CUSTODIAN CONTRACT
Between
EMERGING MARKETS PORTFOLIO
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 Portfolio
Property Held By the Custodian in the United States...... 1
2.1 Holding Investments................................ 1
2.2 Delivery of Investments............................. 2
2.3 Registration of Investments......................... 4
2.4 Bank Accounts....................................... 4
2.5 Availability of Federal Funds....................... 4
2.6 Collection of Income .... :......................... 5
2.7 Payment of Portfolio Monies......................... 5
2.8 Appointment of Agents............................... 6
2.9 Deposit of Investments in a U.S. Securities
System.............................................. 7
2.10 Portfolio Investments Held in the Custodian's
Direct Paper System......................... 8
2.11 Segregated Account................................. 8
2.12 Ownership Certificates for Tax Purposes............ 9
2.13 Proxies............................................ 9
2.14 Communications Relating to Portfolio Investments... 9
2.15 Reports to Portfolio by Independent Public
Accountants........................................ 10
3. Duties of the Custodian with Respect to Portfolio
Property Held Outside of the United States............... 10
3.1 Appointment of Foreign Sub-Custodians...................... 10
3.2 Assets to be Held.......................................... 10
3.3 Foreign Securities Systems................................. 10
3.4 Agreements with Foreign Banking Institutions............... 11
3.5 Access of Independent Accountants of the
Portfolio.................................................. 11
3.6 Reports by Custodian....................................... 11
3.7 Transactions in Foreign Custody Account.................... 12
3.8 Liability of Foreign Sub-Custodians........................ 12
3.9 Liability of Custodian..................................... 12
3.10 Reimbursement for Advances................................. 13
3.11 Monitoring Responsibilities................................ 13
3.12 Branches of U.S. Banks..................................... 13
3.13
4. Payments for Repurchases and Sales of Interests..................14
5. Proper Instructions..............................................14
TABLE OF CONTENTS
PAGE
6. Actions Permitted Without Express Authority..... 14
7. Evidence of Authority........................... 15
8. Duties of Custodian with Respect to the Books of
Account and Calculation of Net Asset Value and
Net Income...................................... 15
9. Records......................................... 15
10. Opinion of Portfolio's Independent Accountant... 16
11. Compensation of Custodian....................... 16
12. Responsibility of Custodian..................... 16
13. Tax Law......................................... 18
13.1 Tax Law of Cayman Islands.................. 18
13.2 Tax Law of Other Jurisdictions............. 18
14. Effective Period, Termination and Amendment..... 19
15. Successor Custodian............................. 19
16. Interpretive and Additional Provisions.......... 20
17. Massachusetts Law to Apply...................... 20
18. Prior Contracts................................. 20
19. Assignment...................................... 20
20. Confidentiality................................. 21
21. Notices......................................... 21
22. Shareholder Communications...................... 22
CUSTODIAN CONTRACT
This Contract is between Emerging Markets Portfolio, a trust
organized and existing under the laws of the state of New York, having
its principal place of business at Butterfield House, P.O. Box 2330,
Grand Cayman, Cayman Islands, British West Indies (the "Portfolio), and
State Street Bank and Trust Company, a Massachusetts trust company,
having its principal place of business at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 (the "Custodian").
WITNESSETH:
WHEREAS, the Portfolio is a non-diversified open-end investment company
which has been organized as a trust under the laws of the state of New
York;
WHEREAS, the Portfolio desires to appoint the Custodian to act as
custodian of the assets of the Portfolio, and the Custodian desires to
accept such appointment;
WHEREAS, the Portfolio's assets are composed of money and property
contributed thereto by the holders of interests in the Portfolio
("Interests") entitled to ownership rights in the Portfolio;
NOW THEREFORE, 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
Pursuant to the authority contained in its Declaration of Trust, the
Portfolio hereby employs the Custodian as the custodian of the assets
of the Portfolio. The Portfolio agrees to deliver to the Custodian or a
sub-custodian all investments and cash, all payments of interest, all
payments of principal or capital distributions received by it with
respect to all investments, and the cash consideration received by it
for Interests as may be issued or sold from time to time. The Custodian
shall not be responsible for any property of the Portfolio not received
by it.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PORTFOLIO PROPERTY HELD BY THE
CUSTODIAN IN THE UNITED STATES
2.1 HOLDING INVESTMENTS. The Custodian shall hold and segregate for the
ac(ount of the Portfolio all non-cash property, to be held by it in the
United States, including all domestic investments owned by the
Portfolio, other than (a) investments which are maintained pursuant to
Section 2.9 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 and certain federal agencies (collectively referred to herein
as a "U.S. Securities Systemil) and (b) commercial paper of an issuer
for which the Custodian acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System
of the Custodian (the "Direct Paper System") pursuant to Section 2.10.
2.2 DELIVERY OF INVESTMENTS. The Custodian shall release and deliver
domestic investments owned by the Portfolio held by the Custodian or in
a U.S. 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 (as defined below), which may
be continuing instructions when deemed appropriate by the parties, and
only in the following cases:
1) Upon sale of such investments 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 investments entered into on behalf of the Portfolio;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.9 hereof;
4)To the depository agent, against a receipt, in connection with
tender or other similar offers for portfolio investments of the Portfolio;
5)To the issuer thereof or its agent, against a receipt, when such
investments 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, against a receipt, 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 2.8; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of interests;
provided that, in any such case, the new investments are to be
delivered to the Custodian;
7)Upon the sale of such investments 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 investments prior to receiving
payment for such investments 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
investments of the issuer of such investments, or pursuant to
provisions for conversion contained in such investments, or pursuant to
any deposit agreement, against a receipt; provided that, in any such
case, the new investments and cash, if any, are to be delivered to the
Custodian;
9) In the case of warrants, rights or similar investments, the
surrender thereof in the exercise of such warrants, rights or similar
investments or the surrender of interim receipts or temporary
investments for definitive investments; provided that, in any such
case, the new investments and cash, if any, are concurrently delivered
to the Custodian or against a receipt;
10) For delivery in connection with any loans of investments made on
behalf of the Portfolio, BUT ONLV against receipt of adequate forms of
collateral as agreed upon from time to time by the Portfolio or its
delegate, 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 investments owned by the
Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Portfolio requiring a pledge of assets of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian and a broker-dealer which is a
member of The National Association of Securities Dealers, Inc.
("NASDII) , 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;
13) For delivery in accordance with the provisions of any agreement
among 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; and
14) For any other proper corporate purpose, BUT ONLV upon receipt of
Proper Instructions from the Portfolio, specifying the investments to
be delivered, 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 investments shall
be made.
2.3 REGISTRATION OF INVESTMENTS. Domestic investments held by the Custodian
(ether than bearer investments) shall be registered in the name of the
Portfolio or in the name of any nominee of the Portfolio or of any
nominee of the Custodian which nominee shall be assigned exclusively to
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.8. All investments 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. If, however, the Portfolio
directs the Custodian to maintain investments in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due to the Portfolio on such investments and to notify the Portfolio on
a best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Portfolio,
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. Funds held by the Custodian for the
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;
ided, however, that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by the
Portfolio. 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 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the
Portfolio and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions from the Portfolio, make federal funds available to
the Portfolio as of specified times agreed upon from time to time by
the Portfolio and the Custodian in the amount of checks received in
payment for
4
Interests which are deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States investments held hereunder to which the
Portfolio shall be entitled either by law or pursuant to custom in the
investments business, and shall collect on a timely basis all income
and other payments with respect to United States bearer investments if,
on the date of payment by the issuer, such investments are held by the
Custodian or its agent thereof and shall credit such income, as
collected, to the 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
investments held hereunder. Income due the Portfolio on United States
investments loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Portfolio. The Custodian will have no duty
or responsibility in connection therewith, other than to provide the
Portfolio with such information or data as may be necessary to assist
the Portfolio in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper Instructions from
the Portfolio, which may be continuing instructions when deemed
appropriate by the parties, the Custodian shall pay out monies of the
Portfolio in the following cases only:
1) Upon the purchase of domestic investments, including options,
futures contracts or options on futures contracts, for the account of
the Portfolio but only (a) against the delivery of such investments,
including evidence of title to such options, futures contracts or
options on futures contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United States or abroad 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 U.S. Securities System, in accordance with the conditions set
forth in Section 2.9 hereof or (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions set forth in
Section 2.10; or (d) in the case of repurchase agreements entered into
between the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
investments either in certificate form or through an entry crediting
the Custodian's account at the Federal Reserve Bank with such
investments or (ii) against delivery of the receipt evidencing purchase
on behalf of the Portfolio of investments owned by the Custodian along
with written evidence of the agreement by the Custodian to repurchase
such investments from the Portfolio; or (e) for transfer to a time
deposit account of the Portfolio in any bank, whether domestic or
foreign or any savings and loan; such transfer may be effected prior to
receipt of a confirmation from a broker and/or the applicable bank or
savings and loan pursuant to Proper Instructions from the Portfolio as
defined in Article 5;
2) In connection with conversion, exchange or surrender of
investments owned by the Portfolio as set forth in Section 2.2 hereof;
3) For payment of the amount of dividends received in respect of
investments sold short;
4) For any other proper purpose, BUT ONLY upon receipt of Proper
Instructions from the Portfolio, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made. In connection with the
following type of expenses, the Custodian shall make payments upon
instructions from the Portfolio from an account of the Portfolio
controlled from outside of the United States:
5) 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 thereof whether
or not such expenses are to be in whole or part capitalized or treated
as deferred expenses;
6) For the payment of any distributions by the Portfolio declared in
accordance with the Declaration of Trust.
2.8 APPOINTMENT OF AGENTS. Upon prior written notice to the Portfolio, the
Custodian may at any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company 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.
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2.9 DEPOSIT OF INVESTMENTS IN A U.S. SECURITIES SYSTEM.
-------------------------------------------------- The Custodian may deposit
and/or maintain domestic investments owned by the Portfolio in a U.S. Securities
System in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and only to the extent
applicable and subject to the following provisions:
1) The Custodian may keep domestic investments of the Portfolio in a
U.S. Securities System provided that such investments are represented
in an account ("Account") of the Custodian in the U.S. 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 domestic investments of
the Portfolio which are maintained in a U.S. Securities System shall identify by
book-entry those investments belonging to the Portfolio;
3) The Custodian shall pay for domestic investments purchased for the
account of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that such investments have been transferred to the
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 domestic investments sold for
the account of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such investments has been
transferred to the 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 U.S.
Securities System of transfers of domestic investments for the account
of the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Portfolio at its
request. The Custodian shall furnish 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 U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Portfolio with any report obtained
by the Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding domestic investments
deposited in the U.S. Securities System.
2.10 PORTFOLIO INVESTMENTS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain investments owned by the Portfolio in
the Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to investments in the Direct
Paper System will be effected in the absence of Proper
Instructions from the Portfolio;
2) The Custodian may keep investments of the Portfolio in the Direct
Paper System only if such investments are represented in an 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 investments of the
Portfolio which are maintained in the Direct Paper System shall identify by
book-entry those investments belonging to the Portfolio;
4) The Custodian shall pay for investments 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 investments to the
Account of the Portfolio. The Custodian shall transfer investments 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 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 Portfolio copies of
daily transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Portfolio with any report on its
system of internal accounting control as the Portfolio may reasonably
request from time to time.
2.11 SEGREGATED ACCOUNT. The Custodian shall establish and maintain a
segregated account or accounts for and on behalf of the Portfolio, into
which account or accounts shall be transferred cash and/or investments,
including investments maintained in an account by the Custodian
pursuant to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Portfolio, the Custodian and a broker-dealer
which is 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
8
Clearing Corporation and of any registered national securities exchange
(or the Commodity Futures Commission or any registered contract market)
, or of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Portfolio,
(ii) for purposes of segregating cash or government investments in
connection with options purchased, sold or written by the Portfolio or
commodity futures contracts or options thereon purchased or sold by the
Portfolio or short-sales, (iii) for other proper corporate purposes.
2.12 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic investments of the Portfolio held by
it and in connection with transfers of such investments.
2.13 PROXIES. The Custodian shall, with respect to the domestic investments
held hereunder, cause to be promptly executed by the registered holder
of such investments, if the investments 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
investments.
2.14 COMMUNICATIONS RELATED TO PORTFOLIO INVESTMENTS. Subject to
the provisions of Section 2.3, the Custodian shall transmit promptly to
the Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic investments and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Portfolio and the maturity of
futures contracts purchased or sold by the Portfolio) received by the
Custodian from issuers of the domestic investments 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 domestic investments
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 on behalf of the Portfolio 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 required to take such action; however, the
Custodian will use its best efforts to take such action as promptly as
the Portfolio may request.
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2.15 REPORTS TO PORTFOLIO BY INDEPENDENT PUBLIC ACCOUNTANTS.
------------------------------------------------------
The Custodian shall provide the Portfolio, at such times as the
Portfolio may reasonably require, with reports by independent public accountants
on the accounting system, internal accounting control and procedures for
safeguarding investments, including futures contracts and options on futures
contracts, including domestic investments deposited and/or maintained in a U.S.
Securities System, relating to the services provided by the Custodian under this
Contract; such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Portfolio 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 PORTFOLIO PROPERTY HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Portfolio hereby authorizes
and instructs the Custodian to employ as sub-custodians f or the Portf
olio securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians")
. Upon receipt of "Proper Instructions", as defined in Section 5 of
this Contract, together with a certified resolution of the Portfolio's
Board of Trustees, the Custodian and the Portfolio may agree to amend
Schedule A hereto from time to time to designate additional foreign
banking institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Proper Instructions, the Portfolio may
instruct the Custodian -to cease the employment of any one or more such
sub-custodians for maintaining custody of the Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c) (1) of Rule 17f -5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Portfolio may
determine to be reasonably necessary to effect the Portfolio's foreign
securities transactions. The Custodian shall identify on its books as
belonging to the Portfolio, the foreign securities of the Portfolio
held by each foreign sub-custodian.
3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be agreed upon in
writing by the Custodian and the Portfolio, assets of the Portfolio
shall be maintained in a clearing agency which acts as a securities
depository or in a book-entry system for the central handling of
securities located outside the United States (each a "Foreign
Securities System") only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant to the
terms hereof. (Foreign Securities Systems and U.S. Securities Systems
are collectively referred to herein as "Securities Systems") Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.4 hereof.
3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit I hereto and shall provide that: (a) the Portfolio's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership of the Portfolio's
assets will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted
under applicable law the independent public accountants for the
Portfolio, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with
the custodian; and (e) assets of the Portfolio held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.
3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE PORTFOLIO. Upon request of the
Portfolio, the Custodian will use its best efforts to arrange for the
independent accountants of the Portfolio to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Portfolio from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio's securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of the Portfolio indicating, as
to securities acquired for the Portfolio, the identity of the entity
having physical possession of such securities.
3.7 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as
otherwise provided in paragraph (b) of this Section 3.7, the provision
of Sections 2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS
to the foreign securities of the Portfolio held outside the United
States by foreign sub-custodians. (b) Notwithstanding any provision of
this Contract to the contrary, settlement and payment for securities
received for the account of the Portfolio and delivery of securities
maintained for the account of the Portfolio may be effected in
accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor
(or an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent
as set forth in Section 2.3
hereof, and the Portfolio agrees to hold any such nominee harmless from
any liability as a holder of record of such securities.
3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and the Portfolio from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with
the institution's performance of such obligations. At the election of
the Portfolio, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolio has not been
made whole for any such loss, damage, cost, expense, liability or
claim.
3.9 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by Section 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this Section 3.9, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Portfolio for any loss due to such delegation,
except such LOSS as may result from (a) political risk (including, but
not limited to, exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy or insolvency
of State Street London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd.
have exercised reasonable care.
3.10 REIMBURSEMENT FOR ADVANCES. If the Portfolio requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any time held for the
account of the Portfolio shall be security therefor and should the
Portfolio fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio
assets to the extent necessary to obtain reimbursement.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually
to the Portfolio, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar
in kind and scope to that
furnished to the Portfolio in connection with the initial approval of
this Contract. In addition, the Custodian will promptly inform the
Portfolio in the event that the Custodian learns of a material adverse
change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Portfolio or in the case of any
foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders, equity will decline below $200 million (U.S. dollars
or the equivalent thereof) or that its shareholders, equity has
declined below $200 million (in each case computed in accordance with
generally accepted U.S.
accounting principles).
3.12 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Portfolios assets is maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2 (a) (5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for the Portfolio in the United Kingdom shall be
maintained in an interest bearing account established for the Portfolio
with the Custodian's London branch, which account shall be subject to
the direction of the Custodian, State Street London Ltd. or both.
4. PAYMENTS FOR REPURCHASES AND INTERESTS
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust the Custodian shall, upon
receipt of instructions from the Portfolio, make funds available to the
Portfolio at an account of the Portfolio controlled from outside of the
United States for payment to holders of Interests who have delivered to
the Portfolio a request for repurchase of their Interests.
5. PROPER INSTRUCTIONS
Proper Instructions as used herein means a writing signed or initialled
on behalf of the Portfolio by one or more person or persons as the
Portfolio shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction
involved. 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 Portfolio shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Portfolio
accompanied by a detailed description of procedures approved by the
Portfolio, Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that
the Portfolio and the Custodian are satisfied that such procedures
afford adequate safeguards for the Portfolio's assets. For purposes of
this Section, Proper Instructions shall include instructions received
by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.11.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Portfolio:
1) make payments to others for minor transactional expenses of handling
investments or other similar items relating to its duties under this
Contract, PROVIDED that all such payments shall be accounted for to the
Portfolio;
2) surrender investments in temporary form for investments
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 investments and property of the Portfolio except as
otherwise directed by the Portfolio.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper
reasonably believed by it to be genuine and to have been properly
executed by or on behalf of the Portfolio. The Custodian may receive
and accept a certified copy of an instruction of the Portfolio as
conclusive evidence (a) of the authority of any person to act in
accordance with such instruction or (b) of any determination or of any
action by the Portfolio pursuant to the Declaration of Trust as
described in such instruction, and such instruction 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 Portfolio to keep the books of
account of the Portfolio and/or compute the net asset value per share
of the outstanding Interests.
9. RECORDS
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will
meet the obligations of the Portfolio. All such records shall be the
property of the Portfolio 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 Portfolio.
10. OPINION OF PORTFOLIO'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Portfolio may
from time to time request, to obtain from year to year favorable
opinions from the Portfolio's independent accountants provided that the
books and records of the Portfolio shall be audited outside of the
United States.
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 Portfolio and the Custodian.
12. RESPONSIBILITY OF CUSTODIAN
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, including any futures commission merchant
acting pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Contract. It shall be kept
indemnif ied by and shall be without liability to the Portfolio for any
action taken or omitted by it in good faith without negligence. The
Portfolio hereby agrees to indemnify and hold harmless the Custodian
from and against any and all costs, expenses, losses, damages, charges,
counsel fees, payments and liabilities which may be asserted against
the Custodian arising out of any failure of the Portfolio to comply
with the United States investments laws. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the
Portfolio) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract and, regardless of whether
assets are maintained in the custody of a foreign banking institution,
a foreign securities depository or a branch of a U.S. bank, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
16
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian
or agent, the Custodian shall be without liability to the Portfolio for
any loss, liability, claim or expense resulting from or caused by; (i)
events or circumstances beyond the reasonable control of the Custodian
or any sub-custodian or Securities System or any agent or nominee of
any of the foregoing, including, without limitation, nationalization or
expropriation, imposition of currency controls or restrictions, the
interruption, suspension or restriction of trading on or the closure of
any securities markets, power or other mechanical or technological
failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work
stoppages, natural disasters or other similar events or acts; (ii)
errors by the Portfolio or the Investment Advisor in their instructions
to the Custodian provided such instructions have been given in
accordance with this Contract; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any
broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's
subcustodian or agent securities purchased or in the remittance of
payment made in connection with securities sold; (v) any delay or
failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian,
the Portfolio, the Custodian's subcustodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer
such securities including non-receipt of bonus, dividends and rights
and other accretions or benefits; (vi) delays or inability to perform
its duties due to any disorder in market infrastructure with respect to
any particular security or Securities System; and (vii) any provision
of any present or future law or regulation or order of the United
States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent
jurisdiction.
If the Portfolio requires the Custodian to take any action with respect
to investments, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Portfolio being liable for the payment of
money or incurring liability of some other form, the Portfolio, as a
prerequisite to requiring the Custodian to take such action, shall
provide indemnity to the Custodian in an amount and form satisfactory
to it.
If the Portfolio requires the Custodian, its affiliates, subsidiaries
or agents, to advance cash or investments for any purpose (including
but not limited to securities settlements, foreign exchange contracts
and assumed settlement) for the benefit of the Portfolio or in the
event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract with respect to the
Portfolio, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the Portfolio shall be
security therefor and should the Portfolio fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and
to dispose of the Portfolio's assets to the extent necessary to obtain
reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
13. TAX LAW
13.1 TAX LAW OF CAYMAN ISLANDS.
-------------------------
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Portfolio or the Custodian as
custodian of the Portfolio's assets by the tax law of Cayman Islands or any
state or political subdivision thereof. The Custodian shall be kept indemnified
by and be without liability to the Portfolio to the extent of the assets of the
Portfolio for any such obligations including taxes, withholding and reporting
requirements, claims for exemption or refund, additions for late payment,
interest, penalties and other expense (including legal expenses) that may be
assessed against the Portfolio or the Custodian as custodian of the Portfolio.
13.2 TAX LAW OF OTHER JURISDICTIONS. It shall be the responsibility of the
Portfolio (except taxes attributable to the domicile of the Custodian
in Massachusetts and in such case the Custodian shall notify the
Portfolio) to notify the Custodian of the obligations imposed on the
Portfolio by the tax law of jurisdictions other than those mentioned in
Section 13.1. The Custodian shall use its best efforts to assist the
Portfolio with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Portfolio has provided such information.
Nevertheless, the Custodian shall be kept indemnified by and shall be
without liability to the Portfolio for any such obligations of which it
has not been notified in writing by the Portfolio, or for which it has
received directions to not withhold U.S. taxes, including taxes,
withholding and reporting requirements, claims for exemptions or
refund, additions for late payment, interest, penalties and other
expenses (including legal expenses) that may be assessed against the
Portfolio or the Custodian as custodian of the Portfolio.
14. 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, in the case of a termination by the
Portfolio, not sooner than thirty (30) days after the date of such
delivery or mailing, and, in the case of a termination by the
Custodian, not sooner than ninety (90) days after the date of such
delivery or mailings.
Upon termination of the Contract, the 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. The parties agree that a notification of
termination of the Portfolio shall serve as a notification of
termination of the Custodian.
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Portfolio shall be appointed by the
Portfolio, 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 investments of the Portfolio then held by
it hereunder and shall transfer to an account of the successor
custodian all of the investments of the 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 instruction of
the Portfolio, deliver at the office of the Portfolio such investments,
funds and other properties in accordance with such instruction.
In the event that no written order designating a successor custodian or
certified copy of an instruction of the Portfolio 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 doing business in
Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published
report, of not less than $100,000,000, all investments, funds and other
properties held by the Custodian on behalf of the Portfolio and all
instruments held by the Custodian relative thereto and all other
property held by it under this Contract on behalf of the Portfolio and
to transfer to an account of such successor custodian all of the
investments of the 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 investments, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing
to failure of the Portfolio to procure the certified copy of the
instruction referred to or of the Portfolio 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
investments, 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.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Portfolio, 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. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
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, all
prior contracts between the Portfolio and the Custodian relating to the
custody of the Portfolio's assets.
19. ASSIGNMENT
This Contract may not be assigned by the Custodian without the written
consent of the Portfolio.
20. CONFIDENTIALITY
None of the parties hereto shall, unless compelled to do so by any
court of competent jurisdiction either before or after the termination
of this Contract, disclose to any person not authorized by the relevant
party to receive the same any information relating to such party and to
the affairs of such party of which the party disclosing the same shall
have become possessed during the period of this Contract and each party
shall use its best endeavors to prevent any such disclosure as
aforesaid.
21. NOTICES
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as
set forth herein during normal business hours or delivered prepaid
registered mail or by telex, cable or telecopy to the parties at the
following addresses or such other addresses as may be notified by any
party from time to time.
TO THE PORTFOLIO: EMERGING MARKETS PORTFOLIO
Butterfield House
P.O. Box 2330
Grand Cayman, Cayman Islands British West Indies
Attn: Managing Director
TO THE CUSTODIAN:STATE STREET BANK AND TRUST COMPANY
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
TO THE ADVISOR:XXXXX BROTHERS XXXXXXXX & CO.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Treasurer
Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.
22. SHAREHOLDER COMMUNICATIONS
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by
issuers of securities for the names, addresses and holdings of benef
icial owners of securities of that issuer held by the bank unless the
beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the
Portfolio to indicate whether it authorizes the Custodian to provide
the Portfolio's name, address, and share position to requesting
companies whose securities the Portfolio owns. If the Portfolio tells
the Custodian "xxxx, the Custodian will not provide this information to
requesting companies. If the Portfolio tells the Custodian "yes" or
does not check either llyes" or "xxxx below, the Custodian is required
by the rule to treat the Portfolio as consenting to disclosure of this
information for all securities owned by the Portfolio or any funds or
accounts established by the Portfolio. For the Portfolio's protection,
the Rule prohibits the requesting company from using the Portfolio's
name and address for any purpose other than corporate communications.
Please indicate below whether the Portfolio consents or objects by
checking one of the alternatives below.
YES [ ] The Custodian IS authorized to release the Portfolio's
name, address, and share positions.
NO [X] The Custodian is not authorized to release the
Portfolio's name, address, and share positions.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
SCHEDULE A
The following foreign banking institutions and foreign securities depositories
have been approved by the Board of Trustees of International Equity Portfolio
(the "Portfolioll) for use as sub-custodians for the Portfolio's securities and
other assets:
(Insert banks and securities depositories)
Certified:
Portfolio's Authorized officer
Date:
EXHIBIT I
SUBCUSTODIAN AGREEMENT
AGREEMENT made this day of 19 between
State Street Bank and Trust Company, A massachusetts Trust Company (hereinafter
referred to as the "Custodian") , having its principal place of business at 000
Xxxxxxxx Xxxxxx, Xxxxxx, XX, and (hereinafter
organized
and having an office at
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and conditions
herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. THE ACCOUNT
A. ESTABLISHMENT OF THE ACCOUNT. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as hereinafter defined)
from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter defined) from
time to time received by Subcustodian therefor.
B. USE OF THE ACCOUNT. The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Custodian as custodian and
the customers of Custodian and not for Custodian's own interest, Securities and
such Cash or cash equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or interest on, or
dividend from, any such Securities (herein collectively called Cash") .
C. TRANSFER OF PROPERTY IN THE ACCOUNT. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. OWNERSHIP AND SEGREGATION OF PROPERTY IN THE ACCOUNT.
----------------------------------------------------
The ownership of the property in the Account, whether Securities, Cash or
both, and whether any such property is held by Subcustodian in an Eligible
Depository, shall be clearly recorded on Subcustodian's books as belonging to
Custodian on behalf of Custodian's customers, and not for Custodian's own
interest and, to the extent that Securities are physically held in the Account,
such Securities shall also be physically segregated from the general assets of
Subcustodian, the assets of Custodian in its individual capacity and the assets
of Subcustodian's other customers. In addition, Subcustodian shall maintain such
other records as may be necessary to
identify the property hereunder as belonging to each Account.
E. REGISTRATION OF SECURITIES IN THE ACCOUNT. Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name of
Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.
II. SERVICES TO BE PROVIDED BY THE SUBCUSTODIAN
The services Subcustodian will provide to Custodian and the manner in which
such services will be performed will be as set forth below in this Agreement.
A. SERVICES PERFORMED PURSUANT TO INSTRUCTIONS. All transactions involving
the Securities and Cash in the Account shall be executed solely in accordance
with Custodian's Instructions as that term is defined in Paragraph IV hereof,
except those described in paragraph B below.
B. SERVICES TO BE PERFORMED WITHOUT INSTRUCTIONS. Subcustodian will, unless
it receives Instructions from Custodian to the contrary:
1. COLLECT CASH. Promptly collect and receive all dividends, income,
principal, proceeds from transfer and other payments with respect to property
held in the Account, and present for payment all Securities held in the Account
which are called, redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon presentation, and
credit Cash receipts therefrom to the Deposit Account.
0.XXXXXXXX SECURITIES. Promptly exchange Securities where the
exchange is purely ministerial including, without limitation, the exchange of
temporary Securities for those in definitive form and the exchange of warrants,
or other documents of entitlement to Securities, for the Securities themselves.
3. SALE OF RIGHTS AND FRACTIONAL INTERESTS. Whenever notification of a
rights entitlement or a fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such rights entitlement
or fractional interest bears an expiration date, Subcustodian will promptly
endeavor to obtain Custodian's Instructions, but should these not be received in
time for Subcustodian to take timely action, Subcustodian is authorized to sell
such rights entitlement or fractional interest and to credit the Account.
4. EXECUTE CERTIFICATES. Execute in Custodian's name for the Account '
whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.
5. PAY TAXES AND RECEIVE REFUNDS. To pay or cause to be paid f rom the
Account any and all taxes and levies in the nature of taxes imposed on the
property in the Account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benef its, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith.
6. PREVENT LOSSES. Take such steps as may be reasonably necessary to secure
or otherwise prevent the loss of, entitlements attached to or otherwise relating
to property held in the Account.
C. ADDITIONAL SERVICES.
1. TRANSMISSION OF NOTICES OF CORPORATE ACTION. By such means as will
permit Custodian to take timely action with respect thereto, Subcustodian will
promptly notify Custodian upon receiving notices or reports, or otherwise
becoming aware, of corporate action affecting Securities held in the Account
(including, but not limited to, calls for redemption, mergers, consolidations,
reorganizations, recapitalizations, tenderoffers, rights of f erings, exchanges,
subscriptions and other of f erings) and dividend, interest and other income
payments relating to such Securities.
2. COMMUNICATIONS REGARDING THE EXERCISE OF ENTITLEMENTS. Upon request
by Custodian, Subcustodian will promptly deliver, or cause any Eligible
Depository authorized and acting hereunder to deliver, to Custodian all notices,
proxies, proxy soliciting materials and other communications that call for
voting or the exercise of rights or other specific action (including material
relative to legal proceedings intended to be transmitted to security holders)
relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting instruments
to be executed by the registered holder of the Securities, but without
indicating the manner in which such Securities are to be voted.
3. MONITOR FINANCIAL SERVICE. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to corporate
actions and dividend, interest and other income payments.
III. USE OF SECURITIES DEPOSITORY
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the central
system for handling of designated securities or equivalent book entries in , or
(b) a transnational system for the central handling of securities or equivalent
book entries (herein called "Eligible Depository"), provided however, that,
while so maintained, such Securities shall be subject only to the directions of
Subcustodian, and that Subcustodian duties, obligations and responsibilities
with regard to such Securities shall be the same as if such Securities were held
by Subcustodian on its premises.
IV. CLAIMS AGAINST PROPERTY IN THE ACCOUNT
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. SUBCUSTODIAN'S WARRANTY
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act of 1940, a copy of which is attached hereto as Attachment A (the "Rule"),
and Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial likelihood
that Subcustodian will cease to qualify under the Rule as currently in effect or
as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission which order permits Custodian to employ
Subcustodian notwithstanding the fact that Subcustodian fails to qualify under
the terms of the Rule, and Subcustodian shall immediately notify custodian, in
writing or by other authorized means, if for any reason it is no longer covered
by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this section,
Custodian may terminate this Agreement immediately without prior notice to
Subcustodian.
VI. DEFINITIONS
A. INSTRUCTIONS. The term "Instructions" means:
1. instructions in writing signed by authorized individuals designated as
such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as shall
customarily be used for thetransmission of like information, and
4. such other forms of communication as from time to time may be agreed
upon by Custodian and Subcustodian, which Subcustodian believes in good faith to
have been given by Custodian or which are transmitted with proper testing or
authentication pursuant to terms and conditions which Custodian may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. ACCOUNT. The term "Account" means collectively the Custody Account, and
the Deposit Account.
C. SECURITIES. The term "Securities" includes, without limitation, stocks,
shares, bonds, debentures, debt securities (convertible or non-convertible),
notes, or other obligations or securities and any certificates, receipts,
futures contracts, foreign exchange contracts, options, warrants, scrip or other
instruments representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or in any
property or assets.
VII. MISCELLANEOUS PROVISIONS
A. STATEMENTS REGARDING THE ACCOUNT. Subcustodian will supply Custodian
with such statements regarding the Account as Custodian may request, including
the identity and location of any Eligible Depository authorized and acting
hereunder. In addition, Subcustodian will supply Custodian an advice or
notification of any transfers of Securities to or from the Account indicating,
as to Securities acquired for the Account, if applicable, the Eligible
Depository having physical possession of such Securities.
B. EXAMINATION OF BOOKS AND RECORDS. Subcustodian agrees that its books and
records relating to the Account and Subcustodian's actions under this Agreement
shall be open to the physical, on-premises inspection and audit at reasonable
times by officers of, auditors employed by or other representatives of Custodian
including (to the extent permitted under
the law of ) the independent public accountants for any customer of Custodian
whose property is being held hereunder and such books and records shall be
retained for such period as shall be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will furnish
its auditor's reports on its system of internal controls, and Subcustodian will
use its best efforts to obtain and furnish similar reports of any Eligible
Depository authorized and acting hereunder.
C. STANDARD OF CARE. In holding, maintaining, servicing and disposing of
Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, ided that Subcustodian shall exercise at least
the degree of care and maintain adequate insurance as expected of a prudent
professional Subcustodian for hire and shall assume the burden of proving that
it has exercised such care in its maintenance of Property held by Subcustodian
in its Account. The maintenance of the Property in an Eligible Depository shall
not affect Subcustodian's standard of care, and Subcustodian will remain as
fully responsible for any loss or damage to such securities as if it had itself
retained physical possession of them. Subcustodian shall also indemnify and hold
harmless Custodian and each of Custodian's customers from and against any loss,
damage, cost, expense, liability or claim (including reasonable attorney's fees)
arising out of or in connection with the improper or negligent performance or
the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions
of the law of , or any other law,
applicable to Subcustodian in connection with its duties hereunder, including
(but not limited to) the payment of all transfer taxes or other taxes and
compliance with any currency restrictions and securities laws in connection with
its duties as Subcustodian.
D. LOSS OF CASH OR SECURITIES. Subcustodian agrees that, in the even of any
loss of Securities or Cash in the Account, Subcustodian will use its best
efforts to ascertain the circumstances relating to such loss and will promptly
report the same to Custodian and shall use every legal means available to it to
effect the quickest possible recovery.
E. COMPENSATION OF SUBCUSTODIAN. Custodian agrees to pay to Subcustodian
from time to time such compensation for its services and such out-of-pocket or
incidental expenses of Subcustodian pursuant to this Agreement as may be
mutually agreed upon in writing from time to time.
F. OPERATING REQUIREMENTS. The Subcustodian agrees to follow such Operating
Requirements as the Custodian may establish from time to time. A copy of the
current Operating Requirements is attached as Attachment B to this Agreement.
G. TERMINATION. This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or Custodian,
shall be followed within 60 days by
Instructions specifying the names of the persons to whom Subcustodian shall
deliver the Securities in the Account and to whom the Cash in the account shall
be paid. If within 60 days following the giving of such notice of termination,
Subcustodian does not receive such Instructions, Subcustodian shall continue to
hold such Securities and Cash subject to this Agreement until such Instructions
are given. The obligations of the parties under this Agreement shall survive the
termination of this Agreement.
H. NOTICES. Unless otherwise specified in this Agreement, all notices and
communications with respect to matters contemplated by this Agreement shall be
in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreec telecommunication methods to the following addresses (or to such
other address as either party hereto may from time to time designate by notice
duly given in accordance with this paragraph)
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations/Network Administration
X.X. Xxx 0000
Xxxxxx, XX 00000
I. CONFIDENTIALITY. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws,
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written cotment.
J. ASSIGNMENT. This Agreement shall not be assignable by either party but
shall bind any successor in interest of Custodian and Subcustodian respectively.
K. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of To the extent inconsistent with this Agreement or
Custodian's Operating Requirements as attached hereto, Subcustodian's rules and
conditions regarding accounts generally or custody accounts specifically shall
not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:
Date:
AGREED TO BY SUBCUSTODIAN
By:
Date:
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative as of
May , 1997.
EMERGING MARKETS PORTFOLIO
By:
Title: President
Executed in Xxxxxxxx, Bermuda
STATE STREET BANK AND TRUST COMPANY
By:
Title:
