EXHIBIT NO. 99-8(a)
CUSTODIAN CONTRACT
Between
MASSACHUSETTS FINANCIAL HIGH INCOME TRUST
and
STATE STREET BANK AND TRUST COMPANY
TABLE OF CONTENTS
PAGE
1. Employment of Custodian and Property to be Held By It............ 1
2. Duties of the Custodian with Respect to Property of the Trust
Held by the Custodian............................................ 2
2.1. Holding Securities..................................... 2
2.2. Delivery of Securities................................. 2
2.3. Registration of Securities............................. 5
2.4. Bank Accounts.......................................... 6
2.5. Payments for Shares.................................... 6
2.6. Investment and Availability of Federal Funds........... 6
2.7. Collection of Income................................... 7
2.8. Payment of Trust Monies................................ 7
2.9. Liability for Payment in Advance of Receipt of
Securities Purchased................................... 9
2.10. Appointment of Agents.................................. 9
2.11 Deposit of Trust Assets in Securities System........... 10
2.11A. Trust Assets Held in the Custodian's Direct Paper
System................................................. 11
2.12. Segregated Account..................................... 13
2.13. Ownership Certificates for Tax Purposes................ 13
2.14. Proxies................................................ 14
2.15. Communications Relating to Trust Portfolio Securities.. 14
2.16. Reports to Trust by Independent Public Accountants..... 14
3. Duties of the Custodian with Respect to Property of the Fund
Held Outside the United States................................... 15
3.1 Appointment of Chase as Subcustodian................... 15
3.2 Standard of Care; Liability............................ 15
3.3 Trust's Responsibility for Rules and Regulations....... 16
4. Payments for Repurchases or Redemptions of Shares of the Trust... 16
5. Proper Instructions.............................................. 16
6. Actions Permitted Without Express Authority...................... 17
7. Evidence of Authority............................................ 17
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.................... 18
9. Records.......................................................... 18
10. Opinion of Trust Independent Accountants......................... 19
11. Compensation of Custodian........................................ 19
12. Responsibility of Custodian...................................... 19
13. Effective Period, Termination and Amendment...................... 20
TABLE OF CONTENTS (CONTINUED)
PAGE
14. Successor Custodian.............................................. 21
15. Interpretive and Additional Provisions........................... 22
16. Additional Funds................................................. 22
17. Massachusetts Law to Apply....................................... 23
18. Prior Contracts.................................................. 23
CUSTODIAN CONTRACT
This Contract between Massachusetts Financial High Income Trust, a
business trust organized and existing under the laws of Massachusetts, having
its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
hereinafter called the "Trust", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust intends to offer shares in two series, the Series I
and Series II (Such series together with all other series subsequently
established b y the Trust and made subject to this Contract in accordance with
paragraph 12, being herein referred to as the "Portfolio(s)");
NOW therefor, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Trust pursuant to the provisions of the Declaration of
Trust including securities and cash it desires to be held within the United
States (collectively "domestic securities") and securities and cash it desires
to be held outside the United States (collectively "foreign securities"),
subject to the terms of Article 3 hereof. The Trust agrees, on behalf of the
Portfolios, agrees to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolios from time to time, and the cash consideration received by it for such
new or treasury shares of beneficial interest of the Trust representing
interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible
for any property of a Portfolio held or received by the Portfolio and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.17), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, but only in accordance with an
applicable vote by the Board of Trustees of the Trust, and provided that the
Custodian shall have no more or less responsibility or liability to the Trust on
account of any actions or omissions of any subcustodian so employed than any
such subcustodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Trust Held By
the Custodian.
2.1. Holding Securities. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, including all
securities owned by such Portfolio, other than (a) securities which are
maintained pursuant to Section 2.12 in a clearing agency which acts as a
securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as a "Securities
System" and (b) commercial paper of an issuer for which State Street Bank and
Trust Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian pursuant
to Section 2.12.A.
2.2. Delivery of Securities. The Custodian shall release and deliver
securities owned by a Portfolio held by the Custodian or in a Securities System
account of the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper System Account") only upon receipt of Proper Instructions
from the Trust on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, and only in the following
cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender
or other similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be delivered to
the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed pursuant to
Section 2.11 or into the name or nominee name of any sub-custodian appointed
pursuant to Article l; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided that in any
such case, the Custodian shall have no responsibility or liability for any loss
arising from the delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions for
conversion contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar securities
or the surrender of
interim receipts or temporary securities for definitive securities;
provided that, in any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities
made by the Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Trust on behalf of the
Portfolios, which may be in the form of cash or obligations issued by the United
States government, its agencies or instrumentalities, except that in connection
with any loans for which collateral is to be credited to the Custodian's account
in the book-entry system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery of securities
owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings
by the Trust on behalf of the Portfolio requiring a pledge of assets by the
Trust on behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio of the Trust;
13) For delivery in accordance with the provisions of any
agreement among the Trust on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission
and/or any Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the Portfolio of
the Trust;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Trust, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be described
from time to time in the currently effective prospectus and statement of
additional information of the Trust related to the Portfolio ("Prospectus"), in
satisfaction of requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon
receipt of, in addition to Proper Instructions from the Trust on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer of the Trust and certified by
the Secretary or an Assistant Secretary, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
2.3. Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Portfolio
or in the name of any nominee of the Trust on behalf of the Portfolio or of any
nominee of the Custodian which nominee shall be assigned exclusively to the
Portfolio, unless the Trust has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.11 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Contract shall
be in "street name" or other good delivery form.
2.4. Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts (the "Portfolio's Account or Accounts") in the name of
each Portfolio of the Trust, subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a Portfolio may
be deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its discretion
deem necessary or desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of Trustees
of the Trust. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
2.5. Payments for Shares. The Custodian shall receive from the
distributor for the Shares or from the Transfer Agent of the Trust and deposit
into the Portfolio's account such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Trust. The Custodian will
provide timely notification to the Trust on behalf of each such Portfolio and
the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.
2.6. Investment and Availability of Federal Funds. Upon mutual
agreement between the Trust on behalf of each applicable Portfolio and the
Custodian, the Custodian shall, upon the receipt of Proper Instructions from the
Trust on behalf of a Portfolio, 1) invest in such instruments as may be set
forth in such instruments as may be set forth in such instructions on the same
day as received all federal funds received after a time agreed upon the
Custodian and the Trust; and 2) make federal funds available to such Portfolio
as of specified times agreed upon from time to time by the Trust and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.7. Collection of Income. The Custodian shall collect on a timely
basis all income and other payments with respect to registered securities held
hereunder to which each Portfolio shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the date of
payment by the issuer, such securities are held by the Custodian or its agent
thereof and shall credit such income, as collected, to such Portfolio's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due each Portfolio on
securities loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Trust. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Trust with such information
or data as may be necessary to assist the Trust in arranging for the timely
delivery to the Custodian of the income to which the Portfolio properly
entitled.
2.8. Payment of Trust Monies. Upon receipt of Proper
Instructions from the Trust on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of securities for the account of the
Portfolio but only (a) against the delivery of such securities to the Custodian
(or any bank, banking firm or trust company doing business in the United States
or abroad which is qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Portfolio or in the name
of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12 hereof; or (c) in the
case of a purchase involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.12A; or (d) in the case of repurchase
agreements entered into between the Trust on behalf of the Portfolio and the
Custodian, or another bank, or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing purchase by the
Portfolio of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from the Portfolio;
2) In connection with conversion, exchange or
surrender of securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued
by the Portfolio as set forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for the account
of the Portfolio: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Trust whether or not such expenses are
to be in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing documents of the Trust;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Trust on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the Executive
Committee of the Trust signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose, and naming
the person or persons to whom such payment is to be made.
2.9. Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase of securities for
the account of a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from the
Trust on behalf of such Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Trust for such securities to the same extent as if the
securities had been received by the Custodian, except that in the case of
repurchase agreements entered into by the Trust on behalf of a Portfolio with a
bank which is a member of the Federal Reserve System, the Custodian may transfer
funds to the account of such bank prior to the receipt of written evidence that
the securities subject to such repurchase agreement have been transferred by
book-entry into a segregated non-proprietary account of the Custodian maintained
with the Federal Reserve Bank of Boston or of the safekeeping receipt, provided
that such securities have in fact been so transferred by book-entry.
2.10. Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of 1940, as
amended, to act as a custodian, as its agent to carry out such of the provisions
of this Article 2 as the Custodian may from time to time direct; provided,
however, that the appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.11 Deposit of Trust Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities Exchange Act of 1934, which acts as a securities depository, or in
the book-entry system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as "Securities System"
in accordance with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are represented in an account
("Custodian's 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;
2) The records of the Custodian with respect to
securities of the Portfolios which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Custodian's Account, and (ii)
the making of an entry on the records of the Custodian to reflect such payment
and transfer for the account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i) receipt of advice from
the Securities System that payment for such securities has been transferred to
the Custodian's Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of the Portfolio.
Copies of all advices from the Securities System of transfers of securities for
the account of the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Trust at its request. Upon
request, the Custodian shall furnish the Trust on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio in the
form of a written advice or notice and shall furnish to the Portfolio copies of
daily transaction sheets reflecting each day's transactions in the Securities
System for the account of the Portfolio.
4) The Custodian shall provide the Trust for the
Portfolio 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;
5) The Custodian shall have received from the Trust on
behalf of the Portfolio the initial or annual certificate, as the case may be,
required by Article 9 hereof;
6) Anything to the contrary in this Contract notwithstanding,
the Custodian shall be liable to the Trust for the benefit of the Portfolio for
any loss or damage to the Portfolio resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it may have
against the Securities System; at the election of the Trust, it shall be
entitled to be subrogated to the rights of the Custodian with respect to any
claim against the Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the extent that the
Trust has not been made whole for any such loss or damage.
2.11A. Trust Assets Held in the Custodian's Direct Paper System.
The Custodian may deposit and/or maintain securities owned by a Portfolio in
the Direct Paper System of the
Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct
Paper System will be effected in the absence of Proper Instructions from the
Trust on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall not include
any assets of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the account of
the Portfolio. The Custodian shall transfer securities sold for the account of
the Portfolio upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Trust on behalf of the
Portfolio confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Trust on behalf of the
Portfolio copies of daily transaction sheets reflecting each day's transaction
in the System for the account of the Portfolio;
6) The Custodian shall provide the Trust on behalf of the
Portfolio with any report on its system of internal accounting control as the
Trust may reasonably request from time to time.
2.12. Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Trust on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.12 hereof, (i) in accordance with the provisions of any
agreement among the Trust on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Trust, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or sold by
the Portfolio, (iii) for the purpose of compliance by the Portfolio with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions from the Trust
on behalf of the applicable Portfolio, a certified copy of a resolution of the
Board of Trustees or of the Executive Committee signed by an officer of the
Trust and certified by the Secretary or an Assistant Secretary, setting forth
the purpose or purposes of such segregated account and declaring such purposes
to be proper corporate purposes.
2.13. Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to securities of each Portfolio held by it and in connection with
transfers of securities.
2.14. Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities.
2.15. Communications Relating to Trust Portfolio Securities. The
Custodian shall transmit promptly to the Trust for each Portfolio all written
information (including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Trust on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being held for the
Portfolio. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Portfolio all written information received by the
Custodian from issuers of the securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Portfolio shall notify the Custodian
at least three business days prior to the date on which the Custodian is to take
such action.
2.16. Reports to Fund by Independent Public Accountants The Custodian
shall provide the Trust, on behalf of each of the Portfolios, at such times as
the Trust may reasonably require, with reports by independent public accountants
on the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures contracts,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract;
such reports, which shall be of sufficient scope and in sufficient detail,
as may reasonably be required by the Trust to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
3. Duties of the Custodian with Respect to Property of the Trust Held
Outside of the United States.
The provisions of this Article 3 shall apply to the duties of the
Custodian as they relate to foreign securities held outside the United States.
3.1. Appointment of Chase as Subcustodian. The Custodian is authorized
and instructed by the Trust to employ Chase Manhattan Bank N.A. ( "Chase") as
subcustodian for the Trust's foreign securities (including cash incidental to
transactions in such securities) on the terms and conditions set forth in the
Subcustody Contract between the Custodian and Chase which is attached hereto as
Exhibit A (the "Subcustody Contract"). The Custodian acknowledges that it has
entered into the Subcustody Contract and hereby agrees to provide such services
to the Trust and in accordance with such Subcustody Contract as necessary for
foreign custody services to be provided pursuant thereto.
3.2. Standard of Care; Liability. Notwithstanding anything to the
contrary in this Contract, the Custodian shall not be liable to the Trust for
any loss, damage, cost, expense, liability or claim arising out of or in
connection with the maintenance of custody of the Trust's foreign securities by
Chase or by any other banking institution or securities depository employed
pursuant to the terms of the Subcustody Contract, except that the Custodian
shall be liable for any such loss, damage, cost, expense, liability or claim
directly resulting from the failure of the Custodian to exercise reasonable care
in the performance of its duties hereunder. At the election of the Trust, the
Trust shall be entitled to be subrogated to the rights of the Custodian under
the Subcustody Contract with respect to any claim arising hereunder against
Chase or any other banking institution or securities
depository employed by Chase if and to the extent that the Trust has not
been made whole therefor.
3.3. Trust's Responsibility for Rules and Regulations. As between the
Custodian and the Trust, the Trust shall be solely responsible to assure that
the maintenance of foreign securities and cash pursuant to the terms of the
Subcustody Contract comply with all applicable rules, regulations,
interpretations and orders of the Securities and Exchange Commission, and the
Custodian assumes no responsibility and makes no representations as to such
compliance.
4. Payments for Repurchases or Redemptions of Shares of the Trust. From such
funds as may be available for the purpose but subject to the limitations of the
Declaration of Trust and any applicable votes of the Board of Trustees of the
Trust pursuant thereto, the Custodian shall, upon receipt of instructions from
the Transfer Agent, make funds available for payment to holders of Shares who
have delivered to the Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of a Portfolio, the Custodian shall honor checks drawn on the Custodian
by a holder of Shares, which checks have been furnished by the Trust to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time between
the Trust and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Article 2 means a writing
signed or initialed by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction
involved. The Trust shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Trust
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolio's assets.
6. Actions Permitted without Express Authority. The Custodian may in
its discretion, without express authority from the Trust on behalf of each
applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to the Trust
on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of the Portfolio except as otherwise directed
by the Board of Trustees of the Trust.
7. Evidence of Authority. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on behalf
of the Trust. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Trust as conclusive evidence (a) of the authority
of any person to act in accordance with such vote or (b) of any determination or
of any action by the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Trust to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Trust on behalf of the Portfolios, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Trust's currently effective prospectus related to such
Portfolio and shall advise the Trust and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Trust to do so, shall advise the Transfer Agent periodically of the division of
such net income among its various components. The calculations of the net asset
value per share and the daily income of each Portfolio shall be made at the time
or times described from time to time in the Trust's currently effective
prospectus related to such Portfolio.
9. Records.
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Trust under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder, applicable federal and state tax laws and any other
law or administrative rules or procedures which may be applicable to the Trust.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Trust and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Trust's request, supply the Trust with a tabulation of securities owned by the
Trust and held by the Custodian and shall, when requested to do so by the Trust
and for such compensation as shall be agreed upon between the Trust and the
Custodian, include certificate numbers in such tabulations.
10. Opinion of Trust's Independent Accountant
The Custodian shall take all reasonable action, as the Trust on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Trust's independent accountants with respect
to its activities hereunder in connection with the preparation of the Trust's
Form N-lA, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Trust on behalf of each applicable Portfolio and the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract and shall be indemnified by the Trust for any
action taken or omitted by it in the proper execution of instructions from the
Trust. It shall be entitled to rely on and may act upon advice of counsel for
the Trust on all matters and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. Notwithstanding the
foregoing, the responsibility of the Custodian with respect to redemptions
effected by check shall be in accordance with a separate Agreement entered into
between the Custodian and the Trust.
The Trust on behalf of a Portfolio agrees to indemnify and hold
harmless the Custodian and its nominee from and against all taxes, charges,
expenses, assessments, claims and liabilities (including counsel fees) incurred
or assessed against it or its nominee in connection with the
performance of this Contract, except such as may arise from it or its
nominee's own negligent action, negligent failure to act or willful misconduct.
The Custodian is authorized to charge any account of the applicable
Portfolio for such items and its fees. To secure any such authorized charges and
any advances of cash or securities made by the Custodian to or for the benefit
of a Portfolio for any purpose which results in the Portfolio incurring an
overdraft at the end of any business day or for extraordinary or emergency
purposes during any business day, the Trust on behalf of the Portfolio hereby
grants to the Custodian a security interest in and pledges to the Custodian
securities held for it by the Custodian, in an amount not to exceed five percent
of the applicable Portfolio's gross assets, the specific securities to be
designated in writing from time to time by the Trust on behalf of the Portfolio
or its investment adviser (the "Pledged Securities"). Should the Trust on behalf
of the Portfolio fail to repay promptly any advances of cash or securities, the
Custodian shall be entitled to use available cash and to dispose of the Pledged
Securities as is necessary to repay any such advances.
13. Effective Period. Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.12 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Trust has
approved the initial use of a particular Securities System by such Portfolio and
the receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has reviewed the use by such Portfolio of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not act under
Section 2.12.A hereof in the absence of receipt of an initial certificate of the
Secretary
or an Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System by such Portfolio and the receipt of an
annual certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by such Portfolio of the Direct Paper System;
provided further, however, (a) that the Trust shall not amend or terminate this
Contract in contravention of any applicable federal or state regulations, or any
provision of the Declaration of Trust, and (b) that the Trust on behalf of one
or more of the Portfolios may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
14. Successor Custodian
If a successor custodian for the assets of one or more of the
Portfolios shall be appointed by the Board of Trustees of the Trust, the
Custodian shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, of its own selection, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by the Custodian on
behalf of each applicable Portfolio and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and on
behalf of each applicable Portfolio transfer to an account of such successor
custodian all of the securities of each such Portfolio held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Trust on behalf of each of the Portfolios may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Contract as may in their joint opinion be consistent with the general tenor of
this Contract. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Declaration of Trust of the
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
16. Additional Funds
In the event that the Trust establishes one or more series of Shares in
addition to Series I and Series II with respect to which it desires to have the
Custodian render services as custodian
under the terms hereof, it shall so notify the Custodian in writing, and if
the Custodian agrees in writing to provide such services, such series of Shares
shall become a Portfolio hereunder.
17. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
18. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, the
existing custodian contracts between the Trust on behalf of each of the
Portfolios and the Custodian. Any reference to the custodian contract between
the Trust and the Custodian in documents executed prior to the date hereof shall
be deemed to refer to this Contract.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 24th day of May, 1988.
ATTEST MASSACHUSETTS FINANCIAL HIGH INCOME TRUST
ILLEGIBLE By: XXXXXXX X. XXXXXX
(Illegible) Xxxxxxx X. Xxxxxx
ATTEST STATE STREET BANK & TRUST COMPANY
X. XXXXXXX By: ILLEGIBLE
X. Xxxxxxx, Assistant Secretary (Illegible), Vice President
