct all correspondence
and payments to the address of the Custodian or such Subcustodian, as the case
may be.
2.4. PURCHASES BY THE FUND. Upon receipt of Proper Instructions (as
that term is defined in section 3.1(a)) and insofar as funds are available for
the purpose (or as funds are otherwise provided by the Custodian at its
discretion pursuant to section 2.25), the Custodian shall pay for and receive
securities or other assets purchased for the account of the Fund, payment being
made only upon receipt of the securities or other assets (a) by the Custodian,
or (b) by credit to an account which the Custodian may have with a Securities
System, clearing corporation of a national securities exchange, Foreign
Depository or other financial institution approved by the Fund. Notwithstanding
the foregoing, upon receipt of Proper Instructions: (i) in the case of
repurchase agreements entered into by the Fund in a transaction involving a
Securities System or a Foreign Depository, the Custodian may release funds to
the Securities System or Foreign Depository prior to the receipt of advice from
the Securities System or Foreign Depository that the securities underlying such
repurchase agreement have been transferred by book entry into the Account (as
defined in section 2.22) of the Custodian maintained with such Securities System
or similar account with a Foreign Depository, provided that the instructions of
the Custodian to the Securities System or Foreign Depository require that the
Securities System or Foreign Depository, as the case may be, may make payment of
such funds to the other party to the repurchase agreement only upon transfer by
book-entry of the securities underlying the repurchase agreement into the
Account, (ii) in the case of futures and forward contracts, options and similar
securities, foreign currency purchased from third parties, time deposits,
foreign currency call account deposits, and other bank deposits, and
transactions pursuant to sections 2.10, 2.11, 2.13, 2.14 and 2.15, the Custodian
may make payment therefor prior to delivery of the contract, currency, option or
security without receiving an instrument evidencing said contract, currency,
option, security or deposit, and (iii) in the case of the purchase of
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securities or other assets the settlement of which occurs outside the United
States of America, the Custodian may make payment therefor and receive delivery
thereof in accordance with local custom and practice generally accepted by
Institutional Clients (as defined below) in the country in which settlement
occurs, provided that in every case the Custodian shall be subject to the
standard of care set forth in Article V and to any Special Instructions given in
accordance with section 3.1(b). Except in the cases provided for in the
immediately preceding sentence, in any case where payment for purchase of
securities or other assets for the account of the Fund is made by the Custodian
in advance of receipt of the securities or other assets so purchased in the
absence of Proper Instructions to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities or other assets to the same
extent as if the securities or other assets had been received by the Custodian.
For purposes of this Agreement, "Institutional Clients" means U.S. registered
investment companies, or major, U.S.-based commercial banks, insurance
companies, pension funds or substantially similar financial institutions which,
as a substantial part of their business operations, purchase or sell securities
and make use of custodial services.
2.5. EXCHANGES OF SECURITIES. Upon receipt of Proper Instructions,
the Custodian shall exchange securities held by it for the account of the Fund
for other securities in connection with any reorganization, recapitalization,
split-up of shares, change of par value, conversion or other event, and to
deposit any such securities in accordance with the terms of any reorganization
or protective plan. Without Proper Instructions, the Custodian may surrender
securities in temporary form for definitive securities, may surrender securities
for transfer into a name or nominee name as permitted in section 2.3, and may
surrender securities for a different number of certificates or instruments
representing the same number of shares or same principal amount of indebtedness,
provided that the securities to be issued are to be delivered to the Custodian.
2.6. SALES OF SECURITIES. Upon receipt of Proper Instructions, the
Custodian shall make delivery of securities or other assets which have been sold
for the account of the Fund, but only against payment therefor (a) in cash, by a
certified check, bank cashier's check, bank credit, or bank wire transfer, or
(b) by credit to the account of the Custodian with a Securities System, clearing
corporation of a national securities exchange, Foreign Depository or other
financial institution approved by the Fund by Proper Instructions. However, (i)
in the case of delivery of physical certificates or instruments representing
securities, the Custodian may make delivery to the broker acting as agent for
the buyer of the securities, against receipt therefor, for examination in
accordance with "street delivery" custom, provided that the Custodian shall have
taken reasonable steps to ensure prompt collection of the payment for,
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or the return of, such securities by the broker or its clearing agent and (ii)
in the case of the sale of securities or other assets the settlement of which
occurs outside the United States of America, such securities shall be delivered
and paid for in accordance with local custom and practice generally accepted by
Institutional Clients in the country in which settlement occurs, provided that
in every case the Custodian shall be subject to the standard of care set forth
in Article V and to any Special Instructions given in accordance with section
3.1(b). Except in the cases provided for in the immediately preceding sentence,
in any case where delivery of securities or other assets for the account of the
Fund is made by the Custodian in advance of receipt of payment for the
securities or other assets so sold in the absence of Proper Instructions to so
deliver in advance, the Custodian shall be absolutely liable to the Fund for
such payment to the same extent as if such payment had been received by the
Custodian.
2.7. DEPOSITARY RECEIPTS. Upon receipt of Proper Instructions, the
Custodian shall surrender securities to the depositary used by an issuer of
American Depositary Receipts, European Depositary Receipts, Global Depositary
Receipts, International Depositary Receipts and other types of Depositary
Receipts (hereinafter collectively referred to as "ADRs") for such securities
against a written receipt therefor adequately describing such securities and
written evidence satisfactory to the Custodian that the depositary has
acknowledged receipt of instructions to issue ADRs with respect to such
securities in the name of the Custodian, or a nominee of the Custodian, for
delivery to the Custodian in Boston, Massachusetts, or at such other place as
the Custodian may from time to time designate.
Upon receipt of Proper Instructions, the Custodian shall surrender
ADRs to the issuer thereof against a written receipt therefor adequately
describing the ADRs surrendered and written evidence satisfactory to the
Custodian that the issuer of the ADRs has acknowledged receipt of instructions
to cause its depositary to deliver the securities underlying such ADRs to the
Custodian.
2.8. EXERCISE OF RIGHTS; TENDER OFFERS. Upon receipt of Proper
Instructions, the Custodian shall (a) deliver to the issuer or trustee thereof,
or to the agent of either, warrants, puts, calls, futures contracts, options,
rights or similar securities for the purpose of being exercised or sold,
provided that the new securities and cash, if any, acquired by such action are
to be delivered to the Custodian, and (b) deposit securities upon invitations
for tenders of securities, provided that the consideration is to be paid or
delivered or the tendered securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the Custodian
shall take all necessary action, unless otherwise directed to the contrary by
Proper Instructions, to comply with the terms of
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all mandatory or compulsory exchanges, calls, tenders, redemptions or similar
rights of security ownership of which the Custodian receives notice or otherwise
becomes aware, and shall promptly notify the Fund of any such action in writing
by facsimile transmission or in such other manner as the Fund and the Custodian
may agree in writing.
2.9. STOCK DIVIDENDS, RIGHTS, ETC. The Custodian shall receive and
collect all stock dividends, rights and other items of like nature and shall
deal with the same as it would other deposited assets or as directed in Proper
Instructions.
2.10. OPTIONS AND SWAPS. Upon receipt of Proper Instructions or
instructions from a third party properly given under any Procedural Agreement,
the Custodian shall (a) receive and retain confirmations or other documents (to
the extent confirmations or other documents are provided to the Custodian)
evidencing the purchase, sale or writing of an option or swap of any type on or
in respect of a security, securities index, currency or similar form of property
by the Fund; (b) deposit and maintain in a segregated account, either physically
or by book-entry in a Securities System or Foreign Depository or with a broker,
dealer or other party designated by the Fund, securities, cash or other assets
in connection with options transactions or swap agreements entered into by the
Fund; (c) transfer securities, cash or other assets to a Securities System,
Foreign Depository, broker, dealer or other party or organization, as margin
(including variation margin) or other security for the Fund's obligations in
respect of an option or swap; and (d) pay, release and/or transfer such
securities, cash or other assets only in accordance with a notice or other
communication evidencing the expiration, termination, exercise of any such
option or default under any such option or swap furnished by The Options
Clearing Corporation, the securities or options exchange on which such option is
traded, or such other organization, party, broker or dealer as may be
responsible for handling such options or swap transactions or have authority to
give such notice or communication under a Procedural Agreement. Subject to the
standard of care set forth in Article V (and to its safekeeping duties set forth
in section 2.1), the Custodian shall not be responsible for the sufficiency of
assets held in any segregated account established and maintained in accordance
with Proper Instructions or instructions from a third party properly given under
any Procedural Agreement or for the performance by the Fund or any third party
of its obligations under any Procedural Agreement. For purposes of this
Agreement, a "Procedural Agreement" is a procedural agreement relating to
options, swaps (including caps, floors and similar arrangements), futures
contracts, forward contracts or borrowings by the Fund to which the Fund, the
Custodian and a third party are parties.
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2.11. FUTURES AND FORWARD CONTRACTS. Upon receipt of Proper
Instructions or instructions from a third party properly given under any
Procedural Agreement, the Custodian shall (a) receive and retain confirmations
or other documents (to the extent confirmations or other documents are provided
to the Custodian) evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund or the entry into a forward contract by
the Fund; (b) deposit and maintain in a segregated account, either physically or
by book entry in a Securities System or Foreign Depository, for the benefit of
any futures commission merchant, or pay to such futures commission merchant,
securities, cash or other assets designated by the Fund as initial, maintenance
or variation "margin" deposits intended to secure the Fund's performance of its
obligations under any futures contracts purchased or sold or any options on
futures contracts written, purchased or sold by the Fund or any forward
contracts entered into, in accordance with the provisions of any Procedural
Agreement designed to comply with the rules of the Commodity Futures Trading
Commission and/or any contract market, or any similar organization or
organizations on which such contracts or options are traded; and (c) pay,
release and/or transfer securities, cash or other assets into or out of such
margin accounts only in accordance with any such agreements or rules. Subject to
the standard of care set forth in Article V, the Custodian shall not be
responsible for the sufficiency of assets held in any such margin account
established and maintained in accordance with Proper Instructions or
instructions from a third party properly given under any Procedural Agreement or
for the performance by the Fund or any third party of its obligations under any
Procedural Agreement.
2.12. BORROWINGS. Upon receipt of Proper Instructions or
instructions from a third party properly given under any Procedural Agreement,
the Custodian shall deliver securities of the Fund to lenders or their agents,
or otherwise establish a segregated account as agreed to by the Fund and the
Custodian, as collateral for borrowings effected by the Fund, but only against
receipt of the amounts borrowed (or to adjust the amount of such collateral in
accordance with the Procedural Agreement), provided that if such collateral is
held in book-entry form by a Securities System or Foreign Depository, such
collateral may be transferred by book-entry to such lender or its agent against
receipt by the Custodian of an undertaking by such lender to pay such borrowed
money to or upon the order of the Fund on the next business day following such
transfer of collateral.
2.13. BANK ACCOUNTS. The Custodian shall open and operate one or more
accounts in the name of the Fund, subject only to draft or order by the
Custodian, and to hold in such account or accounts all deposits denominated in
U.S. and foreign currency, received for the account of the Fund, other than
deposits with
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Banking Institutions held in accordance with the last paragraph of this Section
2.13. The responsibilities of the Custodian to the Fund for deposits accepted on
the Custodian's books and denominated in U.S. currency shall be that of a U.S.
bank for a similar deposit. The obligation of the Custodian for any deposit
denominated in any foreign currency shall have the benefit of and be subject to
the provisions of the last paragraph of Section 5.1(b) hereof, and accordingly
in the event and to the extent the Custodian shall be unable to make payment in
the currency in which a certain deposit is denominated due to an act of God,
sovereign event or other factor beyond its control, the Custodian's obligation
to pay the Fund in respect of such foreign currency obligation shall be deferred
or relieved until and to the extent the Custodian is able to make payment in
such currency and accordingly shall not be payable on demand in U.S. currency.
2.14. INTEREST-BEARING DEPOSITS. The Custodian shall place
interest-bearing fixed term and call deposits with such banks and in such
amounts as the Fund may authorize pursuant to Proper Instructions. Such deposits
may be placed with the Custodian or with Subcustodians or other Banking
Institutions as the Fund may determine. Deposits may be denominated in U.S.
Dollars or other currencies, as the Fund may determine, and need not be
evidenced by the issuance or delivery of a certificate to the Custodian,
provided that the Custodian shall include in its records with respect to the
assets of the Fund, appropriate notation as to the amount and currency of each
such deposit, the accepting Banking Institution and all other appropriate
details, and shall retain such forms of advice or receipt evidencing such
deposits as may be forwarded to the Custodian by the Banking Institution in
question. The responsibility of the Custodian for such deposits accepted on the
Custodian's books shall be that of a U.S. bank for a similar deposit. With
respect to interest-bearing deposits other than those accepted on the
Custodian's books, (a) the Custodian shall be responsible for the collection of
income as set forth in section 2.17, and (b) so long as the Custodian exercises
reasonable care and diligence in executing Proper Instructions, the Custodian
shall have no responsibility for the failure of any Banking Institution to make
payment in accordance with the terms of such an account. Upon receipt of Proper
Instructions, the Custodian shall take such reasonable steps as the Fund deems
necessary or appropriate to cause such deposits to be insured to the maximum
extent possible by the Federal Deposit Insurance Corporation and any other
applicable deposit insurers. The obligation of the Custodian for any
interest-bearing deposit denominated in any foreign currency shall have the
benefit of and be subject to the provisions of the last paragraph of Section
5.1(b) hereof, and accordingly in the event and to the extent the Custodian
shall be unable to make payment in the currency in
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which a certain deposit is denominated due to an act of God, sovereign event or
other factor or event beyond its control, the Custodian's obligation to pay the
Fund in respect of such foreign currency obligation shall be deferred or
relieved until and to the extent the Custodian is able to make payment in such
currency and accordingly shall not be payable on demand in U.S. currency.
2.15. FOREIGN EXCHANGE TRANSACTIONS. (a) Upon receipt of Proper
Instructions, the Custodian shall settle foreign exchange contracts or options
to purchase and sell foreign currencies for spot and future delivery on behalf
and for the account of the Fund with such currency brokers or Banking
Institutions as the Fund may direct pursuant to Proper Instructions. The
Custodian shall be responsible for the transmission of cash and instructions to
and from the currency broker or Banking Institution with which the contract or
option is made, the safekeeping of all certificates and other documents and
agreements received by the Custodian evidencing or relating to such foreign
exchange transactions and the maintenance of proper records as set forth in
section 6.2. In connection with such transactions, upon receipt of Proper
Instructions, the Custodian shall be authorized to make free outgoing payments
of cash in the form of U.S. Dollars or foreign currency without receiving
confirmation of a foreign exchange contract or option or confirmation that the
countervalue currency completing the foreign exchange contract has been
delivered or that the option has been delivered or received. The Custodian shall
have no authority to select third party foreign exchange dealers and, so long as
the Custodian exercises reasonable care and diligence in executing Proper
Instructions, shall have no responsibility for the failure of any such dealer to
settle any such contract or option in accordance with its terms. The Fund shall
reimburse the Custodian for any interest charges or reasonable out-of-pocket
expenses incurred by the Custodian resulting from the failure or delay of third
party foreign exchange dealers to deliver foreign exchange, other than interest
charges and expenses occasioned by or resulting from the negligence, misfeasance
or misconduct of the Custodian.
(b) The Custodian shall not be obligated to enter into foreign
exchange transactions as principal. However, if the Custodian has made available
to the Fund its services as principal in foreign exchange transactions, upon
receipt of Proper Instructions, the Custodian shall enter into foreign exchange
contracts or options to purchase and sell foreign currencies for spot and future
delivery on behalf of and for the account of the Fund with the Custodian as
principal. The responsibility of the Custodian with respect to foreign exchange
contracts and options executed with the Custodian as principal shall be that of
a U.S. bank with respect to a similar contract or option.
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2.16. SECURITIES LOANS. Upon receipt of Proper Instructions, the
Custodian shall deliver securities of the Fund, in connection with loans of
securities by the Fund, to the borrower thereof in accordance with the terms of
a written securities lending agreement to which the Fund is a party or which is
otherwise approved by the Fund.
2.17. COLLECTIONS. The Custodian shall promptly collect, receive and
deposit in the account or accounts referred to in section 2.13 all income,
payments of principal and other payments with respect to the securities and
other assets held hereunder, promptly endorse and deliver any instruments
required to effect such collections and in connection therewith deliver the
certificates or other instruments representing securities to the issuer thereof
or its agent when securities are called, redeemed, retired or otherwise become
payable; provided that the payment is to be made in such form and manner and at
such time, which may be after delivery by the Custodian of the instrument
representing the security, as is in accordance with the terms of the instrument
representing the security, such Proper Instructions as the Custodian may
receive, governmental regulations, the rules of the Securities System or Foreign
Depository in which such security is held or, with respect to securities
referred to in clause (iii) of the second sentence of section 2.4, in accordance
with local custom and practice generally accepted by Institutional Clients in
the market where payment or delivery occurs, but in all events subject to the
standard of care set forth in Article V. The Custodian shall promptly execute
ownership and other certificates and affidavits for all federal, state and
foreign tax purposes in connection with receipt of income or other payments with
respect to securities or other assets of the Fund or in connection with transfer
of securities or other assets. Pursuant to Proper Instructions, the Custodian
shall take such other actions, which may involve an investment decision, as the
Fund may request with respect to the collection or receipt of funds or the
transfer of securities. Except in the cases provided for in the first sentence
of this section, in any case where delivery of securities for the account of the
Fund is made by the Custodian in advance of receipt of payment with respect to
such securities in the absence of Proper Instructions to so deliver in advance,
the Custodian shall be absolutely liable to the Fund for such payment to the
same extent as if such payment had been received by the Custodian. The Custodian
shall promptly notify the Fund in writing by facsimile transmission or in such
other manner as the Fund and the Custodian may agree in writing if any amount
payable with respect to securities or other assets of the Fund is not received
by the Custodian when due.
2.18. DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Upon receipt of
Proper Instructions, or upon receipt of instructions from the Fund's shareholder
servicing agent or agent with comparable duties (the "Shareholder Servicing
Agent") (given by such person or persons
15
and in such manner on behalf of the Shareholder Servicing Agent as the Fund
shall have authorized by Proper Instructions), the Custodian shall release funds
or securities, insofar as available, to the Shareholder Servicing Agent or as
such Shareholder Servicing Agent shall otherwise instruct (a) for the payment of
dividends or other distributions to Fund shareholders or (b) for payment to the
Fund shareholders who have delivered to such Shareholder Servicing Agent a
request for repurchase or redemption of their shares of capital stock of the
Fund.
2.19. PROXIES; COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. The
Custodian shall, as promptly as is appropriate under the circumstances, deliver
or mail to the Fund all forms of proxies and all notices of meetings and any
other notices, announcements or information (including, without limitation,
information relating to pendency of calls and maturities of securities and
expirations of rights in connection therewith, notices of exercise of call and
put options written by the Fund, and notices of the maturity of futures
contracts (and options thereon) purchased or sold by the Fund) affecting or
relating to securities owned by the Fund that are received by the Custodian.
Upon receipt of Proper Instructions, the Custodian shall execute and deliver or
cause its nominee to execute and deliver such proxies or other authorizations as
may be required. Neither the Custodian nor its nominees shall vote upon any of
such securities or execute any proxy to vote thereon or give any consent or take
any other action with respect to securities or other assets of the Fund (except
as otherwise herein provided) unless ordered to do so by Proper Instructions.
The Custodian shall notify the Fund on or before ex-date (or if
later within 24 hours after receipt by the Custodian of the notice of such
corporate action) of all corporate actions affecting portfolio securities of the
Fund received by the Custodian from the issuers of the securities involved, from
third parties proposing a corporate action, from subcustodians, or from commonly
utilized sources (including proprietary sources) providing corporate action
information, a list of which will be provided by the Custodian to the Fund from
time to time upon request. Information as to corporate actions shall include
information as to dividends, distributions, stock splits, stock dividends,
rights offerings, conversions, exchanges, tender offers, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
ex-, record and pay dates and the amounts or other terms thereof. If the Fund
desires to take action with respect to any corporate action, the Fund shall
notify the Custodian within such period as will give the Custodian (including
any Subcustodian) a sufficient amount of time to take such action.
16
2.20. BILLS. Upon receipt of Proper Instructions, the Custodian
shall pay or cause to be paid, insofar as funds are available for the purpose,
bills, statements, or other obligations of the Fund (including but not limited
to interest charges, taxes, advisory fees, compensation to Fund officers and
employees, and other operating expenses of the Fund).
2.21. NONDISCRETIONARY DETAILS. Without the necessity of express
authorization from the Fund, the Custodian shall (a) attend to all
nondiscretionary details in connection with the sale, exchange, substitution,
purchase, transfer or other dealings with securities, cash or other assets of
the Fund held by the Custodian except as otherwise directed from time to time by
the Board of Directors of the Fund, and (b) make payments to itself or others
for minor expenses of handling securities or other assets and for other similar
items relating to the Custodian's duties under this Agreement, provided that all
such payments shall be accounted for to the Fund.
2.22. DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian
may deposit and/or maintain securities owned by the Fund in (a) The Depository
Trust Company, (b) the Participants Trust Company, (c) any book-entry system as
provided in Subpart O of Treasury Circular Xx. 000, 00 XXX 000, Xxxxxxx X of 31
CFR Part 350, or the book-entry regulations of federal agencies substantially in
the form of Subpart O, or (d) any other domestic clearing agency registered with
the Securities and Exchange Commission (the "SEC") under Section 17A of the
Securities Exchange Act of 1934, as amended, which acts as a securities
depository and whose use the Fund has previously approved by Special
Instructions (as that term is defined in section 3.1(b)) (each of the foregoing
being referred to in this Agreement as a "Securities System"). Utilization of a
Securities System shall be in accordance with applicable Federal Reserve Board
and SEC rules and regulations, if any, and subject to the following provisions:
(i) The Custodian may deposit and/or maintain securities held
hereunder in a Securities System, provided that such securities are
represented in an account ("Account") of the Custodian in the Securities
System which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian, or otherwise for customers;
(ii) The records of the Custodian with respect to securities of the
Fund which are maintained in a securities System shall identify by book
entry those securities belonging to the Fund;
(iii) The Custodian shall pay for securities purchased for the
account of the Fund only upon (A) receipt of advice from the
17
Securities System that such securities have been transferred to the
Account, and (B) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The
Custodian shall transfer securities sold for the account of the Fund only
upon (1) receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (2) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices from the
Securities System of transfers of securities for the account of the Fund
shall identify the Fund, be maintained for the Fund by the Custodian and
be provided to the Fund at its request. The Custodian shall furnish the
Fund confirmation of each transfer to or from the account of the Fund in
the form of a written advice or notice and shall furnish to the Fund
copies of daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Fund on the next business
day;
(iv) The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited in
the Securities System; and the Custodian shall send to the Fund such
reports on its own systems of internal accounting control as the Fund may
reasonably request from time to time; and
(v) Upon receipt of Special Instructions, the Custodian shall
terminate the use of any such Securities System on behalf of the Fund as
promptly as practicable and shall take all actions reasonably practicable
to safeguard the securities of the Fund that had been maintained with such
Securities System.
2.23. OTHER TRANSFERS. The Custodian shall deliver securities, cash,
and other assets of the Fund to a Subcustodian as necessary to effect
transactions authorized by Proper Instructions. Upon receipt of Proper
Instructions in writing in advance, the Custodian shall make such other
disposition of securities, cash or other assets of the Fund in a manner other
than or for purposes other than as enumerated in this Agreement, provided that
such written Proper Instructions relating to such disposition shall include a
statement of the purpose for which the delivery is to be made, the amount of
funds and/or securities to be delivered and the name of the person or persons to
whom delivery is to be made.
2.24. ESTABLISHMENT OF SEGREGATED ACCOUNTS. Upon receipt of Proper
Instructions, the Custodian shall establish and maintain on its books a
segregated account or accounts for and on behalf of the Fund, into which account
or accounts may be transferred cash and/or
18
securities or other assets of the Fund, including securities maintained by the
Custodian in a Securities System, said account to be maintained (a) for the
purposes set forth in sections 2.10, 2.11, 2.12 and 2.15; (b) for the purposes
of compliance by the Fund with the procedures required by Release No. 10666
under the Investment Company Act of 1940, as amended (the "1940 Act"), or any
subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies; or (c) for such other
purposes as set forth, from time to time, in Special Instructions.
2.25. CUSTODIAN ADVANCES. (a) In the event that the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund for which there would be, at the close of business on the
date of such payment or transfer, insufficient funds held by the Custodian on
behalf of the Fund, the Custodian may, in its discretion without further Proper
Instructions, provide an advance ("Advance") to the Fund in an amount sufficient
to allow the completion of the transaction by reason of which such payment or
transfer of funds is to be made. In addition, in the event the Custodian is
directed by Proper Instructions to make any payment or transfer of funds on
behalf of the Fund as to which it is subsequently determined that the Fund has
overdrawn its cash account with the Custodian as of the close of business on the
date of such payment or transfer, said overdraft shall constitute an Advance.
Any Advance shall be payable on demand by the Custodian, unless otherwise agreed
by the Fund and the Custodian, and shall accrue interest from the date of the
Advance to the date of payment by the Fund at a rate agreed upon in writing from
time to time by the Custodian and the Fund. It is understood that any
transaction in respect of which the Custodian shall have made an Advance,
including but not limited to a foreign exchange contract or other transaction in
respect of which the Custodian is not acting as a principal, is for the account
of and at the risk of the Fund, and not, by reason of such Advance, deemed to be
a transaction undertaken by the Custodian for its own account and risk. The
Custodian and the Fund acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of securities for prompt delivery or to meet
redemptions or emergency expenses or cash needs that are not reasonably
foreseeable by the Fund. The Custodian shall promptly notify the Fund in writing
(an "Notice of Advance") of any Advance by facsimile transmission or in such
other manner as the Fund and the Custodian may agree in writing. At the request
of the Custodian, the Fund shall pledge, assign and grant to the Custodian a
security interest in certain specified securities of the Fund, as security for
Advances provided to the Fund, under the terms and conditions set forth in
Appendix A attached hereto.
ARTICLE III
19
PROPER INSTRUCTIONS, SPECIAL INSTRUCTIONS
3.1. PROPER INSTRUCTIONS AND SPECIAL INSTRUCTIONS.
(a) Proper Instructions. As used in this Agreement, the term "Proper
Instructions" shall mean: (i) a tested telex from the Fund or the Fund's
investment manager or adviser, or a written request, direction, instruction or
certification (which may be given by facsimile transmission) signed or initialed
on behalf of the Fund by, one or more Authorized Persons (as that term is
defined in section 3.2); (ii) a telephonic or other oral communication by one or
more Authorized Persons; or (iii) a communication (other than facsimile
transmission) effected directly between electro-mechanical or electronic devices
or systems (including, without limitation, computers) by the Fund or the Fund's
investment manager or adviser or by one or more Authorized Persons on behalf of
the Fund; provided that communications of the types described in clauses (ii)
and (iii) above purporting to be given by an Authorized Person shall be
considered Proper Instructions only if the Custodian reasonably believes such
communications to have been given by an Authorized Person with respect to the
transaction involved. Instructions given in the form of Proper Instructions
under clause (i) shall be deemed to be Proper Instructions if they are
reasonably believed by the Custodian to be genuine. Proper Instructions in the
form of oral communications shall be confirmed by the Fund in the manner set
forth in clauses (i) or (iii) above, but the lack of such confirmation shall in
no way affect any action taken by the Custodian in reliance upon such oral
instructions prior to the Custodian's receipt of such confirmation. The Fund,
the Custodian and any investment manager or adviser of the Fund each is hereby
authorized to record any telephonic or other oral communications between the
Custodian and any such person. Proper Instructions may relate to specific
transactions or to types or classes of transactions, provided that Proper
Instructions may take the form of standing instructions only if they are in
writing.
(b) Special Instructions. As used in this Agreement, the term
"Special Instructions" shall mean Proper Instructions countersigned or confirmed
in writing by the Treasurer or any Assistant Treasurer of the Fund or any other
person designated by the Treasurer of the Fund in writing, which
countersignature or confirmation shall be (i) included on the instrument
containing the Proper Instructions or on a separate instrument relating thereto,
and (ii) delivered by hand, facsimile transmission, mail or courier service or
in such other manner as the Fund and the Custodian agree in writing.
(c) Address for Proper Instructions and Special Instructions. Proper
Instructions and Special Instructions shall be delivered to the Custodian at the
address and/or telephone, telecopy
20
or telex number agreed upon from time to time by the Custodian and the Fund.
3.2. AUTHORIZED PERSONS. Concurrently with the execution of this
Agreement and from time to time thereafter, as appropriate, the Fund shall
deliver to the Custodian a certificate, duly certified by the Secretary or
Assistant Secretary of the Fund, setting forth: (a) the names, titles,
signatures and scope of authority of all persons authorized to give Proper
Instructions or any other notice, request, direction, instruction, certificate
or instrument on behalf of the Fund (each an "Authorized Person"); and (b) the
names, titles and signatures of those persons authorized to issue Special
Instructions. Such certificate may be accepted and relied upon by the Custodian
as conclusive evidence of the facts set forth therein and shall be considered to
be in full force and effect until delivery to the Custodian of a similar
certificate to the contrary. Upon delivery of a certificate which deletes the
name(s) of a person previously authorized to give Proper Instructions or to
issue Special Instructions, such persons shall no longer be considered an
Authorized Person or authorized to issue Special Instructions.
3.3. PERSONS HAVING ACCESS TO ASSETS OF THE FUND. Notwithstanding
anything to the contrary in this Agreement, the Custodian shall not deliver any
assets of the Fund held by the Custodian to or for the account of any Authorized
Person, director, officer, employee or agent of the Fund, provided that nothing
in this section 3.3 shall prohibit (a) any Authorized Person from giving Proper
Instructions, or any person authorized to issue Special Instructions from
issuing Special Instructions, provided such action does not result in delivery
of or access to assets of the Fund prohibited by this section 3.3; or (b) the
Fund's independent certified public accountants from examining or reviewing the
assets of the Fund held by the Custodian. The Fund shall provide a list of such
persons to the Custodian, and the Custodian shall be entitled to rely upon such
list and any modifications thereto that are provided to the Custodian from time
to time by the Fund.
3.4. ACTIONS OF CUSTODIAN BASED ON PROPER INSTRUCTIONS AND SPECIAL
INSTRUCTIONS. So long as and to the extent that the Custodian acts in accordance
with Proper Instructions or Special Instructions, as the case may be, and the
terms of this Agreement, the Custodian shall not be responsible for the title,
validity or genuineness of any property, or evidence of title thereof, received
or delivered by it pursuant to this Agreement.
ARTICLE IV
21
SUBCUSTODIANS
The Custodian may, from time to time, in accordance with the
relevant provisions of this Article IV, appoint one or more Domestic
Subcustodians, Foreign Subcustodians and Interim Subcustodians (as such terms
are defined below) to act on behalf of the Fund. For purposes of this Agreement,
all duly appointed Domestic Subcustodians, Foreign Subcustodians and Interim
Subcustodians are referred to collectively as "Subcustodians."
4.1. DOMESTIC SUBCUSTODIANS. The Custodian may, at any time and from
time to time, at its own expense, appoint any bank as defined in section 2(a)(5)
of the 1940 Act meeting the requirements of a custodian under section 17(f) of
the 1940 Act and the rules and regulations thereunder, to act on behalf of the
Fund as a subcustodian for purposes of holding cash, securities and other assets
of the Fund and performing other functions of the Custodian within the United
States (a "Domestic Subcustodian"), provided that the Custodian shall notify the
Fund in writing of the identity and qualifications of any proposed Domestic
Subcustodian at least 30 days prior to appointment of such Domestic
Subcustodian, and the Fund may, in its sole discretion, by written notice to the
Custodian executed by an Authorized Person disapprove of the appointment of such
Domestic Subcustodian. If following notice by the Custodian to the Fund
regarding appointment of a Domestic Subcustodian and the expiration of 30 days
after the date of such notice, the Fund shall have failed to notify the
Custodian of its disapproval thereof, the Custodian may, in its discretion,
appoint such proposed Domestic Subcustodian as its subcustodian.
4.2. FOREIGN SUBCUSTODIANS AND INTERIM SUBCUSTODIANS. (a) Foreign
Subcustodians. The Custodian may, at any time and from time to time, at its own
expense, appoint: (i) any bank, trust company or other entity meeting the
requirements of an "eligible foreign custodian" under section 17(f) of the 1940
Act and the rules and regulations thereunder or exempted therefrom by order of
the SEC, or (ii) any bank as defined in section 2(a)(5) of the 1940 Act meeting
the requirements of a custodian under section 17(f) of the 1940 Act and the
rules and regulations thereunder to act on behalf of the Fund as a subcustodian
for purposes of holding cash, securities and other assets of the Fund and
performing other functions of the Custodian in countries other than the United
States of America (a "Foreign Subcustodian"); provided that prior to the
appointment of any Foreign Subcustodian, the Custodian shall have obtained
written confirmation of the approval of the Board of Directors of the Fund
(which approval may be withheld in the sole discretion of such Board of
Directors) with respect to (A) the identity and qualifications of any proposed
Foreign Subcustodian, (B) the country or countries in which, and the
22
securities depositories or clearing agencies (meeting the requirements of an
"eligible foreign custodian" under section 17(f) of the 1940 Act and the rules
and regulations thereunder or exempted therefrom by order of the SEC) through
which, any proposed Foreign Subcustodian is authorized to hold Securities, cash
and other assets of the Fund (each a "Foreign Depository") and (C) the form and
terms of the subcustodian agreement to be entered into between such proposed
Foreign Subcustodian and the Custodian. In addition, the Custodian may utilize
directly any Foreign Depository, provided the Board of Directors shall have
approved in writing the use of such Foreign Depository by the Custodian. Each
such duly approved Foreign Subcustodian and the countries where and the Foreign
Depositories through which it may hold securities and other assets of the Fund
and the Foreign Depositories that the Custodian may utilize shall be listed in
Appendix B, as it may be amended from time to time in accordance with the
provisions of section 9.3. The Fund shall be responsible for informing the
Custodian sufficiently in advance of a proposed investment which is to be held
in a country in which no Foreign Subcustodian is authorized to act, in order
that there shall be sufficient time for the Custodian to effect the appropriate
arrangements with a proposed Foreign Subcustodian, including obtaining approval
as provided in this section 4.2(a). The Custodian shall not agree to any
material amendment to any subcustodian agreement entered into with a Foreign
Subcustodian, or agree to permit any material changes thereunder, or waive any
material rights under such agreement, except upon prior approval pursuant to
Special Instructions. The Custodian shall promptly provide the Fund with notice
of any such amendment, change, or waiver, whether or not material, including a
copy of any such amendment. For purposes of this subsection, a material
amendment, change or waiver means an amendment, change or waiver that may
reasonably be expected to have an adverse effect on the Fund in any material
way, including but not limited to the Fund's or the Board's obligations under
the 1940 Act, including Rule 17f-5 thereunder.
(b) Interim Subcustodians. In the event that the Fund shall invest
in a security or other asset to be held in a country in which no Foreign
Subcustodian is authorized to act (whether because the Custodian has not
appointed a Foreign Subcustodian in such country and entered into a subcustodian
agreement with it or because the Board of Directors of the Fund has not approved
the Foreign Subcustodian appointed by the Custodian in such country and the
related subcustodian agreement), the Custodian shall promptly notify the Fund in
writing by facsimile transmission or in such other manner as the Fund and
Custodian shall agree in writing that no Foreign Subcustodian is approved in
such country and the Custodian shall, upon receipt of Special Instructions,
appoint any person designated by the Fund in such Special Instructions to hold
such security or other asset. Any person appointed as a Subcustodian pursuant to
this section 4.2(b) is
23
hereinafter referred to herein as an "Interim Subcustodian." Each Interim
Custodian and the securities or assets of the Fund that it is authorized to hold
shall be set forth in Appendix B.
In the absence of such Special Instructions, such security or other
asset shall be held by such agent as the Custodian may appoint unless and until
the Fund shall instruct the Custodian to move the security or other asset into
the possession of the Custodian or a Subcustodian.
4.3. TERMINATION OF A SUBCUSTODIAN. The Custodian shall (a) cause
each Domestic Subcustodian and Foreign Subcustodian to, and (b) use its best
efforts to cause each Interim Subcustodian to, perform all of its obligations in
accordance with the terms and conditions of the subcustodian agreement between
the Custodian and such Subcustodian. In the event that the Custodian is unable
to cause such Subcustodian to fully perform its obligations thereunder, the
Custodian shall forthwith, upon the receipt of Special Instructions, exercise
its best efforts to recover any Losses (as hereinafter defined) incurred by the
Fund because of such failure to perform from such Subcustodian under the
applicable subcustodian agreement and, if necessary or desirable, terminate such
subcustodian and appoint a replacement Subcustodian in accordance with the
provisions of this Agreement. In addition to the foregoing, the Custodian (i)
may, at any time in its discretion, upon written notification to the Fund,
terminate any Domestic Subcustodian, Foreign Subcustodian or Interim
Subcustodian, and (ii) shall, upon receipt of Special Instructions, terminate
any Subcustodian with respect to the Fund, in each case in accordance with the
termination provisions of the applicable subcustodian agreement.
4.4. AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank, trust company,
securities depository or clearing agency that is itself qualified to act as a
custodian under the 1940 Act and the rules and regulations thereunder, as its
agent (an "Agent") to carry out such of the provisions of this Agreement as the
Custodian may from time to time direct, provided that the appointment of one or
more Agents (other than an agent appointed to the second paragraph of section
4.2(b)) shall not relieve the Custodian of its responsibilities under this
Agreement. Without limiting the foregoing, the Custodian shall be responsible
for any notices, documents or other information, or any securities, cash or
other assets of the Fund, received by any Agent on behalf of the Custodian or
the Fund as if the Custodian had received such items itself.
24
ARTICLE V
STANDARD OF CARE; INDEMNIFICATION
5.1. STANDARD OF CARE.
(a) General Standard of Care. The Custodian shall exercise
reasonable care and diligence in carrying out all of its duties and obligations
under this Agreement, and shall be liable to the Fund for all Losses suffered or
incurred by the Fund resulting from the failure of the Custodian to exercise
such reasonable care and diligence. For purposes of this Agreement, "Losses"
means any losses, damages, and expenses.
(b) Actions Prohibited by Applicable Law, Etc. In no event shall the
Custodian incur liability hereunder if the Custodian or any Subcustodian or
Securities System, or any subcustodian, securities depository or securities
system utilized by any such Subcustodian or the Custodian, or any nominee of the
Custodian or any Subcustodian, is prevented, forbidden or delayed from
performing, or omits to perform, any act or thing which this Agreement provides
shall be performed or omitted to be performed, by reason of: (i) any provision
of any present or future law or regulation or order of the United States of
America, or any state thereof, or of any foreign country, or political
subdivision thereof or of any court of competent jurisdiction; or (ii) any act
of God or war or action of any de facto or de jure government or other similar
circumstance beyond the control of the Custodian, unless, in each case, such
delay or nonperformance is caused by the negligence, misfeasance or misconduct
of such person.
(c) Mitigation by Custodian. Upon the occurrence of any event which
causes or may cause any Losses to the Fund (i) the Custodian shall, and shall
cause any applicable Domestic Subcustodian or Foreign Subcustodian to, and (ii)
the Custodian shall use its best efforts to cause any applicable Interim
Subcustodian to, use all commercially reasonable efforts and take all reasonable
steps under the circumstances to mitigate the effects of such event and to avoid
continuing harm to the Fund.
(d) Advice of Counsel. The Custodian shall be entitled to receive
and act upon advice of counsel on all matters. The Custodian shall be without
liability for any action reasonably taken or omitted in good faith pursuant to
the advice of (i) counsel for the Fund, or (ii) at the expense of the Custodian,
such other counsel as the Fund may agree to, such agreement not to be
unreasonably withheld or delayed; provided that with respect to the performance
of any action or omission of any action upon such advice, the Custodian shall be
25
required to conform to the standard of care set forth in section 5.1(a).
(e) Expenses. In addition to the liability of the Custodian under
this Article V, the Custodian shall be liable to the Fund for all reasonable
costs and expenses incurred by the Fund in connection with any claim by the Fund
against the Custodian arising from the obligations of the Custodian hereunder
including, without limitation, all reasonable attorneys' fees and expenses
incurred by the Fund in asserting any such claim, and all reasonable expenses
incurred by the Fund in connection with any investigations, lawsuits or
proceedings relating to such claim, provided that the Fund has recovered from
the Custodian for such claim.
(f) Liability for Past Records. The Custodian shall have no
liability in respect of any Losses suffered by the Fund, insofar as such Losses
arise from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Fund by entities
other than the Custodian prior to the Custodian's employment hereunder.
(g) Reliance on Certifications. The Secretary or an Assistant
Secretary of the Fund shall certify to the Custodian the names and signatures of
the officers of the Fund, the name and address of the Shareholder Servicing
Agent, and any instructions or directions to the Custodian by the Fund's Board
of Directors or shareholders. Any such certificate may be accepted and relied
upon by the Custodian as conclusive evidence of the facts set forth therein and
may be considered in full force and effect until receipt of a similar
certificate to the contrary.
5.2. LIABILITY OF CUSTODIAN FOR ACTIONS OF OTHER PERSONS.
(a) Domestic Subcustodians, Foreign Subcustodians and Agents. The
Custodian shall be liable for the actions or omissions of any Domestic
Subcustodian, Foreign Subcustodian or Agent (other than an agent appointed
pursuant to section 4.2(b)) to the same extent as if such action or omission
were performed by the Custodian itself pursuant to this Agreement. In the event
of any Losses suffered or incurred by the Fund caused by or resulting from the
actions or omissions of any Domestic Subcustodian, Foreign Subcustodian or Agent
(other than an agent appointed pursuant to section 4.2(b)) for which the
Custodian would be directly liable if such actions or omissions were those of
the Custodian, the Custodian shall promptly reimburse the Fund in the amount of
any such Losses.
(b) Interim Subcustodians. Notwithstanding the provisions of section
5.1 to the contrary, the Custodian shall not be liable to the Fund for any
Losses suffered or incurred by the Fund resulting from the actions or omissions
of an Interim Subcustodian or an agent
26
appointed pursuant to section 4.2(b) unless such Losses are caused by, or result
from, the negligence, misfeasance or misconduct of the Custodian; provided that
in the event of any Losses (whether or not caused by or resulting from the
negligence, misfeasance or misconduct of the Custodian), the Custodian shall
take all reasonable steps to enforce such rights as it may have against such
Interim Subcustodian or agent to protect the interests of the Fund.
(c) Securities Systems and Foreign Depositories. Notwithstanding the
provisions of section 5.1 to the contrary, the Custodian shall not be liable to
the Fund for any Losses suffered or incurred by the Fund resulting from the use
by the Custodian or any Subcustodian of a Securities System or Foreign
Depository, unless such Losses are caused by, or result from, the negligence,
misfeasance or misconduct of the Custodian; provided that in the event of any
such Losses, the Custodian shall take all reasonable steps to enforce such
rights as it may have against the Securities System or Foreign Depository, as
the case may be, to protect the interests of the Fund.
(d) Reimbursement of Expenses. The Fund agrees to reimburse the
Custodian for all reasonable out-of-pocket expenses incurred by the Custodian in
connection with the fulfillment of its obligations under this section 5.2,
provided that such reimbursement shall not apply to expenses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Custodian.
5.3. INDEMNIFICATION.
(a) Indemnification Obligations. Subject to the limitations set
forth in this Agreement, the Fund agrees to indemnify and hold harmless the
Custodian and its nominees for all Losses suffered or incurred by the Custodian
or its nominee (including Losses suffered under the Custodian's indemnity
obligations to Subcustodians) caused by or arising from actions taken by the
Custodian in the performance of its duties and obligations under this Agreement,
provided that such indemnity shall not apply to Losses occasioned by or
resulting from the negligence, misfeasance or misconduct of the Custodian or any
Subcustodian, Securities System, Foreign Depository or their respective
nominees. In addition, the Fund agrees to indemnify the Custodian against any
liability incurred by reason of taxes assessed to the Custodian, any
Subcustodian, any Securities System, any Foreign Depository, and their
respective nominees, or other Losses incurred by such persons, resulting from
the fact that securities and other property of the Fund are registered in the
name of such persons, provided that in no event shall such indemnification be
applicable to income, franchise or similar taxes which may be imposed or
assessed against such persons.
(b) Notice of Litigation, Right to Prosecute, etc. The Fund shall
not be liable for indemnification under this section 5.3
27
unless the person seeking indemnification shall have notified the Fund in
writing (i) within such time after the assertion of any claim as is sufficient
for such person to determine that it will seek indemnification from the Fund in
respect of such claim or (ii) promptly after the commencement of any litigation
or proceeding brought against such person, in respect of which indemnity may be
sought; provided that in the case of clause (i) of this section 5.3(b) the Fund
shall not be liable for such indemnification to the extent the Fund is
disadvantaged by any such delay in notification. With respect to claims in such
litigation or proceedings for which indemnity by the Fund may be sought and
subject to applicable law and the ruling of any court of competent jurisdiction,
the Fund shall be entitled to participate in any such litigation or proceeding
and, after written notice from the Fund to the person seeking indemnification,
the Fund may assume the defense of such litigation or proceeding with counsel of
its choice at its own expense in respect of that portion of the litigation for
which the Fund may be subject to an indemnification obligation, provided that
such person shall be entitled to participate in (but not control) at its own
cost and expense, the defense of any such litigation or proceeding if the Fund
has not acknowledged in writing its obligation to indemnify such person with
respect to such litigation or proceeding. If the Fund is not permitted to
participate in or control such litigation or proceeding under applicable law or
by a ruling of a court of competent jurisdiction, such person shall reasonably
prosecute such litigation or proceeding. A person seeking indemnification
hereunder shall not consent to the entry of any judgment or enter into any
settlement of any such litigation or proceeding without providing the Fund with
adequate notice of any such settlement or judgment and without the Fund's prior
written consent, which consent shall not be unreasonably withheld or delayed.
All persons seeking indemnification hereunder shall submit written evidence to
the Fund with respect to any cost or expense for which they are seeking
indemnification in such form and detail as the Fund may reasonably request.
5.4. INVESTMENT LIMITATIONS. If the Custodian has otherwise complied
with the terms and conditions of this Agreement in performing its duties
generally, and more particularly in connection with the purchase, sale or
exchange of securities made by or for the Fund, the Custodian shall not be
liable to the Fund, and the Fund agrees to indemnify the Custodian and its
nominees, for any Losses suffered or incurred by the Custodian and its nominees
arising out of any violation of any investment or other limitation to which the
Fund is subject.
5.5. FUND'S RIGHT TO PROCEED. Notwithstanding anything to the
contrary contained herein, the Fund shall have, at its election upon reasonable
notice to the Custodian, the right to enforce, to the extent permitted by any
applicable agreement and applicable law, the
28
Custodian's rights against any Subcustodian, Securities System, Foreign
Depository or other person for Losses caused the Fund by such Subcustodian,
Securities System, Foreign Depository or other person, and shall be entitled to
enforce the rights of the Custodian with respect to any claim against such
Subcustodian, Securities System, Foreign Depository or other person which the
Custodian may have as a consequence of any such Losses, if and to the extent
that the Fund has not been made whole for such Losses. If the Custodian makes
the Fund whole for such Losses, the Custodian shall retain the ability to
enforce its rights directly against such Subcustodian, Securities System,
Foreign Depository or other person. Upon the Fund's election to enforce any
rights of the Custodian under this section 5.5, the Fund shall reasonably
prosecute all actions and proceedings directly relating to the rights of the
Custodian in respect of the Losses incurred by the Fund; provided that, so long
as the Fund has acknowledged in writing its obligation to indemnify the
Custodian under section 5.3 hereof with respect to such claim, the Fund shall
retain the right to settle, compromise and/or terminate any action or proceeding
in respect of the Losses incurred by the Fund without the Custodian's consent;
and provided further that if the Fund has not made an acknowledgment of its
obligation to indemnify the Custodian, the Fund shall not settle, compromise or
terminate any such action or proceeding without the written consent of the
Custodian, which consent shall not be unreasonably withheld or delayed. The
Custodian agrees to cooperate with the Fund and take all actions reasonably
requested by the Fund in connection with the Fund's enforcement of any rights of
the Custodian. The Fund agrees to reimburse the Custodian for all reasonable
out-of-pocket expenses incurred by the Custodian in connection with the
fulfillment of its obligations under this section 5.5, provided that such
reimbursement shall not apply to expenses occasioned by or resulting from the
negligence, misfeasance or misconduct of the Custodian.
ARTICLE VI
RECORDS
RECORDS
6.1. PREPARATION OF REPORTS. The Custodian shall, as reasonably
requested by the Fund, assist generally in the preparation of reports to Fund
shareholders, regulatory authorities and others, audits of accounts, and other
ministerial matters of like nature. The Custodian shall render statements,
including interim monthly and complete quarterly financial statements, or copies
thereof, from time to time as reasonably requested by Proper Instructions.
6.2. CUSTODIAN'S BOOKS AND RECORDS. The Custodian shall maintain
complete and accurate records with respect to securities and
29
other assets held for the account of the Fund as required by the rules and
regulations of the SEC applicable to investment companies registered under the
1940 Act, including: (a) journals or other records of original entry containing
a detailed and itemized daily record of all receipts and deliveries of
securities (including certificate and transaction identification numbers, if
any), and all receipts and disbursements of cash; (b) ledgers or other records
reflecting (i) securities in physical possession, (ii) securities in transfer,
(iii) securities borrowed, loaned or collateralizing obligations of the Fund,
(iv) monies borrowed and monies loaned (together with a record of the collateral
therefor and substitutions of collateral), and (v) dividends and interest
received; and (c) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Fund as the Fund shall
reasonably request. All such books and records maintained by the Custodian shall
be maintained in a form acceptable to the Fund and in compliance with the rules
and regulations of the SEC (including, but not limited to, books and records
required to be maintained under Section 31(a) of the 1940 Act and the rules and
regulations from time to time adopted thereunder), and any other applicable
Federal, State and foreign tax laws and administrative regulations. All such
records will be the property of the Fund and in the event of termination of this
Agreement shall be delivered to the successor custodian.
All books and records maintained by the Custodian pursuant to this
Agreement and any insurance policies and fidelity or similar bonds maintained by
the Custodian shall be made available for inspection and audit at reasonable
times by officers of, attorneys for, and auditors employed by, the Fund and the
Custodian shall promptly provide the Fund with copies of all reports of its
independent auditors regarding the Custodian's controls and procedures.
6.3. OPINION OF FUND'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. The
Custodian shall take all reasonable action as the Fund may request to obtain
from year to year favorable opinions from the Fund's independent certified
public accountants with respect to the Custodian's activities hereunder in
connection with the preparation of any periodic reports to or filings with the
SEC and with respect to any other requirements of the SEC.
6.4. REPORTS OF CUSTODIAN'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS. At the request of the Fund, the Custodian shall deliver to the Fund
a written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, securities and
other assets, including cash, securities and other assets deposited and/or
30
maintained in a Securities System or with a Subcustodian. Such report shall be
of sufficient scope and in sufficient detail as may reasonably be required by
the Fund and as may reasonably be obtained by the Custodian.
6.5. INFORMATION REGARDING FOREIGN SUBCUSTODIANS AND FOREIGN
DEPOSITORIES. (a) The Custodian shall use reasonable efforts to assist the Fund
in obtaining the following with respect to any country in which any assets of
the Fund are held or proposed to be held:
(1) information concerning whether, and to what extent, applicable
foreign law would restrict the access afforded the Fund's independent
public accountants to books and records kept by a foreign custodian or
foreign securities depository used, or proposed to be used, in that
country;
(2) information concerning whether, and to what extent, applicable
foreign law would restrict the Fund's ability to recover its assets in the
event of the bankruptcy of a foreign custodian or foreign securities
depository used, or proposed to be used, in that country;
(3) information concerning whether, and to what extent, applicable
foreign law would restrict the Fund's ability to recover assets that are
lost while under the control of a foreign custodian or foreign securities
depository used, or proposed to be used, in that country;
(4) information concerning the likelihood of expropriation,
nationalization, freezes or confiscation of the Fund's assets in that
country;
(5) information concerning whether difficulties in converting the
Fund's cash and cash equivalents held in that country into U.S. Dollars
are reasonably foreseeable, including without limitation as a result of
applicable foreign currency exchange regulations;
(6) information concerning the financial strength, general
reputation and standing and ability to perform custodial services of each
foreign custodian or foreign securities depository used, or proposed to be
used, in that country;
(7) information concerning whether each foreign custodian or foreign
securities depository used, or proposed to be used, in that country would
provide a level of safeguards for maintaining the Fund's assets not
materially different from that provided by
31
the Custodian in maintaining the Fund's securities in the United States;
(8) information concerning whether each foreign custodian or foreign
securities depository used, or proposed to be used, in that country has
offices in the United States in order to facilitate the assertion of
jurisdiction over and enforcement of judgments against such custodian or
depository;
(9) as to each foreign securities depository used, or proposed to be
used, in that country information concerning the number of participants
in, and operating history of, such depository; and
(10) such other information as may be requested by the Fund to
ensure compliance with Rule 17f-5 under the 1940 Act.
(b) During the term of this Agreement, the Custodian shall use
reasonable efforts to provide the Fund with prompt notice of any material
changes in the facts or circumstances upon which any of the foregoing
information or statements were based.
(c) Upon request of the Fund, the Custodian shall deliver to the
Fund a certificate stating: (i) the identity of each Foreign Subcustodian then
acting on behalf of the Custodian; and (ii) the countries in which and the
Foreign Depositories through which each such Foreign Subcustodian or the
Custodian is then holding cash, securities and other assets of the Fund.
ARTICLE VII
CUSTODIAN FEES
The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the Custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with the following sentence, shall be billed to the
Fund in such a manner as to permit payment either by a direct cash payment to
the Custodian or by placing Fund portfolio transactions with the Custodian
resulting in an agreed-upon amount of commissions being paid to the Custodian
within an agreed-upon period of time. The Custodian shall be entitled to receive
reimbursement from the Fund on demand for its cash disbursements and expenses
(including cash disbursements and expenses of any Subcustodian or Agent for
which the Custodian has reimbursed such Subcustodian or Agent) permitted by this
Agreement, but excluding
32
salaries and usual overhead expenses, upon receipt by the Fund of reasonable
evidence thereof.
ARTICLE VIII
TERMINATION
This Agreement shall continue in full force and effect until
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid, to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing. In the event of
termination, the Custodian shall be entitled to receive prior to delivery of the
securities, cash and other assets held by it all accrued fees and unreimbursed
expenses the payment of which is contemplated by Article VII, upon receipt by
the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is
agreed that the cash, securities and other assets owned by the Fund and held by
the Custodian or any Subcustodian or Agent shall be delivered to the successor
custodian, and the Custodian agrees to cooperate with the Fund in execution of
documents and performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1. EXECUTION OF DOCUMENTS. Upon request, the Fund shall deliver to
the Custodian such proxies, powers of attorney or other instruments as may be
reasonable and necessary or desirable in connection with the performance by the
Custodian or any Subcustodian of their respective obligations under this
Agreement or any applicable subcustodian agreement.
9.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof.
9.3. WAIVERS AND AMENDMENTS. No provision of this Agreement may be
amended or terminated except by a statement in writing signed by the party
against which enforcement of the amendment or termination is sought, provided
that Appendix B listing the Foreign Subcustodians and Foreign Depositories
approved by the Fund and
33
Appendix C listing quotation and information sources may be amended from time to
time to add or delete one or more of such entities or sources by delivery to the
Custodian of a revised Appendix B or C executed by an Authorized Person, such
amendment to take effect immediately upon execution of the revised Appendix B or
C by the Custodian.
In connection with the operation of this Agreement, the Custodian
and the Fund may agree in writing from time to time on such provisions
interpretative of or in addition to the provisions of this Agreement as may in
their joint opinion be consistent with the general tenor of this Agreement. No
interpretative or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
9.4. CAPTIONS. The section headings in this Agreement are for the
convenience of the parties and in no way alter, amend, limit or restrict the
contractual obligations of the parties set forth in this Agreement.
9.5. GOVERNING LAW. This instrument shall be governed by and
construed in accordance with the laws of the State of New York.
9.6. NOTICES. Notices and other writings delivered or mailed postage
prepaid to the Fund addressed to the Fund at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000
or to such other address as the Fund may have designated to the Custodian in
writing, or to the Custodian at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000,
Attention: Manager, Securities Department, or to such other address as the
Custodian may have designated to the Fund in writing, shall be deemed to have
been properly delivered or given hereunder to the respective addressee.
9.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding on and
shall inure to the benefit of the Fund and the Custodian and their respective
successors and assigns, provided that neither party hereto may assign this
Agreement or any of its rights hereunder without the prior written consent of
the other party.
9.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties.
9.9. REPRESENTATIVE CAPACITY; NONRECOURSE OBLIGATIONS. The Custodian
agrees that any claims by it against the Fund under this Agreement may be
satisfied only from the assets of the Fund; that the person executing this
Agreement has executed it on behalf of the Fund and not individually, and that
the obligations of the Fund arising out
34
of this Agreement are not binding upon such person or the Fund's shareholders
individually but are binding only upon the assets and property of the Fund; and
that no shareholders, directors or officers of the Fund may be held personally
liable or responsible for any obligations of the Fund arising out of this
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed in its name and behalf on the day and year first above written.
XXXXX BROTHERS XXXXXXXX & CO.
per pro
---------------------
Name:
Title:
XXXXXXX MUTUAL FUNDS, INC.
By:
--------------------------
Name: Xxxxxx X. Sluyters
Title: President
35
APPENDIX A TO THE
CUSTODIAN AGREEMENT BETWEEN
XXXXXXX COMMONDITIES STOCK FUND, INC. AND
XXXXX BROTHERS XXXXXXXX & CO.
DATED AS OF ___________
PROCEDURES RELATING TO CUSTODIAN'S SECURITY INTEREST
As security for any Advances (as defined in the Custodian Agreement)
of the Fund, the Fund shall pledge, assign and grant to the Custodian a security
interest in Collateral (as hereinafter defined), under the terms, circumstances
and conditions set forth in this Appendix A.
SECTION 1. DEFINED TERMS. As used in this Appendix A the following terms
shall have the following respective meanings:
(a) "Business Day" shall mean any day that is not a Saturday, a Sunday or
a day on which the Custodian is closed for business.
(b) "Collateral" shall mean those securities having a fair market value
(as determined in accordance with the procedures set forth in the prospectus for
the Fund) equal to the aggregate of all Advance Obligations of the Fund that are
(i) identified in any Pledge Certificate executed on behalf of the Fund or (ii)
designated by the Custodian for the Fund pursuant to Section 3 of this Appendix
A. Such securities shall consist of marketable securities held by the Custodian
on behalf of the Fund or, if no such marketable securities are held by the
Custodian on behalf of the Fund, such other securities designated by the Fund in
the applicable Pledge Certificate or by the Custodian pursuant to Section 3 of
this Appendix A.
(c) "Advance Obligations" shall mean the amount of any outstanding
Advance(s) provided by the Custodian to the Fund together with all accrued
interest thereon.
(d) "Pledge Certificate" shall mean a Pledge Certificate in the form
attached as Exhibit 1 to this Appendix A, executed by a duly authorized officer
of the Fund and delivered by the Fund to the Custodian by facsimile transmission
or in such other manner as the Fund and the Custodian may agree in writing.
(e) "Release Certificate" shall mean a Release Certificate in the form
attached as Exhibit 2 to this Appendix A, executed by a duly authorized officer
of the Custodian and delivered by the
36
Custodian to the Fund by facsimile transmission or in such other manner as the
Fund and the Custodian may agree in writing.
(f) "Written Notice" shall mean a written notice executed by a duly
authorized officer of the party delivering the notice and delivered by facsimile
transmission or in such other manner as the Fund and the Custodian shall agree
in writing.
SECTION 2. PLEDGE OF COLLATERAL. To the extent that any Advance
Obligations of the Fund are not satisfied by the close of business on the first
Business Day following the Business Day on which the Fund receives a Written
Notice requesting security for such Advance Obligation and stating the amount of
such Advance Obligation, the Fund shall pledge, assign and grant to the
Custodian a first priority security interest in Collateral specified by the Fund
by delivering to the Custodian a Pledge Certificate executed by the Fund
describing such Collateral. Such Written Notice may, in the discretion of the
Custodian, be included within or accompany the Notice of Advance (as defined in
the Custodian Agreement) relating to the applicable Advance Obligation.
SECTION 3. FAILURE TO PLEDGE COLLATERAL. In the event that the Fund shall
fail (a) to pay the Advance Obligation described in such Written Notice, (b) to
deliver to the Custodian a Pledge Certificate pursuant to Section 2, or (c) to
identify substitute securities pursuant to Section 6 upon the sale or maturity
of any securities identified as Collateral, the Custodian may, by Written Notice
to the Fund, specify Collateral which shall secure the applicable Advance
Obligation. The Fund hereby pledges, assigns and grants to the Custodian a first
priority security interest in any and all Collateral specified in such Written
Notice; provided that such pledge, assignment and grant of security shall be
deemed to be effective only upon receipt by the Fund of such Written Notice, and
provided further that if the Custodian specifies Collateral in which a first
priority security interest has already been granted, the security interest
pledged, assigned and granted hereunder shall be a security interest that is not
a first priority security interest.
SECTION 4. DELIVERY OF ADDITIONAL COLLATERAL. If at any time the Custodian
shall notify the Fund by Written Notice that the fair market value of the
Collateral securing any Advance Obligation is less than the amount of such
Advance Obligation, the Fund shall deliver to the Custodian, within one Business
Day following the Fund's receipt of such Written Notice, an additional Pledge
Certificate describing additional Collateral. If the Fund shall fail to deliver
such additional Pledge Certificate, the Custodian may specify Collateral which
shall
37
secure the unsecured amount of the applicable Advance Obligation in accordance
with Section 3 of this Appendix A.
SECTION 5. RELEASE OF COLLATERAL. Upon payment by the Fund of any Advance
Obligation secured by the pledge of Collateral, the Custodian shall promptly
deliver to the Fund a Release Certificate pursuant to which the Custodian shall
release Collateral from the lien under the applicable Pledge Certificate or
Written Notice pursuant to Section 3 having a fair market value equal to the
amount paid by the Fund on account of such Advance Obligation. In addition, if
at any time the Fund shall notify the Custodian by Written Notice that the Fund
desires that specified Collateral be released and (a) that the fair market value
of the Collateral securing any Advance Obligation exceeds the amount of such
Advance Obligation, or (b) that the Fund has delivered a Pledge Certificate
pursuant to Section 6 substituting Collateral in respect of such Advance
Obligation, the Custodian shall deliver to the Fund, within one Business Day
following the Custodian's receipt of such Written Notice, a Release Certificate
relating to the Collateral specified in such Written Notice.
SECTION 6. SUBSTITUTION OF COLLATERAL. The Fund may substitute securities
for any securities identified as Collateral by delivery to the Custodian of a
Pledge Certificate executed by the Fund, indicating the securities pledged as
Collateral.
SECTION 7. SECURITY FOR FUND ADVANCE OBLIGATIONS. The pledge of Collateral
by the Fund shall secure only Advance Obligations of the Fund. In no event shall
the pledge of Collateral by the Fund be deemed or considered to be security for
any other types of obligations of the Fund to the Custodian or for the Advance
Obligations or other types of obligations of any other fund.
SECTION 8. CUSTODIAN'S REMEDIES. Upon (a) the Fund's failure to pay any
Advance Obligation of the Fund within thirty days after receipt by the Fund of a
Written Notice demanding security therefor, and (b) one Business Day's prior
Written Notice to the Fund, the Custodian may elect to enforce its security
interest in the Collateral securing such Advance Obligation, by taking title to
(at the then prevailing fair market value), or selling in a commercially
reasonable manner, so much of the Collateral as shall be required to pay such
Advance Obligation in full. Notwithstanding the provisions of any applicable
law, including, without limitation, the Uniform Commercial Code, the remedy set
forth in the preceding sentence shall be the only right or remedy to which the
Custodian is entitled with respect to the pledge and security interest granted
pursuant to any Pledge Certificate or Section 3. Without
38
limiting the foregoing, the Custodian hereby waives and relinquishes all
contractual and common law rights of set-off to which it may now or hereafter be
or become entitled with respect to any obligations of the Fund to the Custodian
arising under this Appendix A to the Custodian Agreement.
39
IN WITNESS WHEREOF, each of the parties has caused this Appendix A to be
executed in its name and behalf on the day and year first above written.
XXXXX BROTHERS XXXXXXXX & CO.
per pro
---------------------
Name:
Title:
XXXXXXX GLOBAL COMMODITIES STOCK FUND, INC.
By:
--------------------------
Name: Xxxxxx X. Sluyters
Title: President
40
EXHIBIT 1
TO
Appendix A
PLEDGE CERTIFICATE
This Pledge Certificate is delivered pursuant to the Custodian
Agreement dated as of _____________________ (the "Agreement"), between
_____________________ (the "Fund") and Xxxxx Brothers Xxxxxxxx & Co. (the
"Custodian"). Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Agreement. Pursuant to [Section 2 or
Section 4] of Appendix A attached to the Agreement, the Fund hereby pledges,
assigns and grants to the Custodian a first priority security interest in the
securities listed on Schedule A attached to this Pledge Certificate
(collectively, the "Pledged Securities"). Upon delivery of this Pledge
Certificate, the Pledged Securities shall constitute Collateral, and shall
secure all Advance Obligations of the Fund described in that certain Written
Notice dated __________, 19___, delivered by the Custodian to the Fund. The
pledge, assignment and grant of security in the Pledged Securities hereunder
shall be subject in all respects to the terms and conditions of the Agreement,
including, without limitation, Sections 7 and 8 of Appendix A attached hereto.
IN WITNESS WHEREOF, the Fund has caused this Pledge Certificate to
be executed in its name, on behalf of the Fund this _____ day of _________,
19___
By: ________________________
Name: ______________________
Title: _____________________
41
SCHEDULE A
TO
PLEDGE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
------ -------- ------- ------
42
EXHIBIT 2
TO
Appendix A
RELEASE CERTIFICATE
This Release Certificate is delivered pursuant to the Custodian Agreement
dated as of _________, 199_ (the "Agreement"), between _______________________
(the "Fund") and Xxxxx Brothers Xxxxxxxx & Co. (the "Custodian"). Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Agreement. Pursuant to Section 5 of Appendix A attached to the
Agreement, the Custodian hereby releases the securities listed on Schedule A
attached to this Release Certificate from the lien under the [Pledge Certificate
dated __________, 19 or the Written Notice delivered pursuant to Section 3 of
Appendix A dated ___________, 19 ].
IN WITNESS WHEREOF, the Custodian has caused this Release Certificate to
be executed in its name and on its behalf this ____ day of 19__.
Xxxxx Brothers Xxxxxxxx & Co.
By: ________________________
Name: ______________________
Title: _____________________
43
SCHEDULE A
TO
RELEASE CERTIFICATE
Type of Certificate/CUSIP Number of
Issuer Security Numbers Shares
------ -------- ------- ------
44
APPENDIX "C"
TO
CUSTODIAN AGREEMENT
BETWEEN
XXXXXXX GLOBAL COMMODITIES STOCK FUND, INC.
and XXXXX BROTHERS XXXXXXXX & CO.
Dated as of __________, 2004
The following is a list of Funds for which the Custodian shall serve under a
Custodian Agreement dated as of __________, 2004 (the "Agreement")
Xxxxxxx Global Commodities Stock Fund, Inc.
IN WITNESS WHEREOF, each of the parties hereto has caused this Appendix to be
executed in the name and on behalf of each such Fund.
XXXXXXX XXXXX BROTHERS XXXXXXXX & CO.
By: By:
---------------------- ----------------------
Name: Name:
--------------------- ---------------------
Title: Title:
-------------------- --------------------
45
XXXXX BROTHERS XXXXXXXX & CO.
EXHIBIT H
Xxxxx Brothers Xxxxxxxx & Co.
Global Custody Fee Proposal
on behalf of
Xxxxxxx Xxxxxx Investments Inc.
__________, 2004
Market Asset Charge (basis points) Trade Instruction Charge (USD)
Argentina 25 b.p. $75
Australia 5 b.p. $60
Austria 6 b.p. $80
Bahrain 40 b.p. $150
Bangladesh 45 b.p. $150
Belgium 6 b.p. $60
Botswana 60 b.p. $175
Brazil (including Administration, 25 b.p. $50
excluding The Brazil Fund, Inc.)
Canada 3 b.p $25
Chile 35 b.p. $75
China 35 b.p. $60
Colombia 60 b.p. $100
Czech Republic 35 b.p. $75
Denmark 5 b.p. $80
Euroclear 3 b.p. $35
Ecuador 50 b.p. $125
46
Market Asset Charge (basis points) Trade Instruction Charge (USD)
Egypt 40 b.p. $175
Finland 8 b.p. $60
France 5 b.p. $60
Germany 3.5 b.p. $35
Ghana 60 b.p. $175
Greece 50 b.p. $150
Hong Kong 6 b.p. $60
Hungary 45 b.p. $175
India 40 b.p. $125
Indonesia 15 b.p. $75
Israel 30 b.p. $150
Italy 6 b.p. $50
Japan 3 b.p. $25
Jordan 50 b.p. $175
Kenya 60 b.p. $175
Korea 16 b.p. $50
The Korea Fund, Inc. 14.5 b.p. $50
Lebanon 40 b.p. $150
Malaysia 8 b.p. $50
Mauritius 40 b.p. $150
Mexico 12 b.p. $50
Morocco 40 b.p. $150
Namibia 40 b.p. $150
Netherlands 6 b.p. $35
47
Market Asset Charge (basis points) Trade Instruction Charge (USD)
New Zealand 6 b.p. $45
Norway 6 b.p. $60
Oman 40 b.p. $150
Pakistan 40 b.p. $125
Xxxx 00 b.p. $150
Philippines 18 b.p. $100
Poland 50 b.p. $100
Portugal 20 b.p. $100
Russia 65 b.p. $250
Singapore 6 b.p. $75
Slovakia 35 b.p. $75
South Africa 10 b.p. $50
Spain 8 b.p. $60
Sri Lanka 20 b.p. $75
Swaziland 60 b.p. $175
Sweden 6 b.p. $60
Switzerland 5 b.p. $75
Taiwan 25 b.p. $75
Thailand 12 b.p. $50
Turkey 35 b.p. $75
Uruguay 50 b.p. $150
Venezuela 35 b.p. $125
Zambia 60 b.p. $175
Zimbabwe 60 b.p. $175
48
Market Asset Charge (basis points) Trade Instruction Charge (USD)
United States .8 b.p. on first $100 million $8.00
.5 b.p. on all next $400 million
.3 b.p. on all above $500 million
Other Transaction Fees
DTC, FBE, PTC $ 8.00
Affirmation Charge $ 1.00
U.S. Physical Securities $25.00
Short-Term Instruments (time deposits, BA, CP, CD, repos) $25.00
Maturities $15.00
Third Party FX $35.00
Derivatives (futures, options, xxxxxx, swaps) $35.00
Incoming/Outgoing wires $10.00
Security Instruction Corrections/Cancellations/Repair $15.00
Check Processing $10.00
Euroclear Deposit/Withdrawal $75.00
Annual Account Minimum: $10,000
Subcustodian Out-of-Pocket Expenses
Subcustodian out-of-pocket expenses are statutory taxes or other charges
mandated in the local market which are passed on without markup to the Funds.
The level of out-of-pocket expenses depends on the geographical composition of
the Fund and trading activity. Subcustodian out-of-pocket expenses reimbursable
to BBH&Co. will be added to each monthly invoice. Subcustodian out-of-pocket
expenses may be revised from time to time.
Xxxxx Brothers Xxxxxxxx & Co. Out-of-Pocket Expenses
BBH&Co. out-of-pocket expenses including but not limited to extraordinary
telecommunications expenses, audit reporting, legal fees including sophisticated
investor letter
49
processing, postage including overnight and courier, shipping insurance,
duplication charges, forms and supplies, proxy charges, consolidation and
reorganization charges, fractional share liquidation charges, and customized
reporting and programming would be additional. The cost of obtaining market
quotations and local administration charges if arranged through BBH&Co. would be
for the account of the Fund.
OPPORTUNITIES FOR ADDITIONAL SAVINGS
Relationship Discount:
- A 10 percent reduction will be applied against the asset based
custody fee on assets between $10 billion and $15 billion.
- a 15 percent reduction will be applied against the asset based
custody fee on assets in excess of $15 billion.
NOTES
Fees for additional markets will be negotiated prior to investment and based
upon local market conditions at time of investment.
This schedule assumes that trade instructions will be sent in properly formatted
SWIFT or ISITC protocol, or another mutually agreed upon automated means. A $25
manual trade instruction charge will be incurred six months from the effective
date of this schedule. BBH&Co. has a readily available economic solution to
trade communication and messaging. We agree to lead project management of an
automation effort for Xxxxxxx.
50
AMENDMENT TO THE CUSTODIAN AGREEMENT
THIS AMENDMENT, dated as of __________, 2004 between XXXXXXX GLOBAL
COMMODITIES STOCK FUND, INC. the "Fund"), a Maryland Corporation organized as an
closed-end management investment company under the laws of Maryland and
registered with the Commission under the 1940 Act, and XXXXX BROTHERS XXXXXXXX &
CO., a limited partnership formed under the laws of the State of New York
("BBH&Co." or the "Custodian"), amends the Custodian Agreement between the
parties dated __________, 2004 (the "Custodian Agreement").
WITNESSETH:
WHEREAS, the Fund has employed BBH&Co. to act as custodian for the
Fund and to provide related services, all as provided in the Custodian
Agreement;
WHEREAS, the Securities and Exchange Commission has promulgated
Rules 17f-5 and 17f-7 under the Investment Company Act of 1940 which establish
rules regarding the Fund's investments held outside the United States by
subcustodians or through Securities Depositories; and
WHEREAS, BBH&Co. is willing to provide services in connection with
such Rules in accordance with the terms of this Amendment to the Custodian
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Fund and BBH&Co. hereby agree, as follows:
1. That Article II - Powers and Duties of Custodian shall be amended
by the inclusion of the following subsection:
2.26 DEPOSIT OF FUND ASSETS IN FOREIGN SECURITIES DEPOSITORIES.
Unless instructed otherwise by the Fund, the Custodian may deposit and/or
maintain non-U.S. investments of the Fund in any non-U.S. Securities Depository
provided such Securities Depository either meets the requirements of an
"eligible securities depository" under Rule 17f-7 promulgated under the 1940
Act, or any successor rule or regulation ("Rule 17f-7") or by order of the
Securities and Exchange Commission is exempted therefrom. Prior to the time that
securities are placed with such depository the Custodian shall have prepared an
analysis of the custody risks associated with maintaining assets with the
Securities Depository and shall have established a system to monitor such risks
on a continuing basis in accordance with Sub-section 2.26.1 of this Section. An
instruction to open an account in a given country shall comprise authorization
for the Custodian to hold assets in such country in accordance with the terms of
this Agreement. The Custodian shall not be required to make independent inquiry
as to the authorization of the Fund to invest in such country.
2.26.1 Monitoring and Risk Assessment of Securities Depositories. Prior to
the placement of any assets of the Fund with a Securities Depository, the
Custodian: (a) shall provide to the Fund, its investment adviser or its
authorized representative an assessment of the custody risks associated
with maintaining assets within such Securities Depository in accordance
with Rule 17f-7(a)(1)(i)(A), and (b) shall have established a system to
monitor
51
the custody risks associated with maintaining assets with such Securities
Depository on a continuing basis and to promptly notify the Fund or its
investment adviser of any material changes in such risk in accordance with
Rule 17f-7(a)(I) (i)(B). in performing its duties under this subsection,
the Custodian shall use reasonable care, prudence and diligence and may
rely on such reasonable sources of information as may be available
including but not limited to: (i) published ratings; (ii) information
supplied by a Subcustodian that is a participant in such Securities
Depository; (iii) industry surveys or publications; (iv) information
supplied by the depository itself, by its auditors (internal or external)
or by the relevant Foreign Financial Regulatory Authority. It is
acknowledged that information procured through some or all of these
sources may not be independently verifiable by the Custodian and that
direct access to Securities Depositories is limited under most
circumstances. Accordingly, the Custodian shall not be responsible for
errors or omissions in its duties hereunder provided that it has performed
its monitoring and assessment duties in accordance with the standard of
care set forth above in this sub-section 2.26.1. The risk assessment shall
be provided to the Fund or its Investment Adviser or its authorized
representative by such means as the Custodian shall reasonably establish.
The form and substance of the risk assessment shall be agreed upon by the
parties. Advice of material change in such assessment may be provided by
the Custodian in the manner established as customary between the Fund and
the Custodian for transmission of material market information.
2. That Article IV - Subcustodians shall be amended by the inclusion
of the following at the end of Sub-section 4.2.(a) Foreign Subcustodians and
Interim Subcustodians:
(a)(1) DELEGATION OF DIRECTORS/TRUSTEES REVIEW OF SUBCUSTODIANS. From time
to time, the Custodian may agree to perform certain reviews of
Subcustodians and of Subcustodian Contracts as delegate of the Fund's
Directors/Trustees. In such event, the Custodian's duties and obligations
with respect to this delegated review will be performed in accordance with
the terms of the attached 17f-5 Delegation Schedule to this Agreement.
3. In addition, that the definitions under the Custodian Agreement
shall be amended with the addition modification of the following:
FOREIGN FINANCIAL REGULATORY AUTHORITY shall have the meaning given by
Section 2(a)(50) of the 1940 Act.
SECURITIES DEPOSITORY shall mean a central or book entry system or agency
established under Applicable Law for purposes of recording the ownership
and/or entitlement to investment securities for a given market that, if a
foreign Securities Depository, meets the definitional requirements of Rule
17f-7 under the 1940 Act.
All defined terms used herein shall have the meaning given to such terms in the
Custodian Agreement as amended by this Amendment.
52
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed as of the date first above written.
XXXXXXX GLOBAL COMMODITIES STOCK FUND,
INC.
By:
---------------------------
Name:
Title:
By: XXXXX BROTHERS XXXXXXXX & CO.
By:
---------------------------
Name:
Title:
53
17F-5 DELEGATION SCHEDULE
By its execution of this Delegation Schedule, XXXXXXX GLOBAL
COMMODITIES STOCK FUND, INC. (the "Fund"), a management investment company
registered with the Securities and Exchange Commission (the "Commission") under
the Investment Company Act of 1940, as amended, (the "1940 Act"), acting through
its Directors/Trustees or its duly appointed representative, hereby appoints
XXXXX BROTHERS XXXXXXXX & CO., a New York limited partnership with an office in
Boston, Massachusetts (the "Foreign Custody Manager"), as its delegate to
perform certain functions with respect to the custody of Fund's Foreign Assets
outside the United States.
1. Maintenance of Fund's Foreign Assets Abroad. The Fund, acting
through its Directors/Trustees or its duly authorized representative, hereby
instructs the Foreign Custody Manager pursuant to the terms of the Custodian
Agreement to place and maintain the Fund's Foreign Assets within the countries
listed on the attached Foreign Custody Network. Such instruction shall
constitute an instruction under the terms of the Custodian Agreement. Countries
may be added to the Foreign Custody network by written instruction of the Fund
that is accepted and agreed to in writing by the Custodian. With respect to
amendments to the Foreign Custody Network, the Fund acknowledges that - (a) the
Foreign Custody Manager shall perform services hereunder only with respect to
the countries where it provides custodial services to the Fund under the
Custodian Agreement; (b) depending on conditions in the particular country,
advance notice may be required before the Foreign Custody Manager shall be able
to perform its duties hereunder in or with respect to such country (such advance
notice to be reasonable in light of the specific facts and circumstances
attendant to performance of duties in such country); and (c) nothing in this
Delegation Schedule shall require the Foreign Custody Manager to provide
delegated or custodial services in any country not listed on the Foreign Custody
Network until such amended Foreign Custody Network has been accepted by the
Foreign Custody Manager in accordance herewith.
2. Delegation. Pursuant to the provisions of Rule 17f-5 under the
1940 Act as amended, the Directors/Trustees hereby delegates to the Foreign
Custody Manager, and the Foreign Custody Manager hereby accepts such delegation
and agrees to perform, only those duties set forth in this Delegation Schedule
concerning the safekeeping of the Fund's Foreign Assets in each of the countries
set forth in Attachment A as amended from time to time in accordance with the
terms of Section 1 of this Delegation Schedule. The Foreign Custody Manager is
hereby authorized to take such actions on behalf of or in the name of the Fund
as are reasonably required to discharge its duties under this Delegation
Schedule, including, without limitation, to cause the Fund's Foreign Assets to
be placed with a particular Eligible Foreign Custodian in accordance herewith.
3. Selection of Eligible Foreign Custodian and Contract
Administration. The Foreign Custody Manager shall perform the following duties
with respect to the selection of Eligible Foreign Custodians and administration
of certain contracts governing the Fund's foreign custodial arrangements:
(a) Selection of Eligible Foreign Custodian. The Foreign Custody
Manager shall place and maintain the Fund's Foreign Assets with an Eligible
Foreign Custodian; provided
54
that the Foreign Custody Manager shall have determined that the Fund's Foreign
Assets will be subject to reasonable care based on, the standards applicable to
custodians in the relevant market after considering all factors relevant to the
safekeeping of such assets including without limitation:
(i) The Eligible Foreign Custodian's practices, procedures, and
internal controls, including, but not limited to; the physical protections
available for certificated securities (if applicable), the controls and
procedures for dealing with any Securities Depository, the method of keeping
custodial records, and the security and data protection practices;
(ii) Whether the Eligible Foreign Custodian has the requisite
financial strength to provide reasonable care for the Fund's Foreign Assets,
including, but not limited to, the adequacy of the Eligible Foreign Custodian's
capital with regard to protecting the Fund's assets against the risk of loss due
to such Eligible Foreign Custodian's insolvency;
(iii) The Eligible Foreign Custodian's general reputation and
standing; and
(iv) Whether the Fund will have jurisdiction over and be able to
enforce judgments against the Eligible Foreign Custodian, such as by virtue of
the existence of any offices of such Eligible Foreign Custodian in the United
States or such Eligible Foreign Custodian's appointment of an agent for service
of process in the United States or consent to jurisdiction in the United States.
The Foreign Custody Manager shall be required to make the foregoing
determination to the best of its knowledge and belief based only on information
reasonably available to it in accordance with the standard of care set forth in
Section 8 of this Schedule.
(b) Contract Administration. The Foreign Custody Manager shall cause
that the foreign custody arrangements with an eligible Foreign Custodian shall
be governed by a written contract that the foreign Custody Manager has
determined will provide reasonable care for Fund assets based on the standards
applicable to custodians in the relevant market after considering all factors
relevant to the safekeeping of such assets, including, without limitation, those
set forth in section 3(a) of this Delegation Schedule. Each such contract shall,
except as set forth in the last paragraph of this subsection (b), include
provisions that provide:
(i) For indemnification or insurance arrangements (or any
combination of the foregoing) such that the Fund will be adequately protected
against the risk of loss of assets held in accordance with such contract;
(ii) That the Fund's Foreign Assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of the
Eligible Foreign Custodian or its creditors, except a claim of payment for their
safe custody or administration or, in the case of cash deposits, liens or rights
in favor of creditors of such Custodian arising under bankruptcy, insolvency or
similar laws;
(iii) That beneficial ownership of the Fund's Foreign Assets will be
freely transferable without the payment of money or value other than for safe
custody or administration;
55
(iv) That adequate records will be maintained identifying the Fund's
Foreign Assets as belonging to the Fund or as being held by a third party for
the benefit of the Fund;
(v) That the Fund's independent public accountants will be given
access to those records described in (iv) above or confirmation of the contents
of such records; and
(vi) That the Foreign Custody Manager on behalf of the Fund will
receive sufficient and timely periodic reports with respect to the safekeeping
of the Fund's Foreign Assets, including, but not limited to, notification of any
transfer to or from the Fund's account or a third party account containing the
Fund's Foreign Assets.
Such contract may contain, in lieu of any or all of the provisions specified in
this Section 3 (b), such other provisions that the Foreign Custody Manager
determines will provide, in their entirety, the same or a greater level of care
and protection for the Fund's Foreign Assets as the specified provisions, in
their entirety.
(c) Limitation to Delegated Selection. Notwithstanding anything in
this Delegation Schedule to the contrary, the duties under this Section 3 shall
apply only to Eligible Foreign Custodians selected by the Foreign Custody
Manager and shall not apply to Securities Depositories or to any Eligible
foreign Custodian that the Foreign Custody Manager is directed to use pursuant
to Section 7.
4. Monitoring. The Foreign Custody Manager shall establish a system
to monitor at reasonable intervals , (i) the appropriateness of maintaining the
Fund's Foreign Assets with each Eligible foreign Custodian that has been
selected by the Foreign Custody Manager pursuant to Section 3 of this Delegation
Schedule; and (ii) the performance of the contract governing custody
arrangements established by the Foreign Custody Manager with each Eligible
Foreign Custodian. The Foreign Custody Manager shall monitor the continuing
appropriateness of placement of the Fund's Foreign Assets in accordance with the
criteria established under Section 3(a) of this Delegation Schedule and other
relevant criteria. The Foreign Custody Manager shall monitor the continuing
appropriateness of the contract governing the Fund's arrangements in accordance
with the criteria established under Section 3(b) of this Delegation Schedule and
other relevant criteria.
5. Reporting. At least annually and more frequently as the
Directors/Trustees deems reasonable and appropriate based on the circumstances,
the Foreign Custody Manager shall provide to the Directors/Trustees written
reports specifying placement of the Fund's Foreign Assets with each Eligible
Foreign Custodian selected by the Foreign Custody Manager pursuant to Section 3
of this Delegation Schedule and shall promptly report to the Directors/Trustees
as to any material changes to such foreign custody arrangements. The Foreign
Custody Manager will prepare such a report with respect to any Eligible Foreign
Custodian that the Foreign Custody Manager has been instructed to use pursuant
to Section 7 only to the extent specifically agreed with respect to the
particular situation.
6. Withdrawal of Fund's Foreign Assets. If the Foreign Custody
Manager determines that an arrangement with a specific Eligible Foreign
Custodian selected by the Foreign Custody Manager under Section 3 of this
Delegation Schedule no longer meets the
56
requirements of said Section, the Foreign Custody Manager shall promptly notify
the Fund of such fact and shall withdraw the Fund's Foreign Assets from the
non-complying arrangement as soon as reasonably practicable; provided, however,
that if in the reasonable judgment of the Foreign Custody Manager, such
withdrawal would require liquidation of any of the Fund's Foreign Assets or
would materially impair the liquidity, value or other investment characteristics
of the Fund's Foreign Assets, it shall be the duty of the Foreign Custody
Manager to provide information regarding the particular circumstances and to act
only in accordance with Proper Instructions of the Fund or its Investment
Adviser with respect to such liquidation or other withdrawal.
7. Direction as to Eligible Foreign Custodian. Notwithstanding this
Delegation Schedule, the Fund, acting through its Directors/Trustees, its
Investment Adviser or its other authorized representative, may direct the
Foreign Custody Manager to place and maintain the Fund's Foreign Assets with a
particular Eligible Foreign Custodian, including without limitation with respect
to investment in countries as to which the Custodian will not provide delegation
services. In such event, the Foreign Custody Manager shall be entitled to rely
on any such instruction as a Proper Instruction under the terms of the Custodian
Agreement and shall have no duties under this Delegation Schedule with respect
to such arrangement save those that it may undertake specifically in writing
with respect to each particular instance.
8. Standard of Care. In carrying out its duties under this
Delegation Schedule, the Foreign Custody Manager agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of the Fund's Foreign Assets would exercise.
9. Representations. The Foreign Custody Manager hereby represents
and warrants that it is a U.S. Bank and that this Delegation Schedule has been
duly authorized, executed and delivered by the Foreign Custody Manager and is a
legal, valid and binding agreement of the Foreign Custody Manager.
The Fund hereby represents and warrants that its Directors/Trustees
has determined that it is reasonable to rely on the Foreign Custody Manager to
perform the delegated responsibilities provided for herein and that this
Delegation Schedule has been duly authorized, executed and delivered by the Fund
and is a legal, valid and binding agreement of the Fund.
10. Effectiveness; termination. This Delegation Schedule shall be
effective as of the date on which this Delegation Schedule shall have been
accepted by the Foreign Custody Manager, as indicated by the date set forth
below the Foreign Custody Manager's signature. This Delegation Schedule may be
terminated at any time, without penalty, by written notice from the terminating
party to the non-terminating party. Such termination shall be effective on the
30th day following the date on which the non-terminating party shall receive the
foregoing notice. The foregoing to the contrary notwithstanding, this Delegation
Schedule shall be deemed to have been terminated concurrently with the
termination of the Custodian Agreement.
11. Notices. Notices and other communications under this Delegation
Schedule are to be made in accordance with the arrangements designated for such
purpose under
57
the Custodian Agreement unless otherwise indicated in a writing referencing this
Delegation Schedule and executed by both parties.
12. Definitions. Capitalized terms in this Delegation Schedule have
the following meanings:
a. Eligible Foreign Custodian - shall have the meaning set forth in
Rule 17f-5(a)(1) and shall also include a U.S. Bank.
b. Fund's Foreign Assets - shall mean any of the Fund's investments
(including foreign currencies) for which the primary market is outside the
United States, and such cash and cash equivalents as are reasonably necessary to
effect the Fund's transactions in such investments.
c. Proper instructions - shall have the meaning set forth in the
Custodian Agreement.
d. Securities Depository - shall mean "eligible securities
depository" as such term is defined in Rule 17f-7.
e. U.S. Bank - Shall have the meaning set forth in Rule 17f-5 (a)
(7).
13. Governing Law and Jurisdiction. This Delegation Schedule shall
be construed in accordance with the laws of the State of New York. The parties
hereby submit to the exclusive jurisdiction of the Federal courts sitting in the
State of New York or the Commonwealth of Massachusetts for of the state courts
of either such State or such Commonwealth.
14. Fees. Foreign Custody Manager shall perform its functions under
this Delegation Schedule or the compensation determined under the Custodian
Agreement.
15. Integration. This Delegation Schedule sets forth all of the
Foreign Custody Manager's duties with respect to the selection and monitoring of
Eligible Foreign Custodians, the administration of contracts with Eligible
Foreign Custodians, the withdrawal of assets from Eligible Foreign Custodians
and the issuance of reports in connection with such duties. The terms of the
Custodian Agreement shall apply generally as to matters not expressly covered in
this Delegation Schedule, including dealings with the Eligible Foreign
Custodians in the course of discharge of the Foreign Custody Manager's
obligations under the Custodian Agreement.
58
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed as of the date first above written.
XXXXXXX GLOBAL COMMODITIES STOCK FUND, INC.
By:
-------------------------
Name:
Title:
By: XXXXX BROTHERS XXXXXXXX & CO.
By:
-------------------------
Name:
Title:
59
